Fortune Ltd is a Hong Kong company that is listed on the Hong Kong and London stock exchanges. The company has established a number of sportswear factories in the Philippines, Indonesia, Vietnam, China and Australia. Materials and labor are typically acquired in the local currencies; however, all acquisitions of plant and machinery are denominated in UK pounds. All sales of clothing are denominated in UK pounds and all borrowing tends to be done in UK pounds and come from UK- based banks. Most equity capital has been raised within Hong Kong, although in recent years there has been a trend towards issuing new shares on the London Stock Exchange.

In terms of current shareholding, 82% of issued shares are held by Hong Kong shareholders. The balance is held by UK residents (12%) and US residents (6%).

Required

(a) Determine the functional currency of Fortune Ltd. 

(b) Determine the presentation currency of Fortune Ltd.

Answer rating: 100% (QA)

a The functional currency of Fortune Ltd will depend on the primary economic environment in which it ... View the full answer