DETERMINATION OF FUNCTIONAL CURRENCY Case A An Indonesian operation manufactures a product using Indonesian materials and labour. Patented processes and senior operations staff are supplied by its Australian parent. Reimbursement invoices for these services are denominated in Australian dollars. The product is sold in the Australian market at a price, denominated in Australian dollars, that is determined by competition with similar locally produced products. The Indonesian operation remits all revenue to the Australian parent, retaining only sufficient cash to meet wages and day-to-day operating costs. The receipt of cash from the Indonesian operation is important to the parent’s cash management function. Long-term financing is arranged and serviced by the parent. Case B A New Zealand operation is a wholly owned subsidiary of an Australian company. The parent regards the operation as a strategic investment and all financial and operational decisions are made by Australian management. The New Zealand operation purchases parts from various non-related Australian manufacturers for assembly in New Zealand. The finished product is exported to a number of countries with Australia as the major market. Consequently, sales prices are determined by competition within Australia. Required In relation to these cases, discuss which currency is the functional currency of the foreign entity.CASE STUDY