ACA Financial Accounting and Reporting

Question 1

Under FRS 102, which of the following items should be classified as an intangible asset?

Accepted Answer

A purchased patent with a finite useful life

Answer

Factory machinery

Answer

Internally generated goodwill

Answer

Land and buildings

Question 2

Under FRS 102, what is the correct accounting treatment for development costs that meet the capitalisation criteria?

Accepted Answer

May be capitalised as an intangible asset and amortised over the development's useful life

Answer

Always expensed immediately as incurred

Answer

Recognised as revenue immediately

Answer

Recorded as a contingent liability

Question 3

A UK company issues 100,000 ordinary shares with a nominal value of £1 each at a price of £3.50 per share. What is the share premium arising from this issue?

Accepted Answer

£250,000

Answer

£100,000

Answer

£350,000

Answer

£150,000

Question 4

Under FRS 102, how should a provision be measured?

Accepted Answer

At the best estimate of the expenditure required to settle the present obligation at the reporting date

Answer

At the maximum possible amount of the obligation

Answer

At the invoice value received from the supplier

Answer

At the amount management would prefer to pay

Question 5

Under the Companies Act 2006, which of the following is a legal requirement for the directors' report of a UK company?

Accepted Answer

A recommended dividend amount (if applicable) and the names of the directors who served during the year

Answer

A detailed five-year financial forecast

Answer

A full list of all employees and their salaries

Answer

The CEO's personal investment portfolio

Question 6

Under FRS 102, what is the treatment of borrowing costs directly attributable to the acquisition of a qualifying asset?

Accepted Answer

May be either capitalised or expensed as an accounting policy choice

Answer

Always expensed to profit or loss as incurred

Answer

Must be capitalised as part of the cost of the qualifying asset

Answer

Recognised directly in equity