The functional currency of an entity:

Question

Quizplus · Accepted Answer

The functional currency of an entity can change if there is a change in underlying transactions, events, and conditions which determine the functional currency. This may happen if there is a change in the nature of the entity's operations or if there is a change in the economic environment in which the entity operates. The change may be triggered by external factors or by changes in internal processes. Therefore, it is important to reassess the functional currency of an entity periodically. A and D are incorrect because the functional currency can change, and B is not true as it is not necessary to reassess the functional currency every year unless there has been a significant change in the underlying transactions, events, and conditions.

The Functional Currency of an Entity