RD operates in Country A and has established the A$ as its functional currency. RD acquired a piece of machinery from an overseas supplier at a cost of B$5 million on 20 November 20X3. The invoice remained unpaid at the year ended 31 December 20X3. Relevant exchange rates (where A$/B$ 2.00 means A$1 = B$2.00) are:

20 November 20X3 ........  A$/B$2.00

31 December 20X3 ........  A$/B$2.15

Required:

In accordance with IAS 21 The Effects of Changes in Foreign Exchange Rates: 

(i) Explain how RD would have established the A$ as its functional currency

(ii) Calculate the amounts to be included in the financial statements of RD for the year to 31 December 20X3 in respect of the above transaction.