CIMA CIMAPRA19-F01-1 Exam Practice Test Instant Access

Question 1

RS purchased an asset on 1 May 20X1 for $200,000, exclusive of import duties of $25,000.

The asset was sold on 1 December 20X3 for $450,000, incurring costs to sell of $15,000.

RS is resident in Country Y where indexation is allowable from the date of purchase to the date of sale.

The indexation factor increased by 40% in the period 1 May 20X1 to 1 December 20X3.

Capital gains are taxed at 25%.

What is the capital tax due from RS on disposal of the asset?

A$120,000

B$38,750

C$30,000

D$28,500

Answer : C

Question 2

Which THREE of the following are principles identified by the Code of Ethics?

AProfessional competence and expertise

BProfessional behavior

CUnderstandability

DProfessional competence and due care

EConfidentiality

FNeutral

Answer : B, D, E

Question 3

The external auditors have completed their audit and have discovered a material but not pervasive error in the financial statements of JK.

The directors of JK have refused to change the financial statements.

What type of modified audit report should be issued?

ADisclaimer of opinion

BEmphasis of matter opinion

CAdverse opinion

DQualified opinion

Answer : D

Question 4

In accordance with IAS 16 Property, Plant and Equipment, in which of the following situations would subsequent expenditure on a non-current asset be capitalised?

AAn entity purchased an aircraft five years ago, when its engines were separately identified in the accounting records. The engines now need to be replaced at a cost of $2 million each. When the engines are replaced the aircraft is expected to be airworthy for a further 5 years.

BAn entity's head office building suffered a major fire, the upper floors and roof were completely destroyed. The entity proposes to restore the building at a cost of $1 million and move back in to the building to use it as a head office again.

CAn entity's delivery vehicle was in a car park when the car park was flooded. The engine and interior of the vehicle needed extensive repair and renovation costing $25,000.

DA manufacturing entity closes its factory for two weeks each summer for routine maintenance and repairs. The current year's cost of maintenance and repairs was $62,000.

Answer : A

Question 5

The statement of profit or loss for PQ, ST and AB for the year ended 31 December 20X0 are shown below:

1. PQ acquired 80% of its subsidiary, ST, on 1 January 20X0 and 40% of its associate, AB, on 1 September 20X0.

2. Since acquistion PQ has sold goods to ST and AB for $20,000 and $30,000 respectively. At the year end both ST and AB have 50% of these goods remaining in inventory. PQ uses a mark-up of 20% on all of its sales.

3. Since acquisition the goodwill in respect of ST has been impaired by $8,000 and the investment in AB has been impaired by $2,000.

4. PQ uses the fair value method for non-controlling interest at acquisition.

Calculate the amount that will be shown as the share of profit of associate in PQ's consolidated statement of profit or loss for the year ended 31 December 20X0.

A$10,000

B$2,000

C$4,000

D$3,200

Answer : B

Question 6

Which one of the following is NOT a step in the development of an International Financial Reporting Standard (IFRS)?

APublication of discussion documents.

BPublication of exposure drafts.

CEstablishment of an advisory committee to advise on issues arising in the development of the IFRS.

DProduction of draft interpretations of the IFRS which are open to public comment.

Answer : D

Question 7

The financial statements of JK for the year ended 31 August 20X4 were approved on 10 November 20X4.

Within these financial statements which of the following would have been treated as a non-adjusting event in accordance with IAS 10 Events After the Reporting Period?

AInventory which was originally valued at its cost of $45,000 being sold for $37,000 in September 20X4.

BA fire in JK's main warehouse on 3 September 20X4 destroying 60% of the inventory that had been held at the year end.

CNotification received on 31 August that one of JK's major customers had gone into liquidation and was unlikely to pay any outstanding invoices.

DThe completion of a court case on 5 November 20X4 in which JK was ordered to pay damages of $150,000.

Answer : B

CIMAPRA19-F01-1 F1 Financial Reporting Exam Practice Test