Asked by giannah alessandra on Jul 02, 2024
Verified
According to AASB 121 The Effects of Changes in Foreign Exchange Rates, the currency in which the financial statements are presented by the reporting entity is the:
A) economic currency.
B) domestic currency.
C) functional currency.
D) presentation currency.
AASB 121
Specifies the requirements for accounting for foreign exchange rates and their effects on foreign currency transactions, including translation of foreign currency financial statements into the entity's presentation currency.
Presentation Currency
The currency in which the financial statements of an entity are presented.
- Identify the differences between functional currency, presentation currency, and their implications for financial reporting.
Verified Answer
AF
alexis flores7 days ago
Final Answer :
D
Explanation :
According to AASB 121, the currency in which the financial statements are presented by the reporting entity is the presentation currency. This is the currency used to report and communicate the financial information to users. The reporting entity must also determine its functional currency, which is the currency of the primary economic environment in which it operates, and use that currency for its accounting records. However, the financial statements may be presented in a different currency, which is referred to as the presentation currency.
Learning Objectives
- Identify the differences between functional currency, presentation currency, and their implications for financial reporting.