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a. On 1 January 2022, Plant Limited, established in China ten years ago, acquired a foreign company (Seeds Limited )by means of purchasing 100% of
a. On 1 January 2022, Plant Limited, established in China ten years ago, acquired a foreign company (Seeds Limited )by means of purchasing 100% of share capital of the Seeds Limited. This foreign subsidiary, located in Australia, is engaged in the trading of sophisticated souvenirs which are especially favored by the young generation in Australia. Seeds Limited has a high degree of autonomy in its operation, for instance, it can determine the target market for the sale of products as well as the selling price (in AUD) for different kinds of products. Goodwill arising on the date of acquisition was AUD 3,000. There was an impairment loss of goodwill AUD 200 in the year of 2022 and it was presumed that this impairment occurred throughout the year. The relevant exchange rate is as follows: Required: Before the preparation of the Consolidated Financial Statements on 31 December 2022, explain how the accountant (Princeton) of Plant Limited should deal with the Goodwill figure. (15 marks) b. According to the IAS 21, (i) Explain the concept of Functional Currency. (ii) Explain three factors that can indicate the functional currency of a foreign operation. Give one commercial example for each factor
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