Based on the arguments presented, what do you think should be the functional currency in this case? MINI CASE The Offshore Investment Fund (OIF) was incorporated in Fairfield, Connecticut, for the...

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Based on the arguments presented, what do you think should be the functional currency in this case?

MINI CASE








The Offshore Investment Fund (OIF) was incorporated in Fairfield, Connecticut, for the sole purpose of allowing U.S. shareholders to invest in Spanish securities. The fund is listed on the New York Stock Exchange. The fund custodian is the Shady Rest Bank and Trust Company of Connecticut (?oShady Rest??), which keeps the fund’s accounts. The question of which currency to use in keeping the fund’s books arose at once. Shady Rest prepared the fund’s books in euros, since the fund was a country fund that invested solely in securities listed on the Madrid Stock Exchange. Subsequently, the fund’s auditors stated that, in their opinion, the functional currency should be the U.S. dollar. This case is based on an actual occurrence. Names and country of origin have been changed to ensure anonymity.


Answered Same DayDec 24, 2021

Answer To: Based on the arguments presented, what do you think should be the functional currency in this case?...

David answered on Dec 24 2021
132 Votes
FAS 52 introduced the concept of functional currency, defined as "the currency of the primary economic environment in which th
FAS 52 introduced the concept of functional currency, defined as "the currency of the primary economic environment in which the entity operates; normally, that is, the currency of the environment in which an entity primarily generates and expends cash."
Para 6 of FAS 52 States the “for an entity with Operations that are relatively self-contained and integrated within a particular country, the functional currency generally would be the currency of that...
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