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This was an interesting question, where the autonomy of the sub played the main role to determine the functional currency.
i do have a couple of questions on this:
1. if the sub was based in a country whose currency was the dinar (and all other factors remaining the same), would the functional currency have been dollar?
2. if, in the given scenario, the sub had the autonomy to make its investment decisions, then the functional currency will be dollar?
3. as a general note, it seems autonomy is an umbrella under which all the factors of IAS 21 are applied. is this correct?
regards and thanks in advance
Hi,
The holiday was good thanks.
1. If all factors remain the same then the currency would be the dollar, as per the model answer.
2. If the subsidiary was responsible for its own decisions then yes the currency would be the dinar and not the dollar.
3. Autonomy is an additional factor to consider in determining the functional currency. If there is autonomy then the subsidiary has responsibility for its own decisions and is not merely just an extension of the reporting entity.
Thanks
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