Question

indicators pointing towards the reporting entity's as the functional currency include that which of the following?

1) production costs and operating expenses are determined primarily by local conditions

2) sales are mostly in the county of the reporting entity

3) there are active local markets, although there may be significant amounts of exports

4) prices are not primarily responsive in the short term to exchange rate changes

Answer 1

Q.indicators pointing towards the reporting entity's as the functional currency include that which of the following?

1) production costs and operating expenses are determined primarily by local conditions

2) sales are mostly in the county of the reporting entity

3) there are active local markets, although there may be significant amounts of exports

4) prices are not primarily responsive in the short term to exchange rate changes

Ans:

International Accounting Standards (IAS) and U.S. Generally Accepted Accounting Principles (GAAP) offer guidance for the translation of foreign currency transactions and financial statements. Perhaps, SFAS 52 which introduced the concept, best sums up functional currency: "the currency of the primary economic environment in which the entity operates; normally, that is, the currency of the environment in which an entity primarily generates and expends cash."

so the answer is 4