CIMAPRA19-F01-1 Exam - Topic 3 Question 122 Discussion

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

Question #: 122
Topic #: 3

Entity RH has an recognised a taxable profit of $1.Smillion for 20X1'. In Entity RH's resident country. Country M, depreciation charges and entertaining expenses are disallowed expenses. Below is some information on Entitry RH's outgoings for the period:

Depreciation charged on PPE: $450,000

Political donations: $155,000

Staff parties: $3,200

Cost of updating assets: $10,000

Other expenses: $83,500

In Country M, there is a standard corporation tax of 12% charged on all corporation profits. What is Entity RH's total tax liability for this period?

A$234,384

B$125,616

C$254,184

D$252,984

Show Suggested Answer

Suggested Answer: A

by Leatha at Mar 07, 2026, 05:23 AM

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Shaquana

24 hours ago

I think the tax liability is option B.

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Ranee

6 days ago

The taxable profit is $1.5M after disallowed expenses.

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Thersa

11 days ago

I believe the corporation tax is just 12% on the adjusted profit, but I can't recall the exact steps to calculate the total tax liability.

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Benedict

16 days ago

I'm not entirely sure if we should include the cost of updating assets in the taxable profit calculation. Was that considered a capital expense?

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Portia

22 days ago

I think we had a similar practice question where we had to calculate tax liabilities after adjusting for non-deductible expenses. It was tricky!

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Thaddeus

27 days ago

I remember we discussed how to adjust taxable profits by adding back disallowed expenses like depreciation and entertainment costs.

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