AASB 121 Requires an Entity to Measure Its Financial Performance

question 10

Essay

AASB 121 requires an entity to measure its financial performance and financial position in its functional currency.What are the indicators of a functional currency? Is the functional currency the same as the presentation currency? Explain your answers.

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Definitions:

International Finance

International finance is the study of monetary interactions that occur between two or more countries, focusing on areas such as foreign exchange markets, international monetary systems, and cross-border investment flows.

Net Exports

The value of a country's total exports minus its total imports, representing the balance of trade.

Trade Surplus

A situation where a country's exports exceed its imports, indicating that it is selling more goods and services to other countries than it is buying.

U.S. Exports

Goods, services, and capital sent from the United States to other countries, contributing to the country's economy.