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Foreign currency

Currency

1.1 Definitions

Functional Currency

‘the currency of the primary economic environment in which an
entity operates’ (IAS 21, para 8).

Presentation Currency

‘the currency in which the financial statements are presented’ (IAS
21, para 8).

1.2 Factors influencing functional currency

 the currency that influences sales prices

 the currency that influences labour, material and other costs.

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