Discuss CIMA CIMAPRA19-F01-1 Exam Topic 5 Question 81

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 figure should be included within cash flows from investing activities for the proceeds of sale of plant and equipment?

A$55 million

B$95 million

C$80 million

D$120 million

Suggested Answer: A

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22 comments · newest first

Rosalyn 11 months ago

Totally agree, $80 million makes sense with the depreciation!

Kasandra 11 months ago

Wait, how do we get to $80 million? Sounds off.

Katie 12 months ago

I think the proceeds should be $80 million.

Maddie 12 months ago

So, the original cost was $100 million, right?

Gilma 12 months ago

The loss on sale was $20 million.

Mariann 1 year ago

I feel like the answer should be around $80 million, considering the loss and depreciation, but I’m not entirely confident in my calculations.

Sherell 1 year ago

I think the depreciation charged before the sale might help us find the carrying amount of the asset. I just can't recall how to apply it correctly.

Jospeh 1 year ago

This question seems similar to one we practiced where we had to adjust for depreciation and losses. I think the loss on sale might affect the proceeds we report.

Lenora 1 year ago

I remember we discussed how to calculate the proceeds from the sale of plant and equipment, but I'm unsure about the exact figures here.

Maynard 1 year ago

This seems like a straightforward calculation, but I want to double-check my work. I'll review the numbers and formulas to make sure I haven't missed anything.

Marilynn 1 year ago

Okay, I've got this. The key is to use the information provided about the cost, depreciation, and loss on sale to calculate the proceeds. I'm confident I can get the right answer.

Gilma 1 year ago

Hmm, I'm a bit confused by all the details in this question. I'll need to carefully read through the information and make sure I understand the key facts before I try to solve it.

Raelene 1 year ago

This question looks tricky, but I think I can work through it step-by-step. I'll need to calculate the net book value of the plant and equipment sold, then use that to determine the proceeds from the sale.

William 1 year ago

Okay, let me review the log levels again. FATAL, INFO, ERROR... I think FATAL is the one that's always enabled, but I want to double-check that before submitting my answer.

Marva 1 year ago

Okay, I think I've got it. The question is asking about the 'metric rank priority' number, so a higher number must take precedence. The answer is C. Higher.

Detra 1 year ago

I recall that FIFO was discussed in class, but I'm not entirely sure if that's the main one used on ACK.

Tanja 1 year ago

I remember discussing the "consumption gap" in relation to customer engagement! Could that be it?

Dylan 2 years ago

I think the correct answer is B) $95 million because that would be the cash inflow from the sale of the plant and equipment.

Arlette 2 years ago

No, the question is asking for the proceeds of sale, which would be the amount received from selling the plant and equipment.

Osvaldo 2 years ago

But why wouldn't it be A) $55 million? Isn't that the cost of the plant and equipment?

Amber 2 years ago

I agree with Arlette. The proceeds of sale of plant and equipment should be included in cash flows from investing activities.

Arlette 2 years ago

I think the answer is B) $95 million.

CIMAPRA19-F01-1 Exam - Topic 5 Question 81 Discussion