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IAS-21

Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA FR Exams › IAS-21

  • This topic has 1 reply, 2 voices, and was last updated 3 months ago by P2-D2.
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  • March 7, 2022 at 9:51 pm #650131
    maximus07
    • Topics: 374
    • Replies: 379
    • ☆☆☆☆

    Can you explain this point?
    Background :: These points are considered when determining functional currency.

    “The currency of the country whose competitive forces and regulations mainly determine the sales price of goods and services.”

    Please explain the quoted sentence, thank you.

    March 8, 2022 at 8:54 am #650181
    P2-D2
    Keymaster
    • Topics: 4
    • Replies: 6115
    • ☆☆☆☆☆

    Hi,

    So, it would apply to a business where it operates in a country that has its own currency but the business’s trade is say in oil/gas, which the price of which is very much determined by the $USD. Also the equipment required to purchase the oil extraction equipment is denominated in $USD, so even though the business operates in a country which has its own current (say Nigeria and its Naira) the functional currency of the business would be the $USD.

    Don’t worry too much as you won’t see this in FR but it could be seen in SBR for instance.

    Thanks

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