Foreign Entity

Summary of Foreign Entity

Within the meaning of financial Accounting Standards Board Statement No. 8 (read this and related legal terms for further details) relative to accounting for foreign currency transactions, aforeign entity is an affiliated firm whose financial statements are prepared in a functional currency other than that used by the reporting enterprise. An example would be the case of a Belgian subsidiary (foreign entity) that maintains its accounts in Belgian francs (functional currency) rather than in the U.S. dollars employed by the reporting enterprise, i.e., the parent U.S. corporation.

(Main Author: William J. Miller)