Essay on Codification Definition Of Foreign Currency

1060 Words Nov 6th, 2015 null Page
Codification Definition of Foreign Currency FASB ASC Topic 830-10-20 defines foreign currency as, “A currency other than the functional currency of the entity being referred to (for example, the dollar could be a foreign currency for a foreign entity). Composites of currencies, such as the Special Drawing Rights, used to set prices or denominate amounts of loans, and so forth, have the characteristics of foreign currency.”
What the Codification Requires for Disclosure
ASC 830-20-50 provides three disclosures for foreign currency transactions. The first item, 830-20-50-1, requires a disclosure for aggregate transaction gain or loss that is not disclosed in the financial statements per ASC 830-20-45. This disclosure requires the aggregate transaction gain or loss used in determining net income for the period be disclosed in the notes on the financial statements. The second item, 830-20-50-2, is a disclosure for subsequent rate changes. If a rate change occurs after the date of the financial statements and has an effect on balances related to foreign currency transactions in a significant manner, a disclosure may be necessary. If disclosure is necessary, it shall include consideration of changes in unsettled transactions from the date of financial statements through the date the rate changed. For cases where it is not possible to determine the changes in unsettled transactions, a statement should be provided in the disclosure referencing the fact. The third item,…

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