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CIMAPRA19-F02-1 Exam - Topic 1 Question 23 Discussion

On 1 January 20X7 GH purchased plant and equipment at a cost of $400,000. The temporary differences in respect of this plant and equipment at 31 December 20X7 and 20X8 have been calculated as follows:Assume that there are no other temporary differences in the periods and that the corporate income tax rate is 25%. GH is expected to have significant taxable profits in the future.Which of the following is the correct impact in GH's statement of financial position at 31 December 20X8 in respect of deferred tax?
A) Increase in the deferred tax asset.
B) Increase in the deferred tax liability.
C) Decrease in the deferred tax asset.
D) Decrease in the deferred tax liability.

CIMAPRA19-F02-1 Exam - Topic 1 Question 23 Discussion

Actual exam question for CIMA's CIMAPRA19-F02-1 exam
Question #: 23
Topic #: 1
[All CIMAPRA19-F02-1 Questions]

On 1 January 20X7 GH purchased plant and equipment at a cost of $400,000. The temporary differences in respect of this plant and equipment at 31 December 20X7 and 20X8 have been calculated as follows:

Assume that there are no other temporary differences in the periods and that the corporate income tax rate is 25%. GH is expected to have significant taxable profits in the future.

Which of the following is the correct impact in GH's statement of financial position at 31 December 20X8 in respect of deferred tax?

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Suggested Answer: A

by Aliza at May 10, 2022, 01:32 AM

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Magnolia
10 months ago
Not convinced this impacts the statement like they say.
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Veronika
10 months ago
Wait, are we sure about the tax rate being 25%?
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Lavera
11 months ago
I think it should be a decrease in the deferred tax asset.
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Ruthann
11 months ago
Definitely an increase in deferred tax liability!
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Ettie
11 months ago
GH bought equipment for $400k.
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Karan
11 months ago
I'm a bit confused on this one. Do I need the recovery public key or the server key? I'll have to review the information provided.
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Yuette
11 months ago
I practiced a similar question and I think if the action isn't published, it wouldn't work in Control Room, so maybe C is the answer.
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Anika
11 months ago
I'm a bit confused by this question. I thought we could only create reports from scratch in Access, not convert existing forms. But maybe there's a way to do it that I'm not aware of. I'll have to review my notes on this.
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