CIMA Exam CIMAPRA17-BA3-1 Topic 3 Question 106 Discussion

Actual exam question for CIMA's CIMAPRA17-BA3-1 exam

Question #: 106
Topic #: 3

The Finance Director of EFG company has made the following statements regarding the recording of expenditure relating to the entity's property, plant and equipment (PPE) in the nominal ledger.

Which THREE of the following statements are true?

AThe annual depreciation charge reduces EFG's profit for the year.

BThe cost of insurance for the factory is debited to the PPE asset account.

CThe loss on the disposal of PPE reduces EFG's profit for the year

DThe cost of repainting the office is credited to the repairs expense account

EThe loss on the disposal of PPE is recorded in a liability account

FThe annual depreciation charge reduces the carrying value of PPE

Show Suggested Answer

Suggested Answer: A, C, F

by Alethea at Jan 26, 2025, 10:55 PM

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Estrella

11 days ago

I disagree with statement E. Loss on disposal should not be recorded in a liability account.

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Krystina

12 days ago

I agree with that. I also think statement F is true because depreciation reduces carrying value.

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Eun

20 days ago

I think statement A is true because depreciation reduces profit.

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Jacinta

25 days ago

A, C, and F are definitely true. The annual depreciation reduces profit and carrying value, and the loss on disposal reduces profit. The others seem a bit iffy.

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Karma

4 days ago

The loss on disposal of PPE definitely reduces profit for the year.

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Carlee

10 days ago

Yes, the annual depreciation charge does reduce profit and carrying value.

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Michell

12 days ago

I agree, A, C, and F are definitely true.

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