IAS-21 Functional Currency

Question 1

Define functional currency

Answer 1

• The currency of the primary economic environment where the entity operates.
• This is usual the local currency.

Question 2

Factors in determining functional currency (5)

Answer 2

• Currency that influences sales price for G+S
• Currency of country who’s regulations and market determine sales price for G+S
• Currency that influences labour, materials etc.
• Currency in which funding from equity and debt is generated.
• Currency in which receipts from operating activities are kept.

Question 3

Define Presentation currency

Answer 3

• Currency in which the entity produces its F/S.

- Can be different to the functional currency.