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Under Ind AS 21, the PRIMARY indicators for functional currency are:
AThe country of incorporation only
B(i) The currency that mainly influences sales prices for goods/services + the currency of the country whose competitive forces and regulations mainly determine the sales prices; AND (ii) The currency that mainly influences labour, material and other costs
CThe currency in which financial statements are PRESENTED + the currency in which the parent reports
DThe currency in which financing activities are denominated + the currency in which operating receipts are retained
Answer & Solution
Correct answer: B. (i) The currency that mainly influences sales prices for goods/services + the currency of the country whose competitive forces and regulations mainly determine the sales prices; AND (ii) The currency that mainly influences labour, material and other costs
Primary indicators are about price-determining currency (sales side + cost side). Secondary indicators (financing, operating receipts retention) are supporting evidence used only when primary indicators are mixed.
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