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2.2 Definition of a foreign entity
Publication date: 31 May 2022
us Foreign currency guide
The definition of a foreign entity in ASC 830 describes a foreign entity as something not necessarily the same as a legal entity.
Definition from ASC 830-10-20
Foreign Entity: An operation (for example, subsidiary, division, branch, joint venture, and so forth) whose financial statements are both:
- Prepared in a currency other than the reporting currency of the reporting entity
- Combined or consolidated with or accounted for on the equity basis in the financial statements of the reporting entity.
In addition to the criteria in ASC 830-10-20, a consolidated operation must be distinct and separable from the reporting entity’s other foreign operations to be considered a separate foreign entity. Consequently, we refer to a distinct and separable operation whose financial statements are prepared in a currency other than the reporting currency of the reporting entity as a foreign entity. In contrast, a distinct and separable operation whose financial statements are prepared in the reporting currency is referred to as a “domestic entity.”
PwC. All rights reserved. PwC refers to the US member firm or one of its subsidiaries or affiliates, and may sometimes refer to the PwC network. Each member firm is a separate legal entity. Please see www.pwc.com/structure for further details. This content is for general information purposes only, and should not be used as a substitute for consultation with professional advisors.
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