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Question 4 (800 words) Nadi Ltd is a company based in Fiji. It is a wholly owned subsidiary of Kiwi Ltd, which is a New
Question 4 (800 words) Nadi Ltd is a company based in Fiji. It is a wholly owned subsidiary of Kiwi Ltd, which is a New Zealand company. Nadi Ltd buys tropical produce from local farmers (its main input to production), prepares it as 'food hampers', which it sells to five-star resorts operating in Fiji. The company employs local Fijian people in its kitchens and production facilities. The resorts are invoiced in Fijian dollars. Required: Imagine that you are a recent graduate working for an accounting practice. Your manager has asked you to draft a business letter (see later discussion) to the CEO of Kiwi Ltd, in which identify the functional currency for Nadi Ltd and explain the factors that justify that choice. In your answer, you are expected to explain the requirements of AASB 121 The Effects of Changes in Foreign Exchange Rates. Writing style: You are writing to a business manager in this letter and your writing style should reflect it. The letter of advice needs to explain the relevant requirements in language and style appropriate for business managers. You should NOT be quoting accounting standards or using technical accounting language. You should not need to provide references in this business letter. The letter will be signed by your manager in this fictious accounting practice
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