Q2.

(a)

Setia Bhd purchased a plant from a foreign entity for USD 18 million on 31 May 2020 when the exchange rate was USD2.00 to RM1. The entity also sells goods to a foreign customer for USD10.5 million on 30 September 2020, when the exchange rate was USD1.75 to RM1. At the entitys year end of 31 December 2020, both amounts are still outstanding and have not been paid. The closing exchange rate was USD1.50 to RM1.

Required:

1. Explain the definition of functional currency and how it differs from local currency and presentation currency. (6 marks)