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. The determination of functional currency is based on the currency that mainly influences the entity's sales prices for goods and services, as well as the currency of the country in which it primarily operates. Any change in these factors can lead the entity to change its functional currency. A change in the management or foreign currency transactions by the parent entity may not necessarily lead to a change in the functional currency. The functional currency does not have to be assessed and changed annually unless there is a change in the underlying transactions, events, and conditions.

The Functional Currency of an Entity