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CIMA Exam CIMAPRA19-F02-1 Topic 1 Question 81 Discussion

Actual exam question for CIMA's CIMAPRA19-F02-1 exam
Question #: 81
Topic #: 1
[All CIMAPRA19-F02-1 Questions]

EF acquired a copy machine under a three-year operating lease. EF will pay nothing in year one and then will pay $6,000 in years two and three. The estimated economic useful life of the machine is six years.

Which THREE of the following statements are true in respect of how EF will account for its use of the machine and the associated operating lease payments?

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Suggested Answer: A, B, C

Contribute your Thoughts:

Dell
3 days ago
Hmm, I'm not sure about including an asset of $12,000 in property, plant, and equipment. Isn't the whole point of an operating lease that we don't record the asset on our books?
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Layla
11 days ago
I disagree with both of you. I think statement E is true because EF will charge $4,000 to profit or loss in each of the three years.
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Son
12 days ago
I agree with you, Sharika. I also believe statement B is true since no expense will be recorded in year one.
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Sharika
16 days ago
I think statement A is true because the asset should be recognized at the start of the lease.
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