Development of Functional Currency in The International Accounting Standards

Abstract

Economic risk and opportunities resulted from accelerating globalization in the world economy resulted in important effects on the accounting theories, accounting standards and in practice in both national and international level. One of the important problems facing the multinational corporations is negative the effect of the exchange rates fluctuations on their financial statements. In order to overcome this problem, ?Functional Currency? concept and its application were introduced by the Financial Accounting Standard, No: 52 (FAS 52) issued by The Financial Accounting Standards Board (FASB) in 1981 in the United States. Main aim of this study is to investigate development of functional currency in international accounting standards.