# ASC 830-10-45: Foreign Currency Matters — Overall — 45 Other Presentation Matters Source: FASB Accounting Standards Codification, Basic View [Read online](https://asc.understandingaccounting.org/asc/830/10/#45-other-presentation-matters) Study and research edition. Verify current requirements with the official source. Summaries, enrichment, and tags are machine-generated study aids. Paragraph html preserves source markup; snippet is abbreviated. Pending content is not necessarily effective. Tables and mathematical or amendment markup are retained as HTML where Markdown would lose structure. Source downloaded (UTC): 2026-09-10T01:46:22.095Z to 2026-09-10T01:46:22.095Z Record version: sha256:15d325c16a58c999d79f458f48cc352753c3a0d78c2fe191a8d91e7a5cda7b71 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 830-10-45: 45 Other Presentation Matters [Read section](https://asc.understandingaccounting.org/asc/830/10/#45-other-presentation-matters) SEC content: no ##### [830-10-45-1](https://asc.understandingaccounting.org/asc/830/10/#830-10-45-1) Pending content: no Source downloaded (UTC): 2026-09-10T01:46:22.095Z to 2026-09-10T01:46:22.095Z Record version: sha256:ba76e061375a634bb3de8c5b6d59dcd9447e3fa86490f6d2f9630b7f1847aadb Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The guidance in this Section relates to how a [reporting entity](https://asc.understandingaccounting.org/glossary/r/#reporting-entity "An entity or group whose financial statements are being referred to. Those financial statements reflect any of the following: The financial statements of one or more foreign operations by combination, consolidation, or equity accounting Foreign currency transactions.") determines the [functional currency](https://asc.understandingaccounting.org/glossary/f/#functional-currency "An entity's functional currency is the currency of the primary economic environment in which the entity operates; normally, that is the currency of the environment in which an entity primarily generates and expends cash. (See paragraphs 830-10-45-2830-10-45-3830-10-45-4830-10-45-5830-10-45-6 and 830-10-55-3830-10-55-4830-10-55-5830-10-55-6830-10-55-7.)") of a [foreign entity](https://asc.understandingaccounting.org/glossary/f/#foreign-entity "An operation (for example, subsidiary, division, branch, joint venture, and so forth) whose financial statements are both: Prepared in a currency other than the reporting currency of the reporting entity Combined or consolidated with or accounted for on the equity basis in the financial statements of the reporting entity.") (including of a foreign entity in a highly inflationary economy), remeasures the books of record (if necessary), and characterizes transaction gains and losses. The guidance is organized as follows: 1. a The functional currency 2. b The functional currency in highly inflationary economies 3. c Remeasurement of books of record into the functional currency 4. d [Subparagraph superseded by Accounting Standards Update No. 2015-01](https://asc.understandingaccounting.org/updates/asu-2015-01/). #### The Functional Currency ##### [830-10-45-2](https://asc.understandingaccounting.org/asc/830/10/#830-10-45-2) Pending content: no Source downloaded (UTC): 2026-09-10T01:46:22.095Z to 2026-09-10T01:46:22.095Z Record version: sha256:326e1cf0a2208fd0a99e0005c33ccdc9dfa6b4b8d1f0b7e770c577fc5f8fb548 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The assets, liabilities, and operations of a foreign entity shall be measured using the functional currency of that entity. An entity's functional currency is the currency of the primary economic environment in which the entity operates; normally, that is the currency of the environment in which an entity primarily generates and expends cash. ##### [830-10-45-3](https://asc.understandingaccounting.org/asc/830/10/#830-10-45-3) Pending content: no Source downloaded (UTC): 2026-09-10T01:46:22.095Z to 2026-09-10T01:46:22.095Z Record version: sha256:3f27e1d4f54182d558c46485e219268a7adc1d1d7fe10a341a1f7eee2b6c8ed3 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. It is neither possible nor desirable to provide unequivocal criteria to identify the functional currency of foreign entities under all possible facts and circumstances and still fulfill the objectives of [foreign currency translation](https://asc.understandingaccounting.org/glossary/f/#foreign-currency-translation "The process of expressing in the reporting currency of the reporting entity those amounts that are denominated or measured in a different currency."). Arbitrary rules that might dictate the identification of the functional currency in each case would accomplish a degree of superficial uniformity but, in the process, might diminish the relevance and reliability of the resulting information. ##### [830-10-45-4](https://asc.understandingaccounting.org/asc/830/10/#830-10-45-4) Pending content: no Source downloaded (UTC): 2026-09-10T01:46:22.095Z to 2026-09-10T01:46:22.095Z Record version: sha256:7a76a300975f740e1165cfab32baf5f1742d3c66ff14dd37dd5f82aa3b3f8c1d Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Multinational reporting entities may consist of entities operating in a number of economic environments and dealing in a number of foreign currencies. All foreign operations are not alike. To fulfill the objectives in paragraph [830-10-10-2](https://asc.understandingaccounting.org/asc/830/10/#830-10-10-2), it is necessary to recognize at least two broad classes of foreign operations: 1. a In the first class are foreign operations that are relatively self-contained and integrated within a particular country or economic environment. The day-to-day operations are not dependent on the economic environment of the parent's functional currency; the foreign operation primarily generates and expends foreign currency. The [foreign currency](https://asc.understandingaccounting.org/glossary/f/#foreign-currency "A currency other than the functional currency of the entity being referred to (for example, the dollar could be a foreign currency for a foreign entity). Composites of currencies, such as the Special Drawing Rights, used to set prices or denominate amounts of loans, and so forth, have the characteristics of foreign currency.") net cash flows that it generates may be reinvested or converted and distributed to the parent. For this class, the foreign currency is the functional currency. 2. b In the second class are foreign operations that are primarily a direct and integral component or extension of the parent entity's operations. Significant assets may be acquired from the parent entity or otherwise by expending dollars and, similarly, the sale of assets may generate dollars that are available to the parent. Financing is primarily by the parent or otherwise from dollar sources. In other words, the day-to-day operations are dependent on the economic environment of the parent's currency, and the changes in the foreign entity's individual assets and liabilities impact directly on the cash flows of the parent entity in the parent's currency. For this class, the dollar is the functional currency. ##### [830-10-45-5](https://asc.understandingaccounting.org/asc/830/10/#830-10-45-5) Pending content: no Source downloaded (UTC): 2026-09-10T01:46:22.095Z to 2026-09-10T01:46:22.095Z Record version: sha256:6d1de0ce05c54b76f9d23d375a42f7fe0577a555c03f5a7f6e2289f59cfb6cd6 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. An entity might have more than one distinct and separable operation, such as a division or branch, in which case each operation may be considered a separate entity. If those operations are conducted in different economic environments, they might have different functional currencies. ##### [830-10-45-6](https://asc.understandingaccounting.org/asc/830/10/#830-10-45-6) Pending content: no Source downloaded (UTC): 2026-09-10T01:46:22.095Z to 2026-09-10T01:46:22.095Z Record version: sha256:73cf9bd6f15522944081ccbfc32b3990028b208bfee7fd210ea4f3259cdfa764 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The functional currency of an entity is, in principle, a matter of fact. In some cases, the facts will clearly identify the functional currency; in other cases they will not. For example, if a foreign entity conducts significant amounts of business in two or more currencies, the functional currency might not be clearly identifiable. In those instances, the economic facts and circumstances pertaining to a particular foreign operation shall be assessed in relation to the stated objectives for foreign currency translation (see paragraphs [830-10-10-1 through 10-2](https://asc.understandingaccounting.org/asc/830/10/#830-10-10-1) ). Management's judgment will be required to determine the functional currency in which financial results and relationships are measured with the greatest degree of relevance and reliability. ##### [830-10-45-7](https://asc.understandingaccounting.org/asc/830/10/#830-10-45-7) Pending content: no Source downloaded (UTC): 2026-09-10T01:46:22.095Z to 2026-09-10T01:46:22.095Z Record version: sha256:4933d5e9a7327dbcdf2b4ee5bc9e8d27841b5add461cabf0fa7de0997e98f57b Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Once the functional currency for a foreign entity is determined, that determination shall be used consistently unless significant changes in economic facts and circumstances indicate clearly that the [functional currency](https://asc.understandingaccounting.org/glossary/f/#functional-currency "An entity's functional currency is the currency of the primary economic environment in which the entity operates; normally, that is the currency of the environment in which an entity primarily generates and expends cash. (See paragraphs 830-10-45-2830-10-45-3830-10-45-4830-10-45-5830-10-45-6 and 830-10-55-3830-10-55-4830-10-55-5830-10-55-6830-10-55-7.)") has changed. Previously issued financial statements shall not be restated for any change in the functional currency. ##### [830-10-45-8](https://asc.understandingaccounting.org/asc/830/10/#830-10-45-8) Pending content: no Source downloaded (UTC): 2026-09-10T01:46:22.095Z to 2026-09-10T01:46:22.095Z Record version: sha256:b2428387d24e794e99401f6105022be204e09928b2f42604fb2f17544f9a1ad7 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. See paragraph [250-10-45-1](https://asc.understandingaccounting.org/asc/250/10/#250-10-45-1) for guidance on adoption or modification of an accounting principle necessitated by transactions or events that are clearly different in substance from those previously occurring. Paragraphs [830-10-45-15 through 45-16](https://asc.understandingaccounting.org/asc/830/10/#830-10-45-15) discuss changes related to highly inflationary economies. ##### [830-10-45-9](https://asc.understandingaccounting.org/asc/830/10/#830-10-45-9) Pending content: no Source downloaded (UTC): 2026-09-10T01:46:22.095Z to 2026-09-10T01:46:22.095Z Record version: sha256:d78b76cbde51ad9d4362ccdc0e31bb7ecab2ca303c8604cd20f0c5db18a4f8b9 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. If the functional currency changes from the [reporting currency](https://asc.understandingaccounting.org/glossary/r/#reporting-currency "The currency in which a reporting entity prepares its financial statements.") to a foreign currency, the adjustment attributable to current-rate translation of nonmonetary assets as of the date of the change shall be reported in other comprehensive income. ##### [830-10-45-10](https://asc.understandingaccounting.org/asc/830/10/#830-10-45-10) Pending content: no Source downloaded (UTC): 2026-09-10T01:46:22.095Z to 2026-09-10T01:46:22.095Z Record version: sha256:a56b390af360565155a77ae99972f938456527f5570e9c0088aee1862a8ac8a5 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. If the functional currency changes from a foreign currency to the reporting currency, [translation adjustments](https://asc.understandingaccounting.org/glossary/t/#translation-adjustments "Translation adjustments result from the process of translating financial statements from the entity's functional currency into the reporting currency.") for prior periods shall not be removed from equity and the translated amounts for nonmonetary assets at the end of the prior period become the accounting basis for those assets in the period of the change and subsequent periods. This guidance shall be used also to account for a change in functional currency from the foreign currency to the reporting currency when an economy becomes highly inflationary. #### The Functional Currency in Highly Inflationary Economies ##### [830-10-45-11](https://asc.understandingaccounting.org/asc/830/10/#830-10-45-11) Pending content: no Source downloaded (UTC): 2026-09-10T01:46:22.095Z to 2026-09-10T01:46:22.095Z Record version: sha256:9dd7d1583af0e214d094032979fd14b1f6bd5be7f46b093a8fd82ffc2db77cf5 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The financial statements of a foreign entity in a highly inflationary economy shall be remeasured as if the functional currency were the reporting currency. Accordingly, the financial statements of those entities shall be remeasured into the reporting currency according to the requirements of paragraph [830-10-45-17](https://asc.understandingaccounting.org/asc/830/10/#830-10-45-17). For the purposes of this requirement, a highly inflationary economy is one that has cumulative inflation of approximately 100 percent or more over a 3-year period. ##### [830-10-45-12](https://asc.understandingaccounting.org/asc/830/10/#830-10-45-12) Pending content: no Source downloaded (UTC): 2026-09-10T01:46:22.095Z to 2026-09-10T01:46:22.095Z Record version: sha256:2bff4dd6bb509bf8793c9eab35aa73ffb41083e0cda120e1fadbbf3b41b22e85 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The determination of a highly inflationary economy must begin by calculating the cumulative inflation rate for the three years that precede the beginning of the reporting period, including interim reporting periods. If that calculation results in a cumulative inflation rate in excess of 100 percent, the economy shall be considered highly inflationary in all instances. However, if that calculation results in the cumulative rate being less than 100 percent, historical inflation rate trends (increasing or decreasing) and other pertinent economic factors should be considered to determine whether such information suggests that classification of the economy as highly inflationary is appropriate. Projections cannot be used to overcome the presumption that an economy is highly inflationary if the 3-year cumulative rate exceeds 100 percent. ##### [830-10-45-13](https://asc.understandingaccounting.org/asc/830/10/#830-10-45-13) Pending content: no Source downloaded (UTC): 2026-09-10T01:46:22.095Z to 2026-09-10T01:46:22.095Z Record version: sha256:6550f6fba2d6eb20630669c6512cac9fa27135ecc8a8d8efa65689c15db770c7 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The definition of a highly inflationary economy is necessarily an arbitrary decision. In some instances, the trend of inflation might be as important as the absolute rate. The definition of a highly inflationary economy shall be applied with judgment. ##### [830-10-45-14](https://asc.understandingaccounting.org/asc/830/10/#830-10-45-14) Pending content: no Source downloaded (UTC): 2026-09-10T01:46:22.095Z to 2026-09-10T01:46:22.095Z Record version: sha256:b6132ab3115f607ceb3393b2869b183fc503c7fc2dd2cf2cd205514b93457f58 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Example 3 (see paragraph [830-10-55-23](https://asc.understandingaccounting.org/asc/830/10/#830-10-55-23)) illustrates the application of this guidance. ##### [830-10-45-15](https://asc.understandingaccounting.org/asc/830/10/#830-10-45-15) Pending content: no Source downloaded (UTC): 2026-09-10T01:46:22.095Z to 2026-09-10T01:46:22.095Z Record version: sha256:8627d83c5b4cd6f4a522761d4f14d5d11f4f3e45251be54131441546a3aece7b Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. If an entity's subsidiary's functional currency changes from the reporting currency to the [local currency](https://asc.understandingaccounting.org/glossary/l/#local-currency "The currency of a particular country being referred to.") because the economy ceases to be considered highly inflationary, the entity shall restate the functional currency accounting bases of nonmonetary assets and liabilities at the date of change as follows: 1. a The reporting currency amounts at the date of change shall be translated into the local currency at current exchange rates. 2. b The translated amounts shall become the new functional currency accounting basis for the nonmonetary assets and liabilities. Example 1 (see paragraph [830-10-55-12](https://asc.understandingaccounting.org/asc/830/10/#830-10-55-12)) illustrates the application of this guidance. ##### [830-10-45-16](https://asc.understandingaccounting.org/asc/830/10/#830-10-45-16) Pending content: no Source downloaded (UTC): 2026-09-10T01:46:22.095Z to 2026-09-10T01:46:22.095Z Record version: sha256:681b0b4868e5d07a07a779a6c0da5c0e59dc3bbc4dd1175ba4c0770422f471de Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. When the functional currency is the reporting currency, paragraph [740-10-25-3(f)](https://asc.understandingaccounting.org/asc/740/10/#740-10-25-3) prohibits recognition of deferred tax benefits that result from indexing for tax purposes assets and liabilities that are remeasured into the reporting currency using historical [exchange rates](https://asc.understandingaccounting.org/glossary/e/#exchange-rate "The ratio between a unit of one currency and the amount of another currency for which that unit can be exchanged at a particular time."). Thus, deferred tax benefits attributable to any such indexing that occurs after the change in functional currency to the reporting currency shall be recognized when realized on the tax return and not before. Deferred tax benefits that were recognized for indexing before the change in functional currency to the reporting currency are eliminated when the related indexed amounts shall be realized as deductions for tax purposes. #### Remeasurement of the Books of Record Into the Functional Currency ##### [830-10-45-17](https://asc.understandingaccounting.org/asc/830/10/#830-10-45-17) Pending content: no Source downloaded (UTC): 2026-09-10T01:46:22.095Z to 2026-09-10T01:46:22.095Z Record version: sha256:36a09df505596b42ac813f2380c213884af8cdb0f1a1f54b05050339b05192ba Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. If an entity's books of record are not maintained in its functional currency, remeasurement into the functional currency is required. That remeasurement is required before translation into the reporting currency. If a foreign entity's functional currency is the reporting currency, remeasurement into the reporting currency obviates translation. The remeasurement of and subsequent accounting for transactions denominated in a currency other than the functional currency shall be in accordance with the requirements of Subtopic 830-20. The remeasurement process is intended to produce the same result as if the entity's books of record had been maintained in the functional currency. To accomplish that result, it is necessary to use historical exchange rates between the functional currency and another currency in the remeasurement process for certain accounts (the current rate will be used for all others), and this guidance identifies those accounts. To accomplish that result, it is also necessary to recognize currently in income all exchange gains and losses from remeasurement of monetary assets and liabilities that are not denominated in the functional currency (for example, assets and liabilities that are not denominated in dollars if the dollar is the functional currency). ##### [830-10-45-18](https://asc.understandingaccounting.org/asc/830/10/#830-10-45-18) Pending content: no Source downloaded (UTC): 2026-09-10T01:46:22.095Z to 2026-09-10T01:46:22.095Z Record version: sha256:24bd930f9c09e41c127e5a3c535aa6468b400f45f2c07c5b1bd9fe95327502da Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. All of the following are common nonmonetary balance sheet items and related revenue, expense, gain, and loss accounts that shall be remeasured using historical rates to produce the same result in terms of the functional currency that would have occurred if those items had been initially recorded in the functional currency: 1. a Equity securities without readily determinable fair values accounted for in accordance with paragraph [321-10-35-2](https://asc.understandingaccounting.org/asc/321/10/#321-10-35-2). The historical rate to be used shall be the exchange rate as of the later of the acquisition date or the most recent date on which the equity security was adjusted to fair value in accordance with paragraphs [321-10-35-2 through 35-3](https://asc.understandingaccounting.org/asc/321/10/#321-10-35-2) , if applicable. 1. 1 [Subparagraph superseded by Accounting Standards Update No. 2019-04](https://asc.understandingaccounting.org/updates/asu-2019-04/). 2. 2 [Subparagraph superseded by Accounting Standards Update No. 2019-04](https://asc.understandingaccounting.org/updates/asu-2019-04/). 2. b Inventories carried at cost 3. c Prepaid expenses such as insurance, advertising, and rent 4. d Property, plant, and equipment 5. e Accumulated depreciation on property, plant, and equipment 6. f Patents, trademarks, licenses, and formulas 7. g Goodwill 8. h Other intangible assets 9. i Deferred charges and credits, except policy acquisition costs for life insurance companies 10. j Deferred income 11. k Common stock 12. l Preferred stock carried at issuance price 13. m Revenues and expenses related to nonmonetary items, for example: 1. 1 Cost of goods sold 2. 2 Depreciation of property, plant, and equipment 3. 3 Amortization of intangible items such as patents, licenses, and so forth 4. 4 Amortization of deferred charges or credits except policy acquisition costs for life insurance entities. ##### [830-10-45-19](https://asc.understandingaccounting.org/asc/830/10/#830-10-45-19) Pending content: no Source downloaded (UTC): 2026-09-10T01:46:22.095Z to 2026-09-10T01:46:22.095Z Record version: sha256:c584d28000a1d163adcf84a2b125f9da5e13d9241e928085b9cd8a03c894fb28 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. [Paragraph superseded by Accounting Standards Update No. 2015-01](https://asc.understandingaccounting.org/updates/asu-2015-01/).