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Functional currency
The functional currency is the currency of the primary economic environment in which the entity operates. The primary economic environment in which the entity operates is normally that in which it generates and expends cash.
To determine the functional currency, the entity will consider the selling prices, costs, financing, and deposit factors, as well as its foreign operations. Accordingly, we must evaluate:
A. The currency that fundamentally influences the selling prices of goods or services; and the country whose competitive forces and regulations fundamentally determine the selling prices of its goods and services.
B. The currency that fundamentally influences labor costs, material costs, and other costs of producing goods or supplying services.
C. The currency in which financing activities funds are generated.
D. The currency in which the amounts collected for operating activities are maintained.
Accounting inquiries
What is the functional currency of an exporting mining company with respect to the selling price factor?
The functional currency of an exporting mining company with respect to the selling price factor is the US dollar.
The price of minerals is determined on international metal exchanges based on global supply and demand. This price is expressed in US dollars.
Functional currency: What is it? What is the functional currency of an exporting mining company, with respect to the selling price factor?
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