QUESTION 1: Determination of functional currency (10 MARKS)

ABC Ltd is an Australian company that is listed on the Australian and US stock exchanges. The company has established a number of sportswear factories in Thailand, Vietnam, China, Indonesia and Australia.

Materials and labour are typically acquired in the local currencies, however, all acquisitions of plant and equipment are denominated in US dollars.

All sales of clothing are denominated in US dollars and all borrowing tends to be done in US dollars and come from US-based banks.

Most equity capital has been raised within Australia, although in recent years there has been a trend towards issuing new shares on the US stock exchange.

In terms of current shareholdings, 85% of issued shares are held by Australian shareholders. The balances are held by US residents (10%) and UK residents (5%).

Required:

(a) Determine the functional currency of ABC Ltd.

(b) Determine the presentation currency of ABC Ltd.