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CIMAPRA19-F01-1 Exam - Topic 2 Question 114 Discussion

Actual exam question for CIMA's CIMAPRA19-F01-1 exam
Question #: 114
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?

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Suggested Answer: B

by Reyes at Jul 11, 2025, 06:47 AM

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Ezekiel
4 months ago
Not sure if 50,000 preference shares alone would do it.
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Ressie
4 months ago
I think option C is the right choice!
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Lai
4 months ago
25,000 equity shares equals 25% ownership, so option B looks good too!
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Rima
4 months ago
Wait, can preference shares count towards that?
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Kiera
5 months ago
WX needs at least 20% ownership for an associate investment.
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Candra
5 months ago
I recall that purchasing 25,000 equity shares might not be enough for significant influence, but 75,000 should definitely qualify.
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Raina
5 months ago
I'm a bit uncertain about how preference shares factor into this. Do they count towards the 20% threshold for associates?
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Deonna
5 months ago
I think we practiced a similar question where we had to calculate ownership percentages. If WX buys 75,000 equity shares, that should definitely give them significant influence, right?
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Lilli
5 months ago
I remember we discussed 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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Eric
6 months ago
This is a good opportunity to apply the accounting standards for investments. I'll need to carefully consider the ownership percentages and voting rights to determine which option meets the associate criteria.
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Mozelle
6 months ago
Okay, I think I've got it. The key is that WX needs to hold at least 20% of the voting power in ST to be considered an associate. So I'll need to calculate the voting power for each option.
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Tequila
6 months ago
Hmm, I'm a bit unsure about the difference between equity and preference shares and how that affects the investment classification. I'll need to review that before answering.
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Ora
6 months ago
This question seems straightforward, but I want to make sure I understand the criteria for an associate investment correctly.
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Eun
8 months ago
I agree with Nohemi, A seems to be the correct answer.
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Nohemi
8 months ago
Because WX needs to have both equity and preference shares to become an associate.
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Chaya
8 months ago
Option D is a bit of a wild card. Buying preference shares wouldn't give you the same level of control as equity shares, would it? But then again, who knows? Accounting can be a real mystery sometimes.
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Brigette
8 months ago
Why do you think so, Nohemi?
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Nohemi
8 months ago
I think the answer is A.
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Bobbie
8 months ago
This question is a real brain-teaser! I'm going to have to think it through carefully. Glad I'm not the one taking the exam!
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Jacqueline
8 months ago
A) WX purchases 15,000 of ST's $1 equity shares and 20,000 of ST's $1 preference shares.
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Lina
8 months ago
Hmm, I'm not sure. Maybe option B? Purchasing 25,000 equity shares could also give WX some influence, but I'm not confident about that.
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Malissa
7 months ago
User 3: Yeah, option B makes sense. It would give WX a significant stake in ST.
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Stefania
7 months ago
User 2: I agree, option B seems like the most likely choice for WX to become an associate investment of ST.
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Earlean
7 months ago
User 1: I think option B is correct. Purchasing 25,000 equity shares could give WX some influence.
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Karan
9 months ago
Option C seems like the correct answer. Purchasing 75,000 equity shares would give WX a significant influence over ST, making it an associate investment.
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Alida
8 months ago
Yes, purchasing 75,000 equity shares would definitely give WX significant influence over ST.
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Rosenda
8 months ago
Option C seems like the correct answer.
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