# ASC 830-10-55: Foreign Currency Matters — Overall — 55 Implementation Guidance and Illustrations Source: FASB Accounting Standards Codification, Basic View [Read online](https://asc.understandingaccounting.org/asc/830/10/#55-implementation-guidance-and-illustrations) 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): 2026-09-10T01:46:26.217Z to 2026-09-10T01:46:26.217Z Record version: sha256:03fde39898e1b489daf8874e5ca9381aa2cf8fa1a1d52c84fe44cb01c18b0310 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 830-10-55: 55 Implementation Guidance and Illustrations [Read section](https://asc.understandingaccounting.org/asc/830/10/#55-implementation-guidance-and-illustrations) SEC content: no #### Implementation Guidance ##### [830-10-55-1](https://asc.understandingaccounting.org/asc/830/10/#830-10-55-1) Pending content: no Source downloaded (UTC): 2026-09-10T01:46:26.217Z to 2026-09-10T01:46:26.217Z Record version: sha256:4b30b556559e904765bad1f06a7fba1fef03972cac4e7904f0ed034a5ceb1c45 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. To measure in [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.") is to quantify an [attribute](https://asc.understandingaccounting.org/glossary/a/#attribute "The quantifiable characteristic of an item that is measured for accounting purposes. For example, historical cost and current cost are attributes of an asset.") of an item in a unit of currency other than the [reporting currency](https://asc.understandingaccounting.org/glossary/r/#reporting-currency "The currency in which a reporting entity prepares its financial statements."). Assets and liabilities are denominated in a foreign currency if their amounts are fixed in terms of that foreign currency regardless of [exchange rate](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.") changes. An asset or liability may be both measured and denominated in one currency, or it may be measured in one currency and denominated in another. ##### [830-10-55-2](https://asc.understandingaccounting.org/asc/830/10/#830-10-55-2) Pending content: no Source downloaded (UTC): 2026-09-10T01:46:26.217Z to 2026-09-10T01:46:26.217Z Record version: sha256:b4c5e45f293dd33d8da47ae1874b0003d222a74416d7ac5d7ce773b45b379784 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. For example, two foreign branches of a U.S. entity, one Swiss and one German, purchase identical assets on credit from a Swiss vendor at identical prices stated in Swiss francs. The German branch measures the cost (an attribute) of that asset in euros. Although the corresponding liability is also measured in euros, it remains denominated in Swiss francs since the liability must be settled in a specified number of Swiss francs. The Swiss branch measures the asset and liability in Swiss francs. Its liability is both measured and denominated in Swiss francs. Although assets and liabilities can be measured in various currencies, rights to receive or obligations to pay fixed amounts of a currency are, by definition, denominated in that currency. ##### [830-10-55-3](https://asc.understandingaccounting.org/asc/830/10/#830-10-55-3) Pending content: no Source downloaded (UTC): 2026-09-10T01:46:26.217Z to 2026-09-10T01:46:26.217Z Record version: sha256:ab2d288a2b034d8670f387a0016956188674e5868e3c4ce6c1a768026c33f25f Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The following provides guidance for determination of the functional currency. The economic factors cited here, and possibly others, should be considered both individually and collectively when determining the functional currency. ##### [830-10-55-4](https://asc.understandingaccounting.org/asc/830/10/#830-10-55-4) Pending content: no Source downloaded (UTC): 2026-09-10T01:46:26.217Z to 2026-09-10T01:46:26.217Z Record version: sha256:e3450f5db21361989e0ee7b9ab4dd3bc22af815c9de39a226f67ec20976af090 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. This general guidance presents indicators of facts to be considered in identifying the functional currency. In those instances in which the indicators are mixed and 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.)") is not obvious, management's judgment will be required to determine the functional currency that most faithfully portrays the economic results of the entity's operations and thereby best achieves 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.") set forth in paragraph [830-10-10-2](https://asc.understandingaccounting.org/asc/830/10/#830-10-10-2). Management is in the best position to obtain the pertinent facts and weigh their relative importance in determining the functional currency for each operation. It is important to recognize that management's judgment is essential and paramount in this determination, provided only that it is not contradicted by the facts. ##### [830-10-55-5](https://asc.understandingaccounting.org/asc/830/10/#830-10-55-5) Pending content: no Source downloaded (UTC): 2026-09-10T01:46:26.217Z to 2026-09-10T01:46:26.217Z Record version: sha256:10aa14681a3f4ad231abe6992c61db8ba129e2e9c27a88adbdd4edf53b6312a9 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The following salient economic factors, and possibly others, should be considered both individually and collectively when determining the functional currency: 1. a Cash flow indicators, for example: 1. 1 Foreign currency. Cash flows related to the foreign entity's individual assets and liabilities are primarily in the foreign currency and do not directly affect the parent entity's cash flows. 2. 2 Parent's currency. Cash flows related to the foreign entity's individual assets and liabilities directly affect the parent's cash flows currently and are readily available for remittance to the parent entity. 2. b Sales price indicators, for example: 1. 1 Foreign currency. Sales prices for the foreign entity's products are not primarily responsive on a short-term basis to changes in exchange rates but are determined more by local competition or local government regulation. 2. 2 Parent's currency. Sales prices for the foreign entity's products are primarily responsive on a short-term basis to changes in exchange rates; for example, sales prices are determined more by worldwide competition or by international prices. 3. c Sales market indicators, for example: 1. 1 Foreign currency. There is an active local sales market for the foreign entity's products, although there also might be significant amounts of exports. 2. 2 Parent's currency. The sales market is mostly in the parent's country or sales contracts are denominated in the parent's currency. 4. d Expense indicators, for example: 1. 1 Foreign currency. Labor, materials, and other costs for the foreign entity's products or services are primarily local costs, even though there also might be imports from other countries. 2. 2 Parent's currency. Labor, materials, and other costs for the foreign entity's products or services continually are primarily costs for components obtained from the country in which the parent entity is located. 5. e Financing indicators, for example: 1. 1 Foreign currency. Financing is primarily denominated in foreign currency, and funds generated by the foreign entity's operations are sufficient to service existing and normally expected debt obligations. 2. 2 Parent's Currency—Financing is primarily from the parent or other dollar-denominated obligations, or funds generated by the foreign entity's operations are not sufficient to service existing and normally expected debt obligations without the infusion of additional funds from the parent entity. Infusion of additional funds from the parent entity for expansion is not a factor, provided funds generated by the foreign entity's expanded operations are expected to be sufficient to service that additional financing. 6. f Intra-entity transactions and arrangements indicators, for example: 1. 1 Foreign currency. There is a low volume of intra-entity transactions and there is not an extensive interrelationship between the operations of the [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.") and the parent entity. However, the foreign entity's operations may rely on the parent's or affiliates' competitive advantages, such as patents and trademarks. 2. 2 Parent's currency. There is a high volume of intra-entity transactions and there is an extensive interrelationship between the operations of the foreign entity and the parent entity. Additionally, the parent's currency generally would be the functional currency if the foreign entity is a device or shell corporation for holding investments, obligations, intangible assets, and so forth, that could readily be carried on the parent's or an affiliate's books. ##### [830-10-55-6](https://asc.understandingaccounting.org/asc/830/10/#830-10-55-6) Pending content: no Source downloaded (UTC): 2026-09-10T01:46:26.217Z to 2026-09-10T01:46:26.217Z Record version: sha256:fd4d14a85a9499f3522fe5572bc023308230d6bce05451290139dcc51a222c62 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. In some instances, a foreign entity might have more than one distinct and separable operation. For example, a foreign entity might have one operation that sells parent-entity-produced products and another operation that manufactures and sells foreign-entity-produced products. If they are conducted in different economic environments, those two operations might have different functional currencies. Similarly, a single subsidiary of a financial institution might have relatively self-contained and integrated operations in each of several different countries. In those circumstances, each operation may be considered to be an entity as that term is used in this Subtopic, and, based on the facts and circumstances, each operation might have a different functional currency. ##### [830-10-55-7](https://asc.understandingaccounting.org/asc/830/10/#830-10-55-7) Pending content: no Source downloaded (UTC): 2026-09-10T01:46:26.217Z to 2026-09-10T01:46:26.217Z Record version: sha256:f423eafcff3d5ca8e25b25236960e740cb068fd1b09dd64e5039ff4a319b2866 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Foreign investments that are consolidated or accounted for by the equity method are controlled by or subject to significant influence by the parent entity. Likewise, the parent's currency is often used for measurements, assessments, evaluations, projections, and so forth, pertaining to foreign investments as part of the management decision-making process. Such management control, decisions, and resultant actions may reflect, indicate, or create economic facts and circumstances. However, the exercise of significant management control and the use of the parent's currency for decision-making purposes do not determine, per se, that the parent's currency is the functional currency for foreign operations. ##### [830-10-55-8](https://asc.understandingaccounting.org/asc/830/10/#830-10-55-8) Pending content: no Source downloaded (UTC): 2026-09-10T01:46:26.217Z to 2026-09-10T01:46:26.217Z Record version: sha256:7ba813c13db8ef195ff60736993fe9f8ba3c57d70c03c448d290332230146fef Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The guidance on the subsequent measurement of inventory in Subtopic 330-10 requires special application when the books of record are not kept in the functional currency. Inventories carried at cost in the books of record in another currency should be first remeasured to cost in the functional currency using historical exchange rates. Then, historical cost in the functional currency should be evaluated for impairment under the subsequent measurement guidance using the functional currency. Application of the subsequent measurement guidance in functional currency may require a write-down in the functional currency statements even though no write-down has been made in the books of record maintained in another currency. Likewise, a write-down in the books of record may need to be reversed if the application of the subsequent measurement guidance in the functional currency does not require a write-down. If inventory has been written down in the functional currency statements, that functional currency amount shall continue to be the carrying amount in the functional currency financial statements until the inventory is sold or a further write-down is necessary. An asset other than inventory may sometimes be written down from historical cost. Although different measurement guidance may be used to determine that write-down, the approach described in this paragraph might be appropriate. That is, a write-down may be required in the functional currency statements even though not required in the books of record, and a write-down in the books of record may need to be reversed before remeasurement to prevent the remeasured amount from exceeding functional currency historical cost. ##### [830-10-55-9](https://asc.understandingaccounting.org/asc/830/10/#830-10-55-9) Pending content: no Source downloaded (UTC): 2026-09-10T01:46:26.217Z to 2026-09-10T01:46:26.217Z Record version: sha256:a9a54c787a835fd80c16ba2535b868b2a68f10e60f7d175071b726ec86b3d1ce Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Literal application of the subsequent measurement guidance in Subtopic 330-10 may require an inventory write-down in functional currency financial statements for locally acquired inventory if the value of the currency in which the books of record are maintained has declined in relation to the functional currency between the date the inventory was acquired and the date of the balance sheet. However, such a write-down may not be necessary, for example, for inventory measured using the first-in, first out (FIFO) methodology, if the [net realizable value](https://asc.understandingaccounting.org/glossary/n/#net-realizable-value "Estimated selling prices in the ordinary course of business, less reasonably predictable costs of completion, disposal, and transportation.") expressed in the currency in which the books of record are maintained has increased sufficiently so that net realizable value exceeds historical cost as measured in functional currency. Cases A and B in Example 2 (see paragraphs [830-10-55-15 through 55-16](https://asc.understandingaccounting.org/asc/830/10/#830-10-55-15) and [830-10-55-18 through 55-19](https://asc.understandingaccounting.org/asc/830/10/#830-10-55-18) ) illustrate this situation. This paragraph is not intended to preclude recognition of gains in a later interim period to the extent of inventory losses recognized from net realizable value declines in earlier interim periods if losses on the same inventory are recovered in the same year, as provided by paragraph [270-10-45-6(c)](https://asc.understandingaccounting.org/asc/270/10/#270-10-45-6). An inventory write-down also may be required for imported inventory. ##### [830-10-55-10](https://asc.understandingaccounting.org/asc/830/10/#830-10-55-10) Pending content: no Source downloaded (UTC): 2026-09-10T01:46:26.217Z to 2026-09-10T01:46:26.217Z Record version: sha256:1286b26be4615f3d2fdd07b19063b3d7d1bfc99121687e2af99940e96ef5cdcd Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Literal application of the standards in this Subtopic might require a degree of detail in record keeping and computations that could be burdensome as well as unnecessary to produce reasonable approximations of the results. Accordingly, it is acceptable to use averages or other methods of approximation. For example, because [translation](https://asc.understandingaccounting.org/glossary/t/#translation "See Foreign Currency Translation.") at the exchange rates at the dates the numerous revenues, expenses, gains, and losses are recognized is generally impractical, an appropriately weighted average exchange rate for the period may be used to translate those elements. Likewise, the use of other time- and effort-saving methods to approximate the results of detailed calculations is permitted. ##### [830-10-55-11](https://asc.understandingaccounting.org/asc/830/10/#830-10-55-11) Pending content: no Source downloaded (UTC): 2026-09-10T01:46:26.217Z to 2026-09-10T01:46:26.217Z Record version: sha256:45e04c2f91525723392649183d9923c8aac6c77eb448ccf820d049642494f4ba Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Average rates used shall be appropriately weighted by the volume of functional currency transactions occurring during the accounting period. For example, to translate revenue and expense accounts for an annual period, individual revenue and expense accounts for each quarter or month may be translated at that quarter's or that month's average rate. The translated amounts for each quarter or month should then be combined for the annual totals. #### Illustrations ##### [830-10-55-12](https://asc.understandingaccounting.org/asc/830/10/#830-10-55-12) Pending content: no Source downloaded (UTC): 2026-09-10T01:46:26.217Z to 2026-09-10T01:46:26.217Z Record version: sha256:8180eb7c46bae7faa6d7a40764ad999a8457148e17ae687f3dca28adad46f484 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. This Example illustrates the application of paragraph [830-10-45-15](https://asc.understandingaccounting.org/asc/830/10/#830-10-45-15). ##### [830-10-55-13](https://asc.understandingaccounting.org/asc/830/10/#830-10-55-13) Pending content: no Source downloaded (UTC): 2026-09-10T01:46:26.217Z to 2026-09-10T01:46:26.217Z Record version: sha256:66dd4614642e46b3b0c9ffee40c4280d4813d87d86d102fab704f4bbca97f3c0 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. A foreign subsidiary of a U.S. entity operating in a highly inflationary economy purchased equipment with a 10-year useful life for 100,000 [local currency](https://asc.understandingaccounting.org/glossary/l/#local-currency "The currency of a particular country being referred to.") (LC) on January 1, 19X1. The exchange rate on the purchase date was LC 10 to USD 1, so the U.S. dollar equivalent cost was USD 10,000. On December 31, 19X5, the equipment has a net book value on the subsidiary's local books of LC 50,000 (original cost of LC 100,000 less accumulated depreciation of LC 50,000) and the current [exchange rate](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.") is LC 75 to the U.S. dollar. In the U.S. parent's financial statements, annual depreciation expense of USD 1,000 has been reported for each of the past 5 years, and at December 31, 19X5, the equipment is reported at USD 5,000 (foreign currency basis measured at the historical exchange rate). ##### [830-10-55-14](https://asc.understandingaccounting.org/asc/830/10/#830-10-55-14) Pending content: no Source downloaded (UTC): 2026-09-10T01:46:26.217Z to 2026-09-10T01:46:26.217Z Record version: sha256:c1e9465fc6a124eeedf5bca91d8fcd8d43efbe8ed2f3b9b25aad21b94193b1f4 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. As of the beginning of 19X6, the economy of the subsidiary ceases to be considered highly inflationary. Under paragraph [830-10-45-15](https://asc.understandingaccounting.org/asc/830/10/#830-10-45-15), a new functional currency accounting basis for the equipment would be established as of January 1, 19X6, by translating the [reporting currency](https://asc.understandingaccounting.org/glossary/r/#reporting-currency "The currency in which a reporting entity prepares its financial statements.") amount of USD 5,000 into the functional currency at the current exchange rate of LC 75 to the U.S. dollar. The new functional currency accounting basis at the date of change would be LC 375,000. For U.S. reporting purposes, pursuant to this Subtopic, the new functional currency accounting basis and related depreciation would subsequently be translated into U.S. dollars at current and average exchange rates, respectively. ##### [830-10-55-15](https://asc.understandingaccounting.org/asc/830/10/#830-10-55-15) Pending content: no Source downloaded (UTC): 2026-09-10T01:46:26.217Z to 2026-09-10T01:46:26.217Z Record version: sha256:9f8dd5edcbae96ded60a22714974b90a84aa71277805fac929b06cdacce51e46 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The following Cases illustrate this Section's implementation guidance on remeasurement of inventory that is measured using first-in, first-out (FIFO) and is not recorded in the functional currency (see paragraphs [830-10-45-18](https://asc.understandingaccounting.org/asc/830/10/#830-10-45-18) and [830-10-55-8 through 55-9](https://asc.understandingaccounting.org/asc/830/10/#830-10-55-8) ): 1. a Historical cost in functional currency exceeds net realizable value in functional currency (Case A) 1. 1 [Subparagraph superseded by Accounting Standards Update No. 2015-11](https://asc.understandingaccounting.org/updates/asu-2015-11/). 2. 2 [Subparagraph superseded by Accounting Standards Update No. 2015-11](https://asc.understandingaccounting.org/updates/asu-2015-11/). 2. b Net realizable value in functional currency exceeds historical cost in functional currency (Case B). ##### [830-10-55-16](https://asc.understandingaccounting.org/asc/830/10/#830-10-55-16) Pending content: no Source downloaded (UTC): 2026-09-10T01:46:26.217Z to 2026-09-10T01:46:26.217Z Record version: sha256:261d669ea32540a94e237be2fdd9a9276d1ca9461e2a92b178102d82d414a1cd Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Cases A and B share all of the following assumptions: 1. a BR is the currency in which the books of record are maintained. 2. b FC is the functional currency. 3. c When the rate is BR 1 = FC 2.40, a foreign subsidiary of a U.S. entity purchases a unit of inventory at a cost of BR 500 (measured in functional currency, FC 1,200). 4. d At the foreign subsidiary's balance sheet date, the current rate is BR 1 = FC 2.00. ##### [830-10-55-17](https://asc.understandingaccounting.org/asc/830/10/#830-10-55-17) Pending content: no Source downloaded (UTC): 2026-09-10T01:46:26.217Z to 2026-09-10T01:46:26.217Z Record version: sha256:c28a13ea8c138f5bd127002c967109ca5cf6d689d37886e86ae432a2c32b8224 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. [Paragraph superseded by Accounting Standards Update No. 2015-11](https://asc.understandingaccounting.org/updates/asu-2015-11/). ##### [830-10-55-18](https://asc.understandingaccounting.org/asc/830/10/#830-10-55-18) Pending content: no Source downloaded (UTC): 2026-09-10T01:46:26.217Z to 2026-09-10T01:46:26.217Z Record version: sha256:c113487c80ca7a3486d8fe531e95e4cff29f63f5a2f1bae71ec61e941f431121 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Assume the net realizable value of the unit of inventory is BR 560 (measured in functional currency, FC 1,120). Because net realizable value as measured in the functional currency (FC 1,120) is less than historical cost as measured in the functional currency (FC 1,200), an inventory write-down of FC 80 is required in the functional currency financial statements. ##### [830-10-55-19](https://asc.understandingaccounting.org/asc/830/10/#830-10-55-19) Pending content: no Source downloaded (UTC): 2026-09-10T01:46:26.217Z to 2026-09-10T01:46:26.217Z Record version: sha256:559e4d3d8f5f72b75fb5fa23ae65fda2c3d0aa8f6af3092a82f0dafa4e3efcc4 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Assume the net realizable value at the foreign subsidiary's balance sheet date is BR 620. Because net realizable value as measured in the functional currency (BR 620 x FC 2.00 = FC 1,240) exceeds historical cost as measured in the functional currency (BR 500 x FC 2.40 = FC 1,200), an inventory write-down is not required in the functional currency financial statements. ##### [830-10-55-20](https://asc.understandingaccounting.org/asc/830/10/#830-10-55-20) Pending content: no Source downloaded (UTC): 2026-09-10T01:46:26.217Z to 2026-09-10T01:46:26.217Z Record version: sha256:d89a6e3c530e6469feefe1da9fd54a61ccf88fc0e4aaf61b6025319311f7f43a Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. [Paragraph superseded by Accounting Standards Update No. 2015-11](https://asc.understandingaccounting.org/updates/asu-2015-11/). ##### [830-10-55-21](https://asc.understandingaccounting.org/asc/830/10/#830-10-55-21) Pending content: no Source downloaded (UTC): 2026-09-10T01:46:26.217Z to 2026-09-10T01:46:26.217Z Record version: sha256:04b245b7f8a2f4a806d5e9059f9ed8234853b3c95d357352c927da6771227643 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. [Paragraph superseded by Accounting Standards Update No. 2015-11](https://asc.understandingaccounting.org/updates/asu-2015-11/). ##### [830-10-55-22](https://asc.understandingaccounting.org/asc/830/10/#830-10-55-22) Pending content: no Source downloaded (UTC): 2026-09-10T01:46:26.217Z to 2026-09-10T01:46:26.217Z Record version: sha256:0cd8503bcee0660b5400f174a1f6bd02c64dbf9adbd11c19104dfab372d2277f Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. [Paragraph superseded by Accounting Standards Update No. 2015-11](https://asc.understandingaccounting.org/updates/asu-2015-11/). ##### [830-10-55-23](https://asc.understandingaccounting.org/asc/830/10/#830-10-55-23) Pending content: no Source downloaded (UTC): 2026-09-10T01:46:26.217Z to 2026-09-10T01:46:26.217Z Record version: sha256:5a03234234ca03623b4c5ec661144e60f907db260636e789b18e9cc6cab7f6d8 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The following Cases illustrate the application of paragraph [830-10-45-12](https://asc.understandingaccounting.org/asc/830/10/#830-10-45-12): 1. a The cumulative 3-year inflation rate exceeds 100 percent (Case A). 2. b The cumulative 3-year inflation rate drops below 100 percent but no evidence suggests that drop is other than temporary (Case B). 3. c The cumulative 3-year inflation rate drops below 100 percent after having spiked above 100 percent (Case C). ##### [830-10-55-24](https://asc.understandingaccounting.org/asc/830/10/#830-10-55-24) Pending content: no Source downloaded (UTC): 2026-09-10T01:46:26.217Z to 2026-09-10T01:46:26.217Z Record version: sha256:98e084bf1082f3ed8368cafd568301ed50eed6a80a3cbb86a0ca4e894381cb78 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Country A's economy at the beginning of 19X9 continues to be classified as highly inflationary because the cumulative 3-year rate is in excess of 100 percent (see the following table). The recent trend of declining inflation rates should not be extrapolated to project future rates to overcome the classification that results from the calculation. - ![ ](https://asc.understandingaccounting.org/asc-img/GUID-EDD6B085-D893-4CB5-B65F-06DE4339DA3A-low.gif) Fiscal Year X1 X2 X3 X4 X5 X6 X7 X8 Annual inflation rate 9% 8% 12% 17% 33% 52% 30% 15% Cumulative three-year rate (a) 32% 42% 74% 137% 163% 127% (a) Amounts are calculated as a compounded three-year inflation rate. ##### [830-10-55-25](https://asc.understandingaccounting.org/asc/830/10/#830-10-55-25) Pending content: no Source downloaded (UTC): 2026-09-10T01:46:26.217Z to 2026-09-10T01:46:26.217Z Record version: sha256:391d022da41eec3d09f40fc282a7768b2e6c384e5e476571732006e14efa7eb5 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Country B's economy at the beginning of 19X9 should continue to be classified as highly inflationary even though the cumulative 3-year rate is less than 100 percent (see the following table) because there is no evidence to suggest that the drop below the 100 percent cumulative rate is other than temporary and the annual rate of inflation during the preceding 8 years has been high. - ![ ](https://asc.understandingaccounting.org/asc-img/GUID-9EAFEB43-1449-4E2C-A3CF-99B7F6AE1FA4-low.gif) Fiscal Year X1 X2 X3 X4 X5 X6 X7 X8 Annual inflation rate 15% 28% 46% 41% 35% 29% 23% 21% Cumulative three-year rate (a) 115% 164% 178% 146% 114% 92% (a) Amounts are calculated as a compounded three-year inflation rate. ##### [830-10-55-26](https://asc.understandingaccounting.org/asc/830/10/#830-10-55-26) Pending content: no Source downloaded (UTC): 2026-09-10T01:46:26.217Z to 2026-09-10T01:46:26.217Z Record version: sha256:3c8be43975b6e76d847e26ff5efd4eb6703a0dd105364c66e1b17c8e63051c13 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Country C's economy at the beginning of 19X9 should no longer be classified as highly inflationary because the cumulative 3-year rate is less than 100 percent (see the following table) and the historical inflation rates suggest that the prior classification resulted from an isolated spike in the annual inflation rate. - ![ ](https://asc.understandingaccounting.org/asc-img/GUID-900780E7-FA32-4899-8D27-C1D97250FA39-low.gif) Fiscal Year X1 X2 X3 X4 X5 X6 X7 X8 Annual inflation rate 5% 6% 4% 7% 12% 55% 18% 6% Cumulative three-year rate (a) 16% 18% 25% 86% 105% 94% (a) Amounts are calculated as a compounded three-year inflation rate.