Question 3 (Continued) (B) Foreign currency translation adds additional complexity to the preparation of financial statements. The financial statements are made less transparent, because the translation itself is not visible to the users of financial statements. There is a choice of exchange rates and applicable translation principles in which the transactions in the financial statements are measured. The functional currency of a company reflects the underlying transactions, events and conditions that are relevant to the company. Required: Discuss the factors that a company should consider when determining its functional currency and explain what the reporting requirements for foreign currency transactions. (8 marks)