CIMA Financial Strategy F3 Question # 63 Topic 7 Discussion

CIMA Financial Strategy F3 Question # 63 Topic 7 Discussion

F3 Exam Topic 7 Question 63 Discussion:
Question #: 63
Topic #: 7

Company AAB is located in country A whose currency is the AS It has a subsidiary, BBA, located m country B that has the BS as its currency AAB has asked BBA to pay BS40 million surplus funds to AAB to assist with a planned new capital investment in country A The exchange rate today is AS1 = BS3

Tax regimes

• Company BBA pays withholding tax of 25% on all cash remitted to the parent company

• Company AAB pays tax of 10% on at cash received from its subsidiary

How much will company AAB have available for investment after receiving the surplus funds from BBA?


A.

A$ 12 million


B.

A$ 9 million


C.

A$ 81 million


D.

A$ 27 million


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