IAS 21 The Effecrs on Changes in Forex

Question 1

Define Functional Currency

Answer 1

The currency of the primary economic environment in which the entity operates

Question 2

Define Presentation Currency

Answer 2

The currency in which the financial statements are presented

Question 3

Functional Currency is determined by following the hierarchy below:

Answer 3

a. Currency that determines the sales price of goods and services
b. Currency that determines the competitive forces and regulations for goods and services
c. Currency that determines the costs of labour, materials and other costs.

Question 4

Secondary indicators

Answer 4

a. The currency in which funds from financing activities are generated
b. The autonomy of a foregin operation from the reporting entity, the level of transactions between the entities