Chapter 7 - Foreign Currency In Individual Financial Statements

Question 1

What is the definition of functional currency?

Answer 1

Functional currency is the currency of the primary economic environment in which an entity operates

Question 2

What are the primary factors of determining functional currency?

Answer 2

• currency influences sales prices

- currency that influences labour, material and other costs

Question 3

What are the secondary factors of determining functional currency?

Answer 3

• currency in which finance is obtained

- currency in which operating receipts are retained

Question 4

What does IAS21 define monetary items as?

Answer 4

Assets or liabilities which will lead to the receipt or payment of a determinable number of currency units