Under IAS 21, which of the following is NOT a factor in determining functional currency?
A) It is the currency that influences sales prices for goods and services.
B) It is the currency that mainly influences labor, material and other costs of providing goods and services.
C) It is the currency least likely to experience hyperinflation.
D) It is the currency in which funds from financing activities are generated.

Question

Quizplus · Accepted Answer

IAS 21 does not consider the likelihood of hyperinflation in a currency as a factor for determining the functional currency. The functional currency is determined based on the primary economic environment in which the entity operates, which includes factors like the currency that influences sales prices and costs (A and B) and the currency in which financing activities are conducted (D).

Under IAS 21, Which of the Following Is NOT a Factor