# ASC 830-20-40: Foreign Currency Matters — Foreign Currency Transactions — 40 Derecognition

Source: FASB Accounting Standards Codification, Basic View

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## ASC 830-20-40: 40 Derecognition

[Read section](https://asc.understandingaccounting.org/asc/830/20/#40-derecognition)

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##### [830-20-40-1](https://asc.understandingaccounting.org/asc/830/20/#830-20-40-1)

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A [transaction gain or loss](https://asc.understandingaccounting.org/glossary/t/#transaction-gain-or-loss "Transaction gains or losses result from a change in exchange rates between the functional currency and the currency in which a foreign currency transaction is denominated. They represent an increase or decrease in both of the following: The actual functional currency cash flows realized upon settlement of foreign currency transactions The expected functional currency cash flows on unsettled foreign currency transactions.") (measured from the [transaction date](https://asc.understandingaccounting.org/glossary/t/#transaction-date "The date at which a transaction (for example, a sale or purchase of merchandise or services) is recorded in accounting records in conformity with generally accepted accounting principles (GAAP). A long-term commitment may have more than one transaction date (for example, the due date of each progress payment under a construction contract is an anticipated transaction date).") or the most recent intervening balance sheet date, whichever is later) realized upon settlement of a [foreign currency transaction](https://asc.understandingaccounting.org/glossary/f/#foreign-currency-transactions "Transactions whose terms are denominated in a currency other than the entity's functional currency. Foreign currency transactions arise when a reporting entity does any of the following: Buys or sells on credit goods or services whose prices are denominated in foreign currency Borrows or lends funds and the amounts payable or receivable are denominated in foreign currency Is a party to an unperformed forward exchange contract For other reasons, acquires or disposes of assets, or incurs or settles liabilities denominated in foreign currency.") generally shall be included in determining net income for the period in which the transaction is settled. The exceptions to this requirement for inclusion in net income of transaction gains and losses are set forth in paragraph [830-20-35-3](https://asc.understandingaccounting.org/asc/830/20/#830-20-35-3) and pertain to certain intra-entity transactions and to transactions that are designated as, and effective as, economic hedges of net investments.