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Hi, John
In question 2(iii) we are asked to computes gain/loss on Namel’s Statement of fin.position due to devaluation of currency.
Namel is a subsidiary of Lignum. Namel’s currency is MR. But in the answer they calculated translation loss which effects the Lignum’s financial statements in Euro.
Could you please explain why?The wording is a bit confusing, but it is because the report is being written for the treasury division of Lignum and since they work in Euros they are bothered about the effect of Namel in euros.
The examiner should have asked about the effect on the consolidated statements, I think.
Thank you very much.
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