F1 CIMA Financial Reporting Free Practice Exam Questions (2025 Updated)

In accordance with IAS 16 Property, Plant and Equipment, in which of the following situations would subsequent expenditure on a non-current asset be capitalised?

The statement of profit or loss for PQ, ST and AB for the year ended 31 December 20X0 are shown below:

1. PQ acquired 80% of its subsidiary, ST, on 1 January 20X0 and 40% of its associate, AB, on 1 September 20X0.

2. Since acquistion PQ has sold goods to ST and AB for $20,000 and $30,000 respectively. At the year end both ST and AB have 50% of these goods remaining in inventory. PQ uses a mark-up of 20% on all of its sales.

3. Since acquisition the goodwill in respect of ST has been impaired by $8,000 and the investment in AB has been impaired by $2,000.

4. PQ uses the fair value method for non-controlling interest at acquisition.

Calculate the amount that will be shown as the share of profit of associate in PQ's consolidated statement of profit or loss for the year ended 31 December 20X0.

Which of the following would be found under the heading "other comprehensive income" in the statement of total comprehensive income?

Mr K is being pressured by his manager to change figures in his report so that it will improve his manager's bonus.

His manager has promised Mr K a promotion if he agrees to do this.

What threats is Mr K facing?

Country X levies a duty on alcoholic drinks. Where the alcohol content is above 40% by volume the duty levied is $5 per 1 litre bottle.

What type of tax is this duty?

The following information is extracted from the statement of financial position for ZZ at 31 March 20X3:

Included within cost of sales in the statement of profit or loss for the year ended 31 March 20X3 is $20 million relating to the loss on the sale of plant and equipment which had cost $100 million in June 20X1.

Depreciation is charged on all plant and equipment at 25% on a straight line basis with a full year's depreciation charged in the year of acquisition and none in the year of sale.

The revaluation reserve relates to the revaluation of ZZ's property.

The total depreciation charge for property, plant and equipment in ZZ's statement of profit of loss for the year ended 31 March 20X3 is $80 million.

The corporate income tax expense in ZZ's statement of profit or loss for year ended 31 March 20X3 is $28 million.

ZZ is preparing its statement of cash flows for the year ended 31 March 20X3.

What figure should be included for corporate income tax paid in order to arrive at the net cash flow from operating activities?

Give your answer to the nearest $ million.

The tax rules in a country state that all tax returns must be filed by 31 March each year and that any outstanding tax balance must be paid by 14 April each year. An entity filed its tax return on 10 April 20X2 and paid the outstanding tax on 20 April 20X2.

Which TWO of the following powers is the tax authority likely to have in respect of these actions by the entity?

Which of the following would NOT be classified as part of non-current assets in a statement of financial position?

The following information relates to AA.

Extract of Trial Balance at 31 December 20X4;

Notes

(i) Inventory at 31 December 20X4 was valued at cost at $30.

(ii) The loan which was received on 1 July 20X4 is repayable in 20X9.

(iii) Corporate income tax represents an over-provision of tax for the year ended 31 December 20X3. AA reported a loss for tax purposes for the year ended 31 December 20X4 and a tax refund is expected amounting to $20.

(iv) Cost of sales, administration and distribution costs need to be adjusted for the following:

What figures should be entered on the face of the Statement of profit or Loss for the year ended 31 December 20X4 in relation to Interest and Corporate income tax?

XYZ's accounting profit for the last reporting period is $200,000. This is after deduction of:

• Accounting depreciation of $40,000.

• Entertaining expenses of $10,000 which are disallowable for tax purposes

• Directors' salaries of 530.000

Tax depreciation allowances of $60,000 are available and the rate of corporate income tax is 20%.

What is the corporate tax liability of XYZ for the reporting period?

RS purchased an asset on 1 May 20X1 for $200,000, exclusive of import duties of $25,000.

The asset was sold on 1 December 20X3 for $450,000, incurring costs to sell of $15,000.

RS is resident in Country Y where indexation is allowable from the date of purchase to the date of sale.

The indexation factor increased by 40% in the period 1 May 20X1 to 1 December 20X3.

Capital gains are taxed at 25%.

What is the capital tax due from RS on disposal of the asset?

Mr AM is the owner of Waxco Ltd. Mr AM was born in India, but currently resides in the USA. He has gained dual Indian and American citizenship.

Mr AM first registered Waxco Ltd in the USA when he started the company ten years ago. However, because of lower costs, the company moved its central management station to Germany two years ago. Waxco Ltd

has other smaller offices such as call centres across Asia, in locations such as Pakistan and Cambodia, however Waxco Ltd only currently sell goods in the USA.

Which of the countries mentioned are relevant for determining Waxco Ltd's competent jurisdiction?

The following information relates to AA.

Extract of Trial Balance at 31 December 20X4;

Notes

(i) Inventory at 31 December 20X4 was valued at cost at $30.

(ii) The loan which was received on 1 July 20X4 is repayable in 20X9.

(iii) Corporate income tax represents an over-provision of tax for the year ended 31 December 20X3. AA reported a loss for tax purposes for the year ended 31 December 20X4 and a tax refund is expected amounting to $20.

(iv) Cost of sales, administration and distribution costs need to be adjusted for the following:

What figures should be entered in the Statement of Profit or Loss for the year ended 31 December 20X4 in relation to Administration and Distribution costs?

Which TWO of the following are implications of employee income tax being paid to the tax authority through a Pay-As-You-Earn scheme?

Which of the following would NOT normally be subject to a withholding tax?

An asset cost $250,000 on 1 January 20X1 and on that date was assessed to have a residual value of $40,000 and a useful economic life of six years. On 1 January 20X4 management assessed that the remaining useful economic life of the asset was five years and that the asset had a residual value of nil.

What is the depreciation charge for this asset in the year ended 31 December 20X4?

Give your answer to the nearest whole number.

In Country X, trading losses in any year can be carried back and set off against trading profits in the previous year, with any unrelieved losses carried forward to set against the first available trade profits in future years.

GH had the following taxable profits and losses in years 20X1 to 20X4:

What are the taxable profits for 20X4, assuming the most efficient use of the loss is made?

BBB has been experiencing liquidity problems and currently has an overdraft with the bank.

Which THREE of the following would be appropriate measures to help address this problem?

If a parent entity is to be exempt from preparing consolidated financial statements it needs to satisfy certain conditions according to IFRS 10 Consolidated Financial Statements.

Which TWO of the following are conditions that need to be satisfied to be exempt?