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CIMAPRA19-F01-1 Exam - Topic 2 Question 125 Discussion

WX is considering an investment in ST.At 31 December 20X2 ST had the following balances in its statement of financial position:Which of the following would cause ST to become an associate investment of WX?
B) WX purchases 25,000 of ST's $1 equity shares.
A) WX purchases 15,000 of ST's $1 equity shares and 20,000 of ST's $1 preference shares.
C) WX purchases 75,000 of ST's $1 equity shares.
D) WX purchases 50,000 of ST's $1 preference shares.

CIMAPRA19-F01-1 Exam - Topic 2 Question 125 Discussion

Actual exam question for CIMA's CIMAPRA19-F01-1 exam
Question #: 125
Topic #: 2
[All CIMAPRA19-F01-1 Questions]

WX is considering an investment in ST.

At 31 December 20X2 ST had the following balances in its statement of financial position:

Which of the following would cause ST to become an associate investment of WX?

Show Suggested Answer Hide Answer
Suggested Answer: B

by Edna at May 07, 2026, 05:28 AM

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Paola
10 hours ago
Exactly! Equity shares are key for influence.
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Ronald
6 days ago
I feel D is too limited. Preference shares don’t count much.
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Monroe
11 days ago
True, but does it meet the associate criteria?
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Ardella
16 days ago
A is interesting too. Mix of equity and preference shares.
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Winifred
21 days ago
But C might lead to a subsidiary, not an associate.
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Paola
26 days ago
I prefer option C. More shares, more power!
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Monroe
1 month ago
It gives significant influence without full control.
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Winifred
1 month ago
Why B?
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Monroe
1 month ago
I think option B is the best choice.
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Myra
2 months ago
Totally agree, C is the way to go!
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Cathrine
2 months ago
Really? 15,000 shares doesn’t seem like enough to be an associate.
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Vesta
2 months ago
25,000 shares is just 25% ownership.
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Fatima
2 months ago
I think option C is the only one that qualifies!
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Raymon
2 months ago
WX needs at least 20% ownership for an associate investment.
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Jacklyn
2 months ago
I feel like option B could also be a contender if it meets the influence criteria, but I’m not confident about the exact numbers needed for associates.
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Gregoria
4 months ago
I practiced a similar question where the ownership percentage was key, but I can't recall if preference shares count towards that percentage.
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Shawn
4 months ago
I think option C makes the most sense since purchasing 75,000 equity shares should definitely give WX significant influence, but I need to double-check the thresholds for associates.
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Raelene
4 months ago
I remember that an associate investment typically requires at least 20% ownership, but I'm not sure if that applies to both equity and preference shares.
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