CIMAPRA19-F02-1 Exam - Topic 1 Question 91 Discussion

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

Question #: 91
Topic #: 1

In the year ended 31 December 20X7, FG leased a piece of machinery. The accountant of FG had prepared the financial statements for the year to 31 December 20X7 on the basis of the lease being an operating lease.

However, following the end of year audit it has been agreed that the machinery is in fact held under a finance lease and therefore the financial statements need to be corrected.

Thecorrection will have which THREE of the following affects on the financial statements?

ANon-current assets will increase.

BFinance costs will increase.

CCurrent liabilities will increase.

DNon-current liabilities will decrease.

EDepreciation costs will decrease.

FNon-current assets will decrease.

Show Suggested Answer

Suggested Answer: B

by Jestine at Jul 01, 2024, 09:03 PM

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Caitlin

6 months ago

I thought depreciation costs would stay the same?

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James

6 months ago

Current liabilities will definitely increase too.

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Corinne

6 months ago

Wait, are we sure about the finance costs increasing?

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Son

7 months ago

Totally agree, that’s how finance leases work!

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Talia

7 months ago

Non-current assets will increase.

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Tiera

7 months ago

I thought non-current liabilities would increase as well, but I'm not sure if they decrease or stay the same. This is confusing!

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Haley

7 months ago

I practiced a similar question where current liabilities increased due to the lease obligation being recognized. I think that applies here too.

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Royal

8 months ago

I'm a bit unsure about the finance costs. I think they might increase because of the interest component in the lease payments, but I need to double-check that.

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Ty

8 months ago

I remember that with a finance lease, the asset is recognized on the balance sheet, so non-current assets will definitely increase.

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Glynda

8 months ago

I'm pretty confident on this one. The key changes are that the non-current asset will increase, finance costs will increase, and current liabilities will increase. The other options don't seem relevant to the change in lease classification.

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Major

8 months ago

This is a tricky one. I'll need to review the accounting standards on finance leases to make sure I fully understand how the financial statements will be impacted. Gotta be careful not to miss any of the key effects.

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Yen

8 months ago

Hmm, I'm a bit confused. If the lease is now classified as a finance lease, wouldn't that also impact the finance costs and depreciation? I'll need to think through the full implications carefully.

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Arlen

8 months ago

This seems straightforward - the lease is now classified as a finance lease, so the machinery will need to be recognized as a non-current asset, and the corresponding liability will increase current and non-current liabilities.

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Roy

8 months ago

Okay, I think I've got it. The non-current asset will increase, finance costs will increase, and current liabilities will increase. The other options don't seem to logically follow from the change in lease classification.

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Clorinda

8 months ago

Okay, let me think this through step-by-step. RSTP is all about determining the root bridge, and that's based on the bridge-id, which is a combination of the priority and the MAC address. The switch with the lowest bridge-id becomes the root. I'm pretty sure that's the right approach here.

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Helaine

8 months ago

I've got this one! Salesforce CDN is a production-only feature, so it's not supported in any sandbox environments, including Partial and Full. I'm confident that option B is the right answer here.

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Tyra

1 year ago

Well, well, looks like the accountant had a bit of a brain freeze on this one. I guess they were hoping the auditors wouldn't notice the old 'hide the finance lease' trick.

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Polly

1 year ago

C) Current liabilities will increase.

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Leontine

1 year ago

B) Finance costs will increase.

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Marva

1 year ago

A) Non-current assets will increase.

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Willow

1 year ago

I'm feeling confident about this one. A, B, and C are definitely the correct answers. Though I'm a little curious to see what kind of humorous comment my fellow candidates might come up with.

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