After-tax cash flow of a subsidiary may differ from the after-tax cash flow of the parent because:

Question

Quizplus · Accepted Answer

The subsidiary's cash flows may be subject to additional taxes in the local country before they can be considered after-tax cash flows of the parent, resulting in differences between the two. This could be due to differences in tax laws or regulations between the two countries, which may lead to additional taxes or withholdings at the subsidiary level before the cash flows can be remitted to the parent company. The other choices, while potentially valid explanations for differences in financial statements between subsidiaries and parent companies, are not directly related to after-tax cash flows.

After-Tax Cash Flow of a Subsidiary May Differ from the After-Tax