Part B (5 marks)
OPI Ltd is a Hong Kong-owned company which is incorporated in Bermuda, with its registered office in Bermuda and head office in Hong Kong. All its factories are located in China and its products are manufactured and traded in China. The operation is financed by Hong Kong investors in Chinese RMB.
Required: Determine OPI’s functional currency. Justify your answer by referring to HKAS 21: The Effects of Changes in Foreign Exchange Rates.
[5 marks]
As Per HKAS 21:
Functional currency, i.e. the currency of the primary economic environment in which the entity operates. Presentation currency, i.e. the currency in which financial statements are presented.
Accordingly the OPI Ltd. functional currency is Chinese RMB as OPI Ltd. primarily operates in China i.e. All its factories are located in China and its products are manufactured and traded in China.
Part B (5 marks) OPI Ltd is a Hong Kong-owned company which is incorporated in Bermuda,...
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