CIMA CIMAPRA19-F01-1 Exam Practice Test Instant Access

Question 1

An entity acquires 100% of the equity shares in another entity.

The consideration paid for the shares is less than the fair value of the net assets acquired.

Which of the following is the correct accounting treatment for the difference between the consideration paid and the fair value of the net assets acquired, in accordance with IFRS 3 Business Combinations?

ARecognise as a gain in the consolidated statement of profit or loss.

BRecognise as a deferred credit and release to consolidated profit or loss over its useful economic life.

CRecognise as a deduction from goodwill in the consolidated statement of financial position.

DRecognise as a gain in the statement of changes in equity.

Answer : A

Question 2

Which of the following is a characteristic of a defined contribution post-employment benefit scheme?

AThe amount of the post-employment benefits paid to former employees depends on how well the scheme's investments have performed.

BThe employer would make additional contributions into the scheme if the actuary predicted a shortfall in the funds available to pay post-employment benefits.

CThe amount of the post-employment benefits paid to former employees is determined at the date of their retirement using a predefined formula.

DThe employer may take a contributions holiday and stop paying contributions for a period, if the scheme's assets appear to be more than are required to meet the scheme's obligations.

Answer : A

Question 3

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 4

DEF is considering introducing a Pay-As-You-Earn (PAYE) system but unsure of the advantages of using it.

Which of the following statements are advantages from the employees perspective of an entity using a PAYE system for collecting taxes from employees.

Select ALL that apply.

AThe employee will be able to deal with tax authority directly to make payments.

BThe employee will avoid being charged penalties for paying late.

CThe employee will calculate their own tax payment.

DThe employee does not have to complete a self assessment tax return.

EThe employee does not have to budget for their tax payments because the tax is deducted at source.

Answer : B, D, E

Question 5

An asset has the following values:

If the asset was sold for its fair value, selling costs of $1,500 would be incurred.

Which of the following is the value of the impairment loss to be recognised for this asset in accordance with IAS 36 Impairment of Assets?

A$0

B$300

C$1,200

D$2,000

Answer : C

Question 6

The tax rules in a country state that all tax returns must be filed by 31 March each year and that any outstanding tax balance must be paid by 14 April each year. An entity filed its tax return on 10 April 20X2 and paid the outstanding tax on 20 April 20X2.

Which TWO of the following powers is the tax authority likely to have in respect of these actions by the entity?

ACharge a fixed penalty for late submission of the tax return.

BCharge interest for non-payment of the outstanding tax balance between 14 April 20X2 and 20 April 20X2.

CCharge interest for non-payment of the outstanding tax balance between 31 March 20X2 and 20 April 20X2.

DCharge interest for non-payment of the outstanding tax balance between 10 April 20X2 and 20 April 20X2.

ESeize the assets of the entity.

Answer : A, B

Question 7

When developing local Generally Accepted Accounting Principles (known as local GAAP) some countries start with International Financial Reporting Standards (IFRSs) which are then amended to reflect local needs and conditions.

This type of approach is classified as:

AAdoption of IFRSs as local GAAP.

BUsing IFRSs as a model for local GAAP.

CIFRSs having a persuasive influence in formulating local GAAP.

DIFRSs having little or no impact in formulating local GAAP.

Answer : B

CIMAPRA19-F01-1 F1 Financial Reporting Exam Practice Test