CIMA CIMA Certifications CIMAPRA19-F02-1 Questions & Answers

• Question 251:

  The tax benefit on a company's asset is £80,000 and the useful life on that asset is five years. The company creates a deferred tax provision to spread this benefit over the asset's useful life.

  What entry is needed to reduce this deferred tax provision in the company's year two accounts?

  A. DR Deferred tax liability (SOFP) £6,000

  B. CR Deferred tax liability (SOFP) £6,000

  C. DR Corporation tax (income statement) £6,000

  D. CR Corporation tax (income statement) £6,00

  E. DR Deferred tax liability (SOFP) £44,000

  F. CR Deferred tax liability (SOFP) £44,000

  G. DR Corporation tax (income statement) £44,000

  H. CR Corporation tax (income statement) £44,000

  Correct Answer: A

• Question 252:

  ST has in issue unquoted 7% debentures which were issued at par and are redeemable in 1 year's time. These debentures cannot be traded. The yield to maturity on these debentures has been calculated at 5%.

  Which of the following would explain why the yield to maturity is lower than the coupon?

  A. ST will benefit from the tax relief on the interest payment.

  B. The debentures will be redeemed at a discount to their par value.

  C. The debentures will be redeemed at their par value.

  D. The market value of the debentures must be higher than their par value.

  Correct Answer: B

• Question 253:

  Which of the following should be eliminated when using the equity method to account for associates in a parent's financial statements?

  Select ALL that apply.

  A. Unrealised profits

  B. Dividends from associates

  C. Intra-group balances and transactions

  D. Goodwill payments

  Correct Answer: AB

• Question 254:

  DRAG DROP

  AAA is the only director of entity CD. AAA is also a director of entity GH. CD owns 30% of the equity of MN and 60% of the equity of OP.

  Identify which of the following are related parties of CD by placing the appropriate response against one.

  Select and Place:

  

  Correct Answer:

  

• Question 255:

  DRAG DROP

  On 1 January 20X6 AB, a listed entity, had 10,000,000 $1 ordinary shares in issue. On 1 April 20X6 AB issued 3,000,000 $1 ordinary shares at their full market price. AB's profit was reported as $1,100,000 after charging corporate income tax

  of $500,000.

  Place the correct values for profit and weighted average number of shares in the boxes below that will be used to calculate AB's earnings per share for the year to 31 December 20X6.

  Select and Place:

  

  Correct Answer:

  

• Question 256:

  DRAG DROP

  On 1 January 20X8 XY, a listed entity, had 10,000,000 ordinary shares in issue each with a par value of 50 cents. On 1 July 20X8 XY raised $6,000,000 by issuing ordinary shares at a price of ?.50 each which was the full market price.

  Place the correct figure into the box below to show the number that XY will use as its weighted average number of ordinary shares in the calculation of earnings per share for the year to 31 December 20X8.

  Select and Place:

  

  Correct Answer: