CIMA Exam CIMAPRA19-F01-1 Topic 5 Question 106 Discussion

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

Question #: 106
Topic #: 5

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: B

by Graciela at Jan 22, 2025, 12:09 AM

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Brinda

9 days ago

Wait, what about the political donations and staff parties? Those are also disallowed expenses, right? I'm going to double-check the numbers, but I think the answer might be C) $254,184.

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Brice

3 days ago

Yes, you are correct. Political donations and staff parties are disallowed expenses in Country M.

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Eric

10 days ago

Okay, let's break this down. Depreciation and entertaining expenses are disallowed, so we need to add those back to the taxable profit. The rest seems straightforward, so I think the answer is A) $234,384.

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Donette

20 days ago

I'm not sure, but I think we need to consider the disallowed expenses and calculate the tax liability accordingly. I would go with A) $234,384 as well.

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Maybelle

26 days ago

I agree with Cecily, because the total tax liability should be calculated based on the taxable profit and the standard corporation tax rate.

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Cecily

27 days ago

I think the answer is A) $234,384.

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