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CIMA F2 Advanced Financial Reporting F2 Question # 41 Topic 5 Discussion

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CIMA F2 Advanced Financial Reporting F2 Question # 41 Topic 5 Discussion

F2 Exam Topic 5 Question 41 Discussion:
Question #: 41
Topic #: 5

UV entered into a five year non-cancellable operating lease for an asset two years ago. Lease payments are settled annually in arrears.

At the year end, UV no longer requires this leased asset as they have decided to discontinue the product line that it was used for.

At this date UV had made two out of the five lease payments.

Which of the following statements about the unavoidable lease payments is true in accordance with IAS 37 Provisions, Contingent Liabilities and Assets?
A.

A provision should be recognised for the unavoidable lease payments with a corresponding charge to profit or loss.

B.

A provision should be recognised for the unavoidable lease payments with a corresponding charge to other comprehensive income.

C.

The amount of the unavoidable lease payments should be disclosed in the financial statements with no corresponding accounting entry.

D.

The amount of the unavoidable lease payments should be ignored in the financial statements.

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Actual exam question for CIMA F2 exam by Phoenix69843 at Aug 3, 2025, 12:00:00 AM

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