CIMA Exam CIMAPRA19-F01-1 Topic 5 Question 83 Discussion

Actual exam question for CIMA's CIMAPRA19-F01-1 exam

Question #: 83
Topic #: 5

RST operates in Country X where the tax rules state entertaining costs and accounting depreciation are disallowable for tax purposes.

In year ending 31 May 20X4, XYZ made an accounting profit of $480,000.

Profit included $16,300 of entertaining costs and $15,150 of income exempt from taxation.

XYZ has plant and machinery with accounting depreciation amounting to $24,200 and tax depreciation amounting to $45,200.

Calculate the tax charge for the year ended 31 May 20X4 assuming all profits are taxed at 25%.

A$115,038

B$114,463

C$125,538

D$124,963

Show Suggested Answer

Suggested Answer: A

by Alease at Mar 20, 2024, 11:09 PM

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Viola

2 days ago

Wait, what? Disallowed entertaining costs and tax depreciation? This sounds like some kind of sorcery. I'll need to really focus on this one.

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Ruthann

6 days ago

Hmm, I think the key here is to properly adjust the accounting profit to arrive at the taxable profit. This seems straightforward, but I better double-check my calculations.

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Okay, so we have to adjust the accounting profit by adding back the disallowed entertaining costs and subtracting the exempt income. Then, we need to use the tax depreciation instead of the accounting depreciation. Let me work this out.

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Donette

20 days ago

I agree with Talia, the tax charge should be $114,463.

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Talia

22 days ago

I believe it should be $114,463 because tax depreciation is higher than accounting depreciation.

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Kaitlyn

25 days ago

I think the tax charge would be $115,038.

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CIMA Exam CIMAPRA19-F01-1 Topic 5 Question 83 Discussion

Contribute your Thoughts:

Viola

Ruthann

Micaela

Donette

Talia

Kaitlyn