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CIMAPRA17-BA3-1 Exam - Topic 1 Question 72 Discussion

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

Question #: 72
Topic #: 1

[All CIMAPRA17-BA3-1 Questions]

Which of the following is an example of where the historic cost convention should be applied?

AA potential bad debt of 8,000.

BRaw materials purchased for $2.50 per kg now costing $2.60 per kg.

CExpenditure on research and development.

DA change to the method used to value inventory and work in progress.

Show Suggested Answer

Suggested Answer: D, E

by Loreta at Jul 25, 2023, 06:05 AM

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Hermila

8 months ago

Not sure about this... what if prices keep changing?

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Veronika

8 months ago

I agree, B is the clear choice here!

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Lou

8 months ago

Wait, can we really ignore current prices? Seems off.

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Mozelle

9 months ago

Definitely B! Costs should reflect what was paid.

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Essie

9 months ago

Historic cost applies to raw materials, right?

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Irving

9 months ago

I’m a bit confused, but I think research and development costs might not fit the historic cost convention since they can be quite subjective.

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Ronald

9 months ago

I practiced a similar question where we had to identify when to use historical costs, and I feel like it might be option D because it involves changes in valuation methods.

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Rene

9 months ago

I'm not entirely sure, but I remember something about bad debts being more about estimates rather than historical costs.

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Annamae

10 months ago

I think the historic cost convention applies to actual transactions, so maybe it's related to option B with the raw materials?

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Carrol

10 months ago

This seems like a straightforward strategic planning question. I'll start by thinking about the overall goals of the firm, which are usually addressed first in the planning process.

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Rasheeda

10 months ago

Hmm, I'm a bit unsure about this one. I know IPsec is related to VPNs, but I'm not sure which of these technologies specifically works with the stateful failover aspect.

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Trinidad

10 months ago

Hmm, I'm a bit confused. I know the plugin is for internationalization, but I'm not sure how the articles are actually linked together. I'll have to think this through carefully.

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Paris

10 months ago

Okay, let me see. Automatic scaling and pausing during inactive periods - that sounds like the serverless option to me, so I'm going to go with C.

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Ciara

1 year ago

I'm going with option B, because I'm historicLOLly inclined to stick to the original costs. Get it? 'Historicly'? Okay, I'll see myself out.

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Malinda

1 year ago

User 3: Agreed, the historic cost convention should be applied in this situation.

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Gussie

1 year ago

User 2: Yeah, sticking to the original costs is important in this case.

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Latanya

1 year ago

User 1: I think option B is the right choice.

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Iola

1 year ago

Research and development? Come on, that's clearly a cost that should be expensed, not capitalized under the historic cost convention.

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Werner

1 year ago

Haha, the bad debt question is a classic trick! You can't use historic cost for that, it's all about estimating future losses.

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Celeste

1 year ago

User 3: Actually, I believe the correct answer is D) A change to the method used to value inventory and work in progress.

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Shaniqua

1 year ago

User 2: No, that's not right. It should be C) Expenditure on research and development.

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Scarlet

1 year ago

User 1: I think the answer is B) Raw materials purchased for $2.50 per kg now costing $2.60 per kg.

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Timmy

1 year ago

Definitely option B. The historic cost convention requires us to use the original purchase price, not the current market value.

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Timmy

1 year ago

It's crucial to follow the guidelines of the historic cost convention to accurately reflect the financial position of the company.

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Curtis

1 year ago

Using the original purchase price is important in maintaining consistency with the historic cost convention.

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Rodrigo

1 year ago

I agree, option B is the correct choice for applying the historic cost convention.

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Magda

1 year ago

I think the historic cost convention should be applied to the raw materials purchased for $2.50 per kg. The cost hasn't changed, so we should stick to the original price.

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Allene

1 year ago

I see your point, but what about the change in the method used to value inventory and work in progress?

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Geoffrey

1 year ago

I think the research and development expenditure should be considered under the historic cost convention.

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Dannette

1 year ago

But what about the potential bad debt of 8,000? Shouldn't that also follow the historic cost convention?

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Blossom

1 year ago

I agree, sticking to the original price for raw materials makes sense.

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Kara

1 year ago

I think option C is not a suitable example, as expenditure on research and development is not typically subject to the historic cost convention.

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Margart

1 year ago

I see your point, but I believe option B is the most straightforward example for applying the historic cost convention.

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Martha

1 year ago

I think option A could also be a valid example, as it involves a potential bad debt that was recorded at its original cost.

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Sylvie

1 year ago

I agree, option B is the correct example for applying the historic cost convention.

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Rima

1 year ago

Why do you think that?

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Vincent

1 year ago

I disagree, I believe it should be applied to option A.

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Rima

1 year ago

I think the historic cost convention should be applied to option B.

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