CIMA Exam CIMAPRA19-F01-1 Topic 5 Question 93 Discussion

Actual exam question for CIMA's CIMAPRA19-F01-1 exam

Question #: 93
Topic #: 5

The following information relates to AA.

Extract of Trial Balance at 31 December 20X4;

Notes

(i) Inventory at 31 December 20X4 was valued at cost at $30.

(ii) The loan which was received on 1 July 20X4 is repayable in 20X9.

(iii) Corporate income tax represents an over-provision of tax for the year ended 31 December 20X3. AA reported a loss for tax purposes for the year ended 31 December 20X4 and a tax refund is expected amounting to $20.

(iv) Cost of sales, administration and distribution costs need to be adjusted for the following:

What figures should be entered on the face of the Statement of profit or Loss for the year ended 31 December 20X4 in relation to Interest and Corporate income tax?

AInterest $25 Corporate income tax $(37)

BInterest $25 Corporate income tax $37

CInterest $50 Corporate income tax $(3)

DInterest $50 Corporate income tax $3

Show Suggested Answer

Suggested Answer: A

by Scarlet at Jul 16, 2024, 07:33 AM

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Salena

3 months ago

Hmm, let me think about this. If the loan is repayable in 20X9, then the interest for the year should be $25. And the tax refund is $20, not $3. So the answer has to be B. Easy peasy, lemon squeezy!

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Gerald

3 months ago

Yes, it's definitely B. The interest and tax figures need to be adjusted accordingly.

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Alease

3 months ago

I agree, the interest should be $25 and the tax refund is $20, so the answer is B.

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Timmy

3 months ago

I agree with Daniel, I also think it's B.

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Leonida

3 months ago

I'm not sure, but I think it might be C.

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Barrett

3 months ago

Haha, these accounting questions always make my head spin. But I think I've got it this time - the answer is C. Fifty bucks for the interest and a measly three-dollar tax refund? Sounds about right for a company like AA.

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Yuette

3 months ago

I'm leaning towards D. The interest on the loan would be $50, and the corporate income tax refund is $3, based on the information provided.

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Julian

2 months ago

Yes, D is the most suitable option considering the details provided in the question.

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Rebbecca

2 months ago

I agree with you, D seems to be the right choice based on the information given.

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Rosio

3 months ago

I think D is the correct option. The interest is $50 and the corporate income tax refund is $3.

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Carman

4 months ago

I'm pretty sure the answer is B. The loan was received on 1 July 20X4 and is repayable in 20X9, so the interest for the year should be $25. And the corporate income tax is an over-provision, so it should be a refund of $37.

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