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Discuss the translation process that will occur

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CASE STUDY

In relation to the following case situation, discuss the choice of a functional currency. A Korean operation is a wholly-owned subsidiary of an Australian company which regards the operation as a long-term investment, and thus takes no part in the day today decision making of the operation. The operation purchases parts from various non-related Australian manufacturers for assembly by Korean labor. The finished product is exported to a number of countries but Australia is the major market. Consequently, sales prices are determined by competition within Australia Case Study 2 In its 2016 annual report, Wesfarmers notes that the functional currency and presentation currency of Wesfarmers Ltd and its Australian subsidiaries are the Australian dollar. In Note 19 it lists its overseas subsidiaries. These include Bunnings (NZ) Ltd for which the functional currency is the New Zealand dollar (NZD), and Auridam Botswana (Proprietary) Ltd for which the functional currency is the Pula (BWP).

Required

Problem 1: Discuss the translation process that will occur so that these subsidiaries can be included in the consolidated financial statements of Wesfarmers Ltd.

Reference no: EM132953667

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