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On the Radar

Foreign Currency Matters

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On the Radar
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 do four things: