ACCA ACCA Financial Reporting Standards 2

Question 1

Under IFRS 9, into which three categories are financial assets classified?

Accepted Answer

Amortized cost, fair value through other comprehensive income (FVOCI), and fair value through profit or loss (FVTPL)

Answer

IFRS 9 classifies financial assets into amortized cost, FVOCI, and FVTPL based on the entity's business model and the contractual cash flow characteristics.

Question 2

What does IAS 19 govern in financial reporting?

Accepted Answer

Employee benefits including pensions

Answer

IAS 19 Employee Benefits prescribes how companies account for and disclose employee benefits, including short-term benefits, post-employment benefits, and pensions.

Question 3

Under IFRS 3, how should goodwill arising on a business combination be accounted for?

Accepted Answer

Recognized as an asset and tested annually for impairment

Answer

IFRS 3 requires goodwill to be recognized as an intangible asset and subjected to annual impairment testing rather than systematic amortization.

Question 4

What is the 'conceptual framework' in IFRS and what is its primary purpose?

Accepted Answer

A guide that underpins the development of IFRS standards and assists preparers in applying them

Answer

The IFRS Conceptual Framework provides the underlying concepts that guide the IASB in developing standards and helps preparers develop consistent accounting policies.

Question 5

Under IAS 37, when should a provision be recognized on the balance sheet?

Accepted Answer

When there is a present obligation, probable outflow of resources, and reliable estimate

Answer

IAS 37 requires a provision to be recognized only when there is a present obligation (legal or constructive), a probable outflow of economic benefits, and a reliable estimate can be made.

ACCA - Association of Chartered Certified Accountants Certification Practice Test

ACCA - Association of Chartered Certified Accountants Certification Practice Test

ACCA ACCA Financial Reporting Standards 2