New Year Sale 2026! Hurry Up, Grab the Special Discount - Save 25% - Ends In 00:00:00 Coupon code: SAVE25
Welcome to Pass4Success

- Free Preparation Discussions
Mail Us support@pass4success.com
Location US
Mob_nav_barsMENU

CIMAPRA19-F02-1 Exam - Topic 5 Question 105 Discussion

Actual exam question for CIMA's CIMAPRA19-F02-1 exam
Question #: 105
Topic #: 5
[All CIMAPRA19-F02-1 Questions]

UV entered into a five year non-cancellable operating lease for an asset two years ago. Lease payments are settled annually in arrears.

At the year end, UV no longer requires this leased asset as they have decided to discontinue the product line that itwas used for.

At this date UV had made two out of the five lease payments.

Which of the following statements about the unavoidable lease payments is true in accordance with IAS 37 Provisions, Contingent Liabilities and Assets?

Show Suggested Answer Hide Answer
Suggested Answer: A

by Ezekiel at Jan 13, 2025, 07:49 AM

Limited Time Offer

25%

Off

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

Contribute your Thoughts:

0/2000 characters
Submit Cancel
Emilio
3 months ago
Option C sounds reasonable too, but I lean towards A.
upvoted 0 times
...
Eleni
3 months ago
I’m not sure about that, shouldn’t they disclose it at least?
upvoted 0 times
...
Reena
3 months ago
Wait, can they just ignore the payments? That seems off.
upvoted 0 times
...
Samuel
4 months ago
I agree, option A makes the most sense here.
upvoted 0 times
...
Winifred
4 months ago
A provision for unavoidable lease payments is definitely needed.
upvoted 0 times
...
Royal
4 months ago
I think the key here is that since the lease is non-cancellable, we might need to recognize a provision. I lean towards option A, but I’m not entirely certain.
upvoted 0 times
...
Corrie
4 months ago
I’m a bit confused about whether the lease payments should be disclosed or if a provision is necessary. I feel like we covered this but I can't recall the specifics.
upvoted 0 times
...
Christene
4 months ago
This question feels similar to one we practiced where we had to determine if a liability should be recognized. I think option A might be correct.
upvoted 0 times
...
Brice
5 months ago
I remember we discussed how IAS 37 deals with provisions, but I'm not sure if we should recognize a provision for lease payments that are unavoidable.
upvoted 0 times
...
Shawn
5 months ago
This is a tricky one. I'll need to weigh the options carefully and make sure I select the answer that is fully compliant with the IAS 37 requirements.
upvoted 0 times
...
Norah
5 months ago
Okay, I think I've got a handle on this. The key is determining whether a provision needs to be recognized for the unavoidable lease payments, and if so, where the corresponding charge should be recorded.
upvoted 0 times
...
Santos
5 months ago
Hmm, I'm a bit unsure about this one. I'll need to review the IAS 37 standard closely to make sure I understand the right accounting treatment for the remaining lease payments.
upvoted 0 times
...
Lon
5 months ago
This seems like a straightforward application of IAS 37. I'll need to carefully consider the requirements around recognizing a provision for the unavoidable lease payments.
upvoted 0 times
...
Vanda
9 months ago
Wait, we're supposed to actually read the accounting standards? I thought this was a multiple-choice exam, not a research project!
upvoted 0 times
...
Katheryn
9 months ago
I'm pretty sure the correct answer is C. Disclose the amount in the financial statements, but don't bother with any accounting entries. That way, you can just show the liability and move on.
upvoted 0 times
Annamaria
8 months ago
I agree with you, C seems to be the correct answer. Just disclose the amount and no need for accounting entries.
upvoted 0 times
...
Nathalie
8 months ago
I disagree, I believe the answer is C. We should disclose the amount in the financial statements without any accounting entry.
upvoted 0 times
...
Gretchen
9 months ago
I think the correct answer is A. We should recognize a provision for the unavoidable lease payments with a charge to profit or loss.
upvoted 0 times
...
...
Ettie
10 months ago
Haha, I bet the answer is D - just ignore the lease payments and hope the examiner doesn't notice. That's the easiest solution, right?
upvoted 0 times
Kallie
9 months ago
User 3: Yeah, ignoring the lease payments would not be a good idea. We need to be transparent in our financial statements.
upvoted 0 times
...
Gerald
9 months ago
User 2: I agree with Gerald. We should follow the accounting standards and recognize a provision for the unavoidable lease payments.
upvoted 0 times
...
Susy
9 months ago
User 1: No way, that's not the right approach. We can't just ignore the lease payments.
upvoted 0 times
...
...
Shanda
10 months ago
I'm not sure about this one. Could it be B? Recognizing the provision in other comprehensive income might be more appropriate since it's not directly related to the current operations.
upvoted 0 times
Shannon
9 months ago
I see your point, but I still believe that recognizing the provision in profit or loss is the most appropriate treatment.
upvoted 0 times
...
Tresa
9 months ago
I'm not sure about that. I still think B could be a valid option considering the nature of the lease payments.
upvoted 0 times
...
Levi
10 months ago
I agree with you. Option A makes more sense because it directly impacts the profit or loss.
upvoted 0 times
...
Quentin
10 months ago
I think A is the correct option. Recognizing the provision in profit or loss seems more appropriate in this case.
upvoted 0 times
...
...
Lashawnda
10 months ago
I think the correct answer is A. A provision should be recognised for the unavoidable lease payments, as UV is legally bound to make the remaining lease payments even though they no longer require the asset. Charging this to profit or loss seems appropriate.
upvoted 0 times
Farrah
9 months ago
Yes, UV is legally obligated to make the remaining lease payments, so it makes sense to recognize it as a provision in the financial statements.
upvoted 0 times
...
Kerry
10 months ago
I agree with you, option A is the correct answer. UV should recognize a provision for the unavoidable lease payments.
upvoted 0 times
...
...
Barabara
11 months ago
I'm not sure about option B. Recognizing the provision in other comprehensive income doesn't seem appropriate in this situation.
upvoted 0 times
...
Jessenia
11 months ago
I agree with Tammara. It makes sense to recognize the provision for the lease payments that UV is obligated to make.
upvoted 0 times
...
Tammara
11 months ago
I think option A is correct. A provision should be recognized for the unavoidable lease payments with a corresponding charge to profit or loss.
upvoted 0 times
...

Save Cancel