ACA Financial Reporting 2

Question 1

Under FRS 102 (UK GAAP), an entity that is a micro-entity may apply:

Accepted Answer

FRS 105 (the Micro-entities Regime)

Answer

FRS 105 is the UK financial reporting standard for micro-entities (meeting two of three thresholds: turnover ≤£632k, balance sheet ≤£316k, employees ≤10), providing a simplified framework.

Question 2

Under IAS 19, which of the following is recognised in other comprehensive income (OCI) for defined benefit pension schemes?

Accepted Answer

Remeasurement gains and losses

Answer

IAS 19 requires remeasurement gains and losses (actuarial gains/losses and returns on plan assets excluding interest) to be recognised in OCI and not recycled to profit or loss.

Question 3

Under IFRS 10, the non-controlling interest (NCI) at acquisition can be measured at:

Accepted Answer

Either fair value or proportionate share of net assets

Answer

IFRS 3/IFRS 10 allows NCI to be measured at either fair value (full goodwill method) or at the NCI's proportionate share of the acquiree's identifiable net assets (partial goodwill method).

Question 4

Under IAS 27 / IFRS 10, which method is used in the parent's own (separate) financial statements to account for investments in subsidiaries?

Accepted Answer

Cost or fair value model

Answer

In separate financial statements, IAS 27 permits investments in subsidiaries to be measured at cost or in accordance with IFRS 9 (fair value). The equity method is not permitted in separate statements.

Question 5

Which of the following would be classified as an item of other comprehensive income (OCI)?

Accepted Answer

Revaluation surplus on PPE

Answer

Under IAS 16's revaluation model, increases in the carrying amount of PPE (revaluation surplus) are recognised in OCI and accumulated in the revaluation reserve within equity.

ACA ICAEW Practice Test

ACA ICAEW Practice Test

ACA Financial Reporting 2