CIMAPRA19-F02-1 Exam - Topic 1 Question 15 Discussion

Actual exam question for CIMA's CIMAPRA19-F02-1 exam

Question #: 15
Topic #: 1

LM acquired 80% of the equity shares of ST when ST's retained earnings were $50 million. The fair value of the net assets of ST included a contingent liability with a fair value of $100 million at the date of acquisition and a fair value of $40 million at 31 December 20X6. No other fair value adjustments were required at the date of acquisition.

LM and ST had retained earnings of $200 million and $80 million respectively at 31 December 20X6.

The consolidated retained earnings of LM at 31 December 20X6 were:

A$164 million

B$176 million

C$272 million

D$284 million

Show Suggested Answer

Suggested Answer: C

by Timothy at May 10, 2022, 12:24 AM

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Laurel

4 months ago

Totally with you on that, Kendra!

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Laquita

4 months ago

Wait, how does the contingent liability affect this?

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Kendra

4 months ago

So, is it $176 million? Sounds right.

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Onita

4 months ago

Don't forget the 80% ownership!

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Bernardine

5 months ago

LM's retained earnings are $200 million, ST's are $80 million.

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Elise

5 months ago

I've worked with Nuage VSP before, so I'm pretty confident that's one of the right answers. The other two are a bit trickier to remember.

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Katy

5 months ago

I feel like option B is more about corporate ethics rather than sustainability, but it's tricky. A sounds correct to me for this question.

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Jamey

5 months ago

This looks like a straightforward activity-based budgeting question. I'll need to calculate the machine set-up cost per unit of product Q based on the given information.

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