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Dear John,
With regards to the tax part of this question, since Mehgam’s tax rate (25%) is lower than the country Chmura Co. is based in (20%), there is no issue of additional tax needing to be calculated.
However, my question is, if Mehgam’s tax rate was lower than the country Chmura Co. is based on, how and where should the additional tax be recorded?
Thank you in advance
If the tax rates were the other way round then there would be a extra 5% of the profits payable in the Megham country and this would appear in the cash flows in Megham.
Incidentally, although not relevant for the question you have asked, there are lectures working through the whole of this question linked from this page:
https://opentuition.com/acca/afm/afm-revision-lectures/
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