IAS 21 the effects of changes in foreign exchange rates

Question 1

functional currency

Answer 1

the currency of the primary economic environment where the entity operates

Question 2

how to determine functional currency

Answer 2

• the currency that influences sales prices for goods and services
• the currency of the country whose competitive forces and regulations mainly determine the sales price of goods and services
• the currency that mainly influences labour, materials and other costs of providing goods and services
  ALSO CONSIDER SECONDARY FACTORS
  *currency in which funds from financing activities are generated
  currency in which receipts from operating activities are retained