Dianthus Ltd is a multinational company with headquarters in Queensland, Australia. It is, however, listed on...

 

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Dianthus Ltd is a multinational company with headquarters in Queensland, Australia. It is, however, listed on both ASX (Australian Securities Exchange) and SZSE (Shenzhen Stock Exchange). It manufactures and sells furniture worldwide. Most of its products are manufactured in China, where it obtains local materials and labour. Its sales are invoiced in Australian dollars. Some other information about the company is displayed below. Sales breakdown by geographical segments 2019 2018 Sales in Australia 1.5 billion AUD 1.46 billion AUD Sales in China 5.2 billion CNY 4.8 billion CNY Sales to the rest of the world 0.2 billion AUD 0.3 billion AUD Value of listings on securities / stock exchanges ASX Number of shares Price per share 1,000,000 23.4 AUD SZSE 12,000,000 2.5 CNY In the tables above, AUD refers to Australian dollars, whereas CNY refers to Chinese Yuan, and the approximate exchange rate is 1 AUD = 5 CNY REQUIRED: What do you think is the functional currency of Dianthus Ltd? Discuss your answers in detail, with references to the information given above, and in accordance with AASB 121 'The Effects of Changes in Foreign Exchange Rates'. Dianthus Ltd is a multinational company with headquarters in Queensland, Australia. It is, however, listed on both ASX (Australian Securities Exchange) and SZSE (Shenzhen Stock Exchange). It manufactures and sells furniture worldwide. Most of its products are manufactured in China, where it obtains local materials and labour. Its sales are invoiced in Australian dollars. Some other information about the company is displayed below. Sales breakdown by geographical segments 2019 2018 Sales in Australia 1.5 billion AUD 1.46 billion AUD Sales in China 5.2 billion CNY 4.8 billion CNY Sales to the rest of the world 0.2 billion AUD 0.3 billion AUD Value of listings on securities / stock exchanges ASX Number of shares Price per share 1,000,000 23.4 AUD SZSE 12,000,000 2.5 CNY In the tables above, AUD refers to Australian dollars, whereas CNY refers to Chinese Yuan, and the approximate exchange rate is 1 AUD = 5 CNY REQUIRED: What do you think is the functional currency of Dianthus Ltd? Discuss your answers in detail, with references to the information given above, and in accordance with AASB 121 'The Effects of Changes in Foreign Exchange Rates'.

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As per AASB 121 functional currency is the currency of the primary economic environment in which the ... View the full answer