Foreign currency

Foreign currency accounting continues to be a topic of interest because of increased foreign exchange rate volatility and certain countries with high inflation and multiple exchange rates.

The basic foreign exchange guidance, now codified in ASC 830, was first issued back in 1981 as FAS 52. It provides a model for reporting when an entity conducts transactions in more than one currency. The entity prepares financial statements in a single currency, which requires that changes in the relationship between different units of currency be recognized and measured. ASC 830 uses two processes to express all of a reporting entity’s transactions in a single reporting currency: foreign currency measurement and foreign currency translation.

Foreign currency measurement is the process by which an entity expresses transactions whose terms are denominated in a foreign currency in its functional currency. Changes in functional currency amounts that result from the measurement process are called transaction gains or losses; transaction gains and losses are included in net income.

Foreign currency translation is the process of expressing a foreign entity’s functional currency financial statements in the reporting currency. Translation adjustments are included in the cumulative translation adjustment (CTA) account, which is a component of other comprehensive income.


Foreign currency volatility

6/15/15 | Assurance services

Foreign currency volatility is impacting companies across all industries. PwC’s Valerie Wieman and John Horan discuss the driving forces, risk management hedging strategies, and disclosure considerations. View


Accounting guides

Foreign currency – 2014 accounting and financial reporting guide

12/8/14 | Assurance services
  • Podcast
    Episode 4: Cross Border Acquisitions

    Assurance services

    Doing an acquisition overseas? Listen to learn some unique points to consider in a cross border acquisition.

  • US Real Estate Insights: Summer 2015

    8/10/15 | Real estate

    This issue continues to build on the theme of investing globally, and features an article that discusses the flow of capital into US markets from foreign investors. In “The New Sources of US Real Estate Capital”, Jack Keating discusses which nations have been investing in the US markets and the challenges these investors face as they increase their allocations to US markets.

  • In the loop
    In the loop: Greece's bailout - Financial reporting considerations

    7/24/15 | Assurance services

    PwC examines the financial reporting implications of Greece's bailout package.

  • Accounting guides
    Financial statement presentation guide - 2014 second edition (updated June 2015)

    7/22/15 | Assurance services

    PwC's popular Financial statement presentation guide addresses U.S. GAAP presentation and disclosure requirements of common balance sheet and income statement accounts.

  • Video
    Foreign currency volatility

    6/15/15 | Assurance services

    Foreign currency volatility is impacting companies across all industries. PwC’s Valerie Wieman and John Horan discuss the driving forces, risk management hedging strategies, and disclosure considerations.

  • Quarter close
    The quarter close — Second quarter 2015: Publication and video perspectives

    6/15/15 | Assurance services

    This edition features recent business, FASB and regulatory developments, including mitigating foreign currency volatility, the SEC's pay-for-performance proposal, developments in the new revenue recognition standard, US GAAP accounting simplifications, and more.

  • Webcast
    Foreign Currency Considerations in Acquisitions and Dispositions webcast - On demand (CPE-eligible)

    Assurance services

    In this recorded webcast, foreign currency professionals from PwC's National Office and the Capital Markets Accounting Advisory Services practice discuss key considerations for multinational companies with foreign operations regarding the impact that acquisitions and dispositions can have on functional currency determination, recording of goodwill, release of CTA and substantial liquidation of foreign entities. Watch a replay or participate in the on demand (CPE-eligible) version of this webcast.

  • In the loop
    In the loop: Financial reporting implications of foreign currency volatility - what can your company do?

    4/6/15 | Assurance services

    PwC offers suggestions for how the financial statement impact of recent foreign currency volatility may affect disclosure.

  • In brief
    In brief: Consolidation and disclosure related to Venezuelan operations

    1/13/15 | Assurance services

    The SEC did not object to deconsolidation of a Venezuelan subsidiary due to currency restrictions and lack of control.

  • Accounting guides
    Foreign currency – 2014 accounting and financial reporting guide

    12/8/14 | Assurance services

    Provides a framework and specific examples of how to account for foreign currency transactions and foreign operations.

  • Video
    Venezuela exchange rates

    5/22/14 | Assurance services

    The reporting implications of three legal exchange mechanisms in Venezuela, each with a different exchange rate, are discussed by PwC's Stephanie Stewart, John Bishop and John Horan in a Special Edition of The quarter close.

  • Dataline
    Dataline: Implications of recent events in Venezuela - Multiple legal exchange rates exist as of March 31, 2014

    4/14/14 | Assurance services

    At March 31, 2014, there were three legal exchange mechanisms administered by the Venezuelan government.

  • Video
    Determining functional currency

    3/17/14 | Assurance services

    PwC's Stephanie Stewart, John Bishop, and Michael Yenchek discuss why determining functional currency is fundamental to a company's financial statements and tips for making the assessment.

  • Dataline
    Dataline: Implications of recent events in Venezuela - Modifications to SICAD

    1/24/14 | Assurance services

    In December 2013, the regulation allowing the SICAD auction mechanism was amended to expand its use.

  • Dataline
    Dataline: Cumulative translation adjustment – A compromise to achieve consistency

    5/16/13 | Assurance services

    On March 5, 2013 the FASB issued ASU No. 2013-05, which amends ASC 830, Foreign Currency Matters, and ASC 810, Consolidation,to address diversity in practice related to the release of cumulative translation adjustments ("CTA") into earnings upon the occurrence of certain derecognition events. This Dataline provides an overview of the ASU.

  • EITF observer
    EITF observer: A meeting synopsis - January 2013

    1/21/13 | Assurance services

    At the EITF's January 17 meeting, the Task Force discussed seven Issues, reaching a final consensus on two issues (11-A and 12-D) and consensus-for-exposure on two Issues (13-A and 13-C). Further discussion is expected on three issues (12-B, 12-F and 12-H). This edition of EITF observer provides a synopsis of the meeting.

  • Dataline
    Dataline: Eurozone uncertainties - Financial reporting considerations of a country's exit from the Eurozone

    11/30/12 | Assurance services

    The Eurozone debt crisis continues to persist, leading some to believe that the crisis might result in a country exiting the Euro and adopting a new local currency. Many companies that could be affected by a country's exit from the Euro have started to consider how that might affect their operations, financing, and business strategies. Companies should also consider the financial reporting implications of the creation of a new currency.

  • Tax accounting insights
    Foreign currency tax accounting


    This publication addresses key considerations in applying U.S. GAAP with respect to foreign currency income tax reporting. It is designed to be a reference guide to explore tax accounting for foreign currency. It begins with the “basics” and relevant areas of focus when applying Accounting Standards Codification (ASC) 830, Foreign Currency Matters, and also discusses the application of ASC 740, Accounting for Income Taxes, to foreign currency.