Wesfarmers notes that the functional currency and presentation currency of Wesfarmers Ltd and its Australian subsidiaries are the Australian dollar while in the second case it says Wesfarmers lists its overseas subsidiaries and their functional currencies which didnt mention presentation currency in it, and can you please give me the reason in it? n

case 2

 

In its 2017 annual report (note 19) Wesfarmers lists its overseas subsidiaries and their functional currencies. These include Bunnings (NZ) Ltd for which the functional currency is the New Zealand dollar (NZD), and KAS Global Trading Pty Ltd for which the functional currency is the Hong Kong dollar (HK$).

 

Required

What is meant by 'functional currency'? How is it determined?

 

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