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

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

Question #: 109
Topic #: 4

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?

A$85 million

B$110 million

C$185 million

D$210 million

Show Suggested Answer

Suggested Answer: A, B

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

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Brittni

3 months 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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Elza

2 months ago

Exactly, it's all about understanding how those numbers flow in the financial statements.

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Annice

2 months ago

That makes sense, considering the depreciation charge and the loss on the sale of plant and equipment.

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Merilyn

2 months ago

I think the cash outflow figure for the purchase of property, plant and equipment should be $110 million.

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Jettie

2 months ago

I know right, they always try to trick us with those extra details.

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Berry

3 months 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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Augustine

2 months ago

C) $185 million

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Velda

2 months ago

B) $110 million

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Ruthann

3 months ago

A) $85 million

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Effie

3 months 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

3 months ago

I think the correct answer for the cash outflow figure from investing activities is $110 million.

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Tashia

3 months 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

3 months 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

4 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

3 months ago

B) $110 million

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Virgina

3 months ago

I think the correct figure should be $85 million.

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Herschel

3 months ago

A) $85 million

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Latonia

4 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

4 months ago

I disagree, I believe the answer is B) $110 million.

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Linwood

4 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

3 months ago

Yes, you are correct! The correct answer is indeed $110 million, option B.

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Bette

3 months 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

4 months ago

I think the answer is A) $85 million.

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