CIMA Exam CIMAPRA19-F02-1 Topic 1 Question 48 Discussion

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

Question #: 48
Topic #: 1

LM and JK operatein the same countryand prepare their financial statements to30 June 20X6 in accordance with International Accounting Standards. On 27 June 20X6 both entities raised $1 million cashby issuing debt instruments with identical terms and conditions. Prior to this issue both entities were financed entirely by equity.

At 30 June 20X6 the gearing ratios,calculatedasDebt/Equity x 100%, wereas follows:

LM: 30%

JK: 65%

Which of the following independent options would explain the difference between LM and JK's year-end gearing?

ALM revalued its land and buildings upwards in the year; JK has performed no revaluations.

BLMmade a bonus issue from retained earnings in the year; JK issued no shares in the year.

CLM had 100,000 $1 shares at the year end; JKhad 200,000 50c shares in issue at the year end.

DLM held no investments in other entities; JK revalued its available for sale investments upwards in the year.

Show Suggested Answer

Suggested Answer: A

by Alpha at May 05, 2022, 06:54 PM

Limited Time Offer

25%

Off

Get Premium CIMAPRA19-F02-1 Questions as Interactive Web-Based Practice Test or PDF

Contribute your Thoughts:

Submit Cancel

Currently there are no comments in this discussion, be the first to comment!