CIMAPRA19-F03-1 Exam - Topic 4 Question 42 Discussion

Actual exam question for CIMA's CIMAPRA19-F03-1 exam

Question #: 42
Topic #: 4

A company is planning a share repurchase programme with the following details:

* Repurchased shares will beimmediatelycancelled.

* The shares will be purchased at a premium to the market share price.

The current market share price is greater than the nominal value of the shares.

Which of the following statements about the impact of the share repurchase programme on the company's financial statements is correct?

AThe premium to the nominal value would be charged to retained earnings.

BThe share capital figure would reduce by the nominal value of the shares purchased.

CThe total value of the equity in its Statement of Financial Position would remain unchanged.

DThe premium to the market value would be charged to the Income Statement.

Show Suggested Answer

Suggested Answer: B

by Iluminada at May 10, 2022, 01:31 AM

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5 months ago

The premium goes to retained earnings, right?

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Hmm, I'm a bit unsure about this one. I know software allocations are important, but I'm not sure of the exact process when the hardware is retired. I'll have to review my notes to see if I can figure out the right answer.

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Fanny

5 months ago

This looks straightforward. I'd start by defining the organization's objectives and then prioritize their initiatives to ensure the Salesforce implementation aligns with their goals.

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Suzi

5 months ago

I'm not entirely sure about the calculations, but I remember something about fixed and variable costs. Maybe it's better to choose option A since 5,000 seems like a dividing line for profit?

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CIMAPRA19-F03-1 Exam - Topic 4 Question 42 Discussion

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