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CIMA Exam CIMAPRA19-F01-1 Topic 4 Question 109 Discussion

Actual exam question for CIMA's CIMAPRA19-F01-1 exam
Question #: 109
Topic #: 4
[All CIMAPRA19-F01-1 Questions]

The following information is extracted from the statement of financial position for ZZ at 31 March 20X3:

Included within cost of sales in the statement of profit or loss for the year ended 31 March 20X3 is $20 million relating to the loss on the sale of plant and equipment which had cost $100 million in June 20X1.

Depreciation is charged on all plant and equipment at 25% on a straight line basis with a full year's depreciation charged in the year of acquisition and none in the year of sale.

The revaluation reserve relates to the revaluation of ZZ's property.

The total depreciation charge for property, plant and equipment in ZZ's statement of profit of loss for the year ended 31 March 20X3 is $80 million.

The corporate income tax expense in ZZ's statement of profit or loss for year ended 31 March 20X3 is $28 million.

ZZ is preparing its statement of cash flows for the year ended 31 March 20X3.

What cash outflow figure should be included within cash flows from investing activities for the purchase of property, plant and equipment?

Show Suggested Answer Hide Answer
Suggested Answer: A, B

by Tatum at Mar 20, 2025, 03:15 PM

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Brittni
16 days ago
Wait, did they really throw in a revaluation reserve just to confuse us? That's a classic move by the CIMA examiners.
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Berry
18 days ago
Alright, let's see if I can work this out step-by-step. I'm going to need to use my calculator for this one.
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Effie
26 days ago
Haha, the corporate income tax expense is a red herring in this question. It's not relevant to determining the cash outflow for the purchase of property, plant, and equipment.
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Tashia
16 days ago
I think the correct answer for the cash outflow figure from investing activities is $110 million.
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Tashia
18 days ago
So, we should focus on the depreciation and the loss on the sale of plant and equipment to calculate the cash outflow for investing activities.
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Tashia
20 days ago
You're right, the corporate income tax expense doesn't affect the cash outflow for purchasing property, plant, and equipment.
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Lizbeth
1 months ago
The information given about depreciation and the loss on the sale of plant and equipment is really crucial in solving this problem. I need to be careful in calculating the correct figure.
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Quentin
9 days ago
B) $110 million
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Virgina
15 days ago
I think the correct figure should be $85 million.
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Herschel
20 days ago
A) $85 million
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Latonia
1 months ago
But the cost of sales included a loss on the sale of plant and equipment, so it should be $85 million.
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Pearlene
2 months ago
I disagree, I believe the answer is B) $110 million.
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Linwood
2 months ago
This question is all about analyzing the statement of financial position and statement of profit or loss to determine the cash outflow for the purchase of property, plant, and equipment. I think I've got this one figured out!
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Bette
15 days ago
Yes, you are correct! The correct answer is indeed $110 million, option B.
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Bette
18 days ago
I believe the cash outflow figure for the purchase of property, plant, and equipment should be $110 million, option B.
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Latonia
2 months ago
I think the answer is A) $85 million.
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