Assignment Problem: Determination of functional currency
Case Scenario: 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-to-day decision making of the operation. The operation purchases parts from various non-related Australian manufacturers for assembly by Korean labour. 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.
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