FUNCTIONAL CURRENCY, THE KEY TO EFFECTIVE REPORTING

Functional Currency

Whatever goals you’re trying to achieve, let us be a part of your success.
We’re ready to provide you with professional guidance and reliable service every step of the way. 
Take a look our services and see what we can do for you today.


FUNCTIONAL CURRENCY, THE KEY TO EFFECTIVE REPORTING

FUNCTIONAL CURRENCY

With the fast-paced globalization, companies more often than ever need to be engaged in international trade, cross-border alliances and joint ventures. Businesses are simply no longer confined to their respective countries, thus doing business all across the globe. With the global business also comes the demand for a functional currency, which we’ll gladly handle for you.

Finding a common ground functional currency is crucial

Companies conduct business in the international market for two main reasons:

  1. To buy and/or sell goods and services from/to suppliers/buyers
  2. To conduct business through overseas subsidiaries, branches and associates 

But which functional currency should these companies use when maintaining their accounting records? Which currency should these companies use when preparing and reporting their financial statements? 

That’s where we come into the picture!

A functional currency per definition is “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.”

In other words, the currency in which a corporate entity normally generates and spends cash and in which transactions are usually denominated is called the functional currency. This is also the currency in which accounting records are recorded and financial statements are prepared. All transactions in currencies other than the functional currency (i.e. THB) are treated as transactions in foreign currencies (i.e. USD).

If you ask for our opinion, when it comes to deciding the functional currency of an entity, priority should be given to the primary factors. Secondary factors should also be considered if clear-cut decisions cannot be made based on just the primary factors.

In determining the functional currency, solid managerial judgment is required to determine the currency that most faithfully represents the economic effects of the underlying transactions and events. Are you confused or unsure of what to do? Feel free to get in touch with us at 444 Consultants for a free consultation.

US DOLLAR

USD ( $ )

1 USD = 0.88 EUR
1 USD = 1.37 SGD
1 USD = 31.32 THB

EURO RATE

EUR ( € )

1 EUR = 1.13 USD
1 EUR = 1.54 SGD
1 EUR = 35.44 THB

SINGAPORE DOLLAR

SGD ( S$ )

1 SGD = 0.73 USD
1 SGD = 0.65 EUR
1 SGD = 22.93 THB

THAI BAHT

THB ( ฿ )

1 THB = 0.032 USD
1 THB = 0.028 EUR
1 THB = 0.044 USD