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CIMA Exam CIMAPRA19-F02-1 Topic 5 Question 105 Discussion

Actual exam question for CIMA's CIMAPRA19-F02-1 exam
Question #: 105
Topic #: 5
[All CIMAPRA19-F02-1 Questions]

UV entered into a five year non-cancellable operating lease for an asset two years ago. Lease payments are settled annually in arrears.

At the year end, UV no longer requires this leased asset as they have decided to discontinue the product line that itwas used for.

At this date UV had made two out of the five lease payments.

Which of the following statements about the unavoidable lease payments is true in accordance with IAS 37 Provisions, Contingent Liabilities and Assets?

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Suggested Answer: A

Contribute your Thoughts:

Barabara
5 days ago
I'm not sure about option B. Recognizing the provision in other comprehensive income doesn't seem appropriate in this situation.
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Jessenia
10 days ago
I agree with Tammara. It makes sense to recognize the provision for the lease payments that UV is obligated to make.
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Tammara
11 days ago
I think option A is correct. A provision should be recognized for the unavoidable lease payments with a corresponding charge to profit or loss.
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