CIMA Exam CIMAPRA19-F02-1 Topic 4 Question 108 Discussion

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

Question #: 108
Topic #: 4

KL acquired 2 million $1 equity shares in MN on 18 July 20X0 for $1.65 a share and classified this investment as available for sale (AFS) in accordance with IAS 39 Financial instruments: Recognition andMeasurement.

KL paid a 0.5% transaction fee to its broker on this transaction. MN's shares were trading at $1.78 on 31 December 20X0.

Which of the following journals records the subsequent measurement of this investment at 31 December 20X0?

AOption

BOption

COption

Show Suggested Answer

Suggested Answer: A

by Sage at Mar 07, 2025, 11:09 PM

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Justine

20 hours ago

Ah, the joys of accounting standards. I wonder if the exam writers get a kick out of seeing us squirm over these financial instrument questions. At least it's not as bad as trying to decipher the tax code!

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Dalene

3 days ago

Hmm, this one's a bit tricky. I'm going to go with option C, but I hope the exam doesn't have any of those 'trick questions' that make you second-guess yourself!

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Mertie

10 days ago

I think option C is the correct answer here. The investment should be measured at fair value, and the increase in value from the acquisition price to the market price on 31 December 20X0 should be recorded in other comprehensive income.

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Wava

16 days ago

I'm not sure, but I think option B could also be a possible journal entry.

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Malissa

16 days ago

This question is testing our understanding of how to account for available-for-sale (AFS) investments under IAS 39. The key is to recognize that the investment should be measured at fair value, with the change in fair value recorded in other comprehensive income.

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Cyril

17 days ago

I agree with Roslyn, option C seems to be the correct journal entry.

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Roslyn

19 days ago

I think the answer is option C.

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