Reference no: EM132956569

Problem 1: What is the rationale behind the choice of an exchange rate as an entity's functional currency?

Problem 2: How are statement of profit or loss and other comprehensive income items translated from the local currency into the functional currency?

Problem 3: The accounts listed below are for a wholly owned foreign subsidiary. In the space provided indicate the exchange rate that would be used to translate the accounts into Australian dollars. Use the following letters to indicate the appropriate exchange rate:

H - historical exchange rate

C - current exchange rate at the end of the current period

A - average exchange rate for the current period.