Deloitte
Accounting Research Tool
...
Chapter 5 — Foreign Currency Translations

5.2 Translation Process

5.2 Translation Process

ASC 830-30 defines foreign currency translation as the “process of expressing in the reporting currency of the reporting entity those amounts that are denominated or measured in a different currency.” The translation guidance outlined in this chapter applies to an entity’s functional-currency-based results.

Footnotes

1
The glossary in ASC 220-10 indicates that the term “comprehensive income” encompasses all components of net income as well as all components of OCI and that OCI refers to “revenues, expenses, gains, and losses that [under GAAP] are included in comprehensive income but excluded from net income.”
2
Upon adopting FASB Statement 158 (codified in ASC 715), companies and their subsidiaries (domestic and foreign) were required to recognize the funded status of their defined benefit plans. Accordingly, previously unrecognized amounts (including gains or losses, prior service costs or credits, and transition assets or obligations) were recorded, net of tax, as a component of AOCI. However, FASB Statement 158’s recognition provisions did not change how net periodic benefit cost is measured or recognized in an entity’s financial statements.
After adoption of FASB Statement 158, ASC 715-30-35 and ASC 715-60-35 required that prior service costs or credits, and gains or losses, respectively, that arise during the period, and that are not immediately recognized as a component of net periodic benefit cost, be recognized as a component of OCI. Such amounts will ultimately be reclassified to net periodic benefit cost in subsequent periods. Accordingly, upon consolidation, parent companies with foreign subsidiaries that sponsor defined benefit plans will need to consider the impact of ASC 830 on the amounts recorded in, and reclassified from, AOCI.