What to know about the functional currency approach

Foreign currency matters

Many entities operate in multiple countries. When an entity’s financial statements include foreign operations, the entity must consolidate those foreign entities and present them as though they were the financial statements of a single reporting entity. This process of translating the accounts of foreign entities is addressed in ASC 830, which has existed for decades without recent substantial changes, and is known as the "functional currency approach."

Under the functional currency approach, a reporting entity must perform four steps:

Continue your foreign currency learning

Deloitte’s Roadmap Foreign Currency Matters comprehensively discusses the scope, measurement, and disclosure guidance in ASC 830.