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  1. Home
  2. IIA Certification
  3. IIA-CIA-Part3 Exam
  4. IIA.IIA-CIA-Part3.v2025-10-13.q454 Dumps
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Question 16

An organization contracted a third-party service provider to plan, design, and build a new facility. Senior management would like to transfer all of the risk to the builder. Which type of procurement contract would the organization use?

Correct Answer: C
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Question 17

A common mistake in valuing the entity to be acquired in a business combination is:

Correct Answer: C
If the net incremental cash flows to the acquirer's shareholders are to be valued, the discount rate used should be the cost of equity capital. Moreover, this rate should reflect the risk associated with the use of funds rather than their source. The rate therefore should not be the cost of capital of the acquirer but rather the cost of equity of the combined entity after the combination. This calculation requires a new estimate of beta to be used in the Capital Asset Pricing Model.
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Question 18

If the government were to increase corporate tax rates, after-tax cost-volume-profit relationships for individual firms would change as follows:

Correct Answer: C
The firm owes no tax if it does not earn a profit. At the breakeven point, there is no profit.
Thus, a tax increase would have no effect on a firm's breakeven point, which is calculated by dividing fixed costs by the contribution margin ratio. The contribution margin equals sales revenues minus total variable costs. A business needs a computer application that can be either other related data follows Computer time is charged using developed internally or purchased. Suitable software from a predetermined rates. The organization has sufficient excess vendor costs US $29,000. Minor modifications and testing can be conducted by the systems staff as part of their regular workload. If the software is developed internally, a systems analyst would be assigned full time, and a contractor would assume the analyst's responsibilities. 1 he hourly rate for the regular analyst is US $25. The hourly rate for the contractor is US $22. The contractor would occupy an empty office.
The office has 100 square feet, and occupancy cost is US $45 per square foot computer capacity for either software development or modification/testing of the purchase software.
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Question 19

A manufacturer produces a quality product for which it charges a little more than some competing items but gives its consumers a more liberal warranty policy. The product carries a 5-year warranty that covers both labor and materials charges. Which of the following defines the appropriate method of accounting for the warranty?

Correct Answer: B
A provision is a liability of uncertain timing and amount A liability is a present obligation arising from past events, the settlement of which is expected to result in an outflow of resources embodying economic benefits. Whether a past event results in a present obligation is usually clear. Thus, it is clear from the circumstances that the entity's sale of goods without warranty is an obligating event that resulted in a present obligation for the issuance of warranty costs. Recognition of provisions is appropriate when the entity has a legal or constructive present obligation resulting from a past event (called an obligating event), it is probable that an outflow of economic benefits will be necessary to settle the obligation, and its amount can be reliably estimated. Assuming that the amount of warranty costs can be reliably estimated all though they are uncertain in timing and amount compared with a trade payable, for example) and that the outflow is probable in these circumstances, "more likely than not"), the manufacturer's contractual present obligating should result in recognition of a provision.
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Question 20

The activity that involves a trial run of a product in a typical segment of the market before proceeding to a national launch is referred to as:

Correct Answer: B
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