Functional currency file: indicators, documented judgement, change and disclosures

Context

Groupe Solenne SA (fictitious entity), which presents consolidated financial statements in euros, is preparing the closing of 31 December 20X6. The file covers five situations: the functional currency of Norvik Distribution AS (fictitious entity, acquired on 1 January 20X6, Norway) and the loan the parent granted it, the purchase of a plot of land paid in a non-exchangeable currency, the translation of Norvik's statements with its goodwill, the translation of a subsidiary in a hyperinflationary economy (Qadira Retail SA, fictitious entity) and two disposals (Tamar Services Ltd and Hudson Pack Inc., fictitious entities). Teaching simulation: the review trail of the file (preparation, reviewer notes and final sign-off) is simulated for demonstration purposes; it is neither a real review nor a validation of the content.

Assignment

Functional currency file

Purpose of the workpaper

Describe the entity's facts (selling prices, costs, financing, receipts), enter the indicators observed in the grid, review them starting with the primary indicators, justify the conclusion (professional judgement, no threshold imposed), then prepare the disclosures. If the functional currency changes, translate the amounts at the rate of the date of the change.

Questions of the file covered by this workpaper

• Justify the functional currency of Norvik (mixed indicators).
• Translate the capital of Norvik at the rate of 1 January 20X6.

• ScheduleProfile of NorvikOpen
• ContractLoan agreement with NorvikOpen
• ScheduleRates given by the caseOpen
• ScheduleNorvik statements in NOKOpen
• ContractAcquisition file of NorvikOpen
• InvoiceInvoice and deed of purchase of the landOpen
• MemoNote on QadiraOpen
• MinutesBoard minutesOpen
• ContractDisposal agreementsOpen
• MemoMoving costsOpen