distinguish among presentation (reporting) currency, functional currency, and local currency;
The reporting currency is a money in which the accounts or other financial records of an organization are revealed. It is simple to interpret financial information in general by picking one currency to notice. The currency in which the parent firm is legally enrolled is most often the currency.
Popular to multinationals, functional currency means the main economic environment where an institution produces and expends cash. It is the principal currency in which an enterprise operates. The main currency of a Corporation is the functioning currency. As firms operate in several currencies but disclose their financial statements in one exchange rate, they have to convert foreign currencies into functional currencies. The regulations for the translation of foreign currency into accounts are laid down by the International Accounting Standards (IAS) and the GAAP.
Step by step
Solved in 4 steps
