weighted average exchange rate

This subtopic tells an entity with foreign currency transactions or foreign operations how to translate cash flows in the statement of cash flows. Foreign currency cash flows are reported at the reporting currency equivalent using the exchange rates in effect at the time of the cash flows (a weighted-average rate may be used if the result is substantially the same). The effect of exchange rate changes on cash, cash equivalents, and restricted cash held in foreign currencies is shown as a separate part of the reconciliation of the change in total cash for the period.

ASC 830-10 sets the scope and foundational framework for foreign currency accounting: it requires each foreign entity's assets, liabilities, and operations to be measured in that entity's functional currency—the currency of the primary economic environment in which it operates (830-10-45-2)—before amounts are translated into the reporting currency. It supplies the economic indicators (cash flow, sales price, sales market, expense, financing, and intra-entity indicators in 830-10-55-5) that management weighs to identify the functional currency, mandates remeasurement of books of record not kept in the functional currency using historical rates for specified nonmonetary items (830-10-45-17 through 45-18), and requires entities in highly inflationary economies (cumulative 3-year inflation ≈100% or more) to be remeasured as if the reporting currency were the functional currency (830-10-45-11).