CIMAPRA19-F02-1 Exam - Topic 5 Question 110 Discussion

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

Question #: 110
Topic #: 5

RSis alisted entitythat has no subsidiaries although its Finance Director is also a director of TU, an unconnected entity.

It is preparing its financial statements to 30 September 20X6.

Which of the following substantial transactions must be disclosed in these financial statements in accordance withIAS 24 Related Party Disclosures?

APension payments made on behalf of the Managing Director of RS.

BPurchase ofproductionmaterials from TU at a discounted price to the current market value.

CSale of finished goods to TU at normal selling price.

DPerformance related bonuspayments made to the office staff for the year.

Show Suggested Answer

Suggested Answer: A

by Meaghan at Apr 09, 2025, 05:01 AM

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Benton

4 months ago

I'm surprised that transactions with an unconnected entity are still relevant here.

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Jerry

4 months ago

I think the purchase from TU should be disclosed too, right?

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Kimbery

4 months ago

A pension payment for the MD definitely needs disclosure.

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Royce

4 months ago

Wait, why would selling at normal price to TU matter?

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Hyun

4 months ago

Totally agree, the bonus payments should be disclosed as well!

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Allene

5 months ago

I don’t think the performance bonuses are related party transactions since they’re for office staff, but I could be wrong.

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Simona

5 months ago

I practiced a similar question where we had to identify transactions with directors. I feel like the sale of goods to TU might not need disclosure since it’s at normal price.

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Adelaide

5 months ago

I think the purchase from TU is definitely a related party transaction since the Finance Director is involved, but I’m unsure about the discount aspect.

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Dan

5 months ago

I remember discussing related party transactions in class, but I'm not sure if pension payments count as substantial.

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Janella

6 months ago

I feel confident I can solve this, I just need to apply my knowledge of related party disclosures systematically.

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Dana

6 months ago

The wording of the options is tricky, I'll need to read them closely to determine which one matches the requirements of IAS 24.

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Sanjuana

6 months ago

Okay, I think I've got this. The key is to identify any transactions between RS and the unconnected entity TU since they share a director.

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Layla

6 months ago

Hmm, I'm a bit unsure about the specifics of IAS 24 and what needs to be disclosed. I'll have to review that standard carefully.

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Susana

6 months ago

This question seems straightforward, I just need to focus on the key details about related party transactions.

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Tayna

11 months ago

Pension payments for the Managing Director? That's personal information, not a business transaction. I'm going with B as well.

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Ilona

10 months ago

I agree, pension payments for the Managing Director should not be disclosed as a substantial transaction.

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Candida

10 months ago

C) Sale of finished goods to TU at normal selling price.

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Madonna

10 months ago

B) Purchase of production materials from TU at a discounted price to the current market value.

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Malcolm

11 months ago

Ha! Performance-related bonuses to the office staff? That's hardly a related party transaction worth disclosing. I'd go with B.

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Josphine

10 months ago

Yeah, I also think the purchase of production materials from TU is the most significant transaction to disclose.

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Markus

11 months ago

I think the purchase of production materials from TU at a discounted price should be disclosed.

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Maddie

11 months ago

I agree, performance-related bonuses to office staff are not substantial enough to disclose.

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Kerry

12 months ago

I think C is the correct answer. The sale of finished goods to TU at normal selling price is still a related party transaction that should be disclosed.

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