CIMAPRA19-F02-1 Exam - Topic 1 Question 52 Discussion

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

Question #: 52
Topic #: 1

A local council is one year into a two year project to renovate local parks. The project is on track to be completed within the set time-scale, however it has proved more costly than initially expected.

The project is on track to be completed within its two year period. Contracts for the labour and materials needed to renovate the parks were agreed at the start of the project and no changes have arisen. Despite the fact that the council has yet to fully settle these contracts, costs are set to be as budgeted.

Why would this example not be recognised as a provision?

ANeither the timing nor the amount of the provision is uncertain.

BThe settlement of the contract is unlikely to result in an outflow from the council.

CThe council doesn't have a present obligation from the project.

DThe council has no potential future obligations arising from the project.

Show Suggested Answer

Suggested Answer: A

by Diane at May 29, 2022, 06:04 AM

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Taryn

4 months ago

But what if unexpected costs pop up later?

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Leonor

4 months ago

Totally agree with A, no uncertainty means no provision needed!

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Goldie

4 months ago

Wait, how can they be sure about costs if contracts aren't settled yet?

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Verlene

4 months ago

I think option A makes the most sense here.

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Orville

4 months ago

Costs are within budget, that's good!

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Lakeesha

5 months ago

This reminds me of a practice question where we talked about obligations. I wonder if option C could be the right choice since the council isn't obligated yet.

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Isaac

5 months ago

I'm not entirely sure, but I think option A might be correct since the timing and amount seem clear.

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Elroy

5 months ago

I remember we discussed provisions in class, and I think it's because the costs are already set and there's no uncertainty about them.

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Carmen

5 months ago

I feel like option B could be misleading, but if the contracts are settled, then maybe there's no real outflow expected.

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Ardella

5 months ago

Hmm, this looks like a tricky one. I'll need to carefully read through the question and options to identify the key information.

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