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QUESTION: 91

CORRECT TEXT
Country ZZ allows the cost of a capital asset to be adjusted for an indexation allowance which takes into consideration the effect of inflation, although the indexation allowance cannot convert a chargeable gain into a chargeable loss.
The following data relates to the sale of an asset during the year ended 31 March 20X4:

Calculate the chargeable gain or loss in respect of the sale of this asset.
Give your answer to the nearest $.

Answer(s): A

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QUESTION: 92

BC manufactures product X and on 1 February 20X4 started a project to develop a new material for use in its production. The development project is due to be completed by 31 December 20X4 with the new material being used in production from 1 January 20X5. The development project costs have been reliably estimated at $200,000 and it is anticipated that the new material will increase the margin achieved on product X by 20%.
You are a CIMA accountant within BC and are considering how to treat the development costs of $200,000 in the financial statements for the year ended 31 December 20X4. In accordance with the ethical principle of professional competence and due care, which of the following statements correctly explains how these costs should be accounted for?

Expense to profit or loss because the development project will be completed by the end of the year.
Expense to profit or loss because the development has not changed the nature of product X.
Capitalise and amortise from 1 February 20X4 because this is the date that the project commenced.
Capitalise but do not amortise until 1 January 20X5 because this is the date that the new material will start to be used.

Answer(s): D

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QUESTION: 93

There are two main approaches to corporate governance: rules-based and principle-based.
Which THREE of the following are correct?

Rules-based corporate governance applies to the USA and principle-based corporate governance applies to the UK.
Rules-based corporate governance applies to the UK and principle-based corporate governance applies to the USA.
Sarbanes Oxley Act (SOX) is a rules-based approach to corporate governance.
Sarbanes Oxley Act (SOX) is a principle-based approach to corporate governance.
A principle-based approach will mean the entity must comply or explain and a rules-based approach will have appropriate penalties for transgression.
Best practice will use a rules-based approach to corporate governance and will have appropriate penalties for transgression.

Answer(s): A,C,E

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