The functional currency according to IAS 21 the effects of changes in foreign exchange rates is the currency of the primary economic environment where the entity operates.
Required:
Identify THREE factors in accordance with IAS 21 that an entity will consider in determining its functional currency. (3 marks)
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i. The currency that mainly influences sales prices for goods and services.
ii. The currency of the currency whose competitive forces and regulations mainly determine the sales price of goods and services.
iii. The currency that mainly influences labour, material and other costs of providing goods and services.
iv. The currency in which funding from issuing debt and equity is generated.
v. The currency in which receipts from operating activities are usually retained. (Any 3)