ACCA ACCA Financial Reporting Standards 3

Question 1

Under IAS 21, how are foreign currency monetary items translated at the balance sheet date?

Accepted Answer

At the closing (spot) rate at the balance sheet date

Answer

At the historical rate when the transaction was initially recorded

Answer

At the average rate for the reporting period

Answer

At the forward rate contracted for settlement

Question 2

What is the purpose of a 'statement of changes in equity' in IFRS financial statements?

Accepted Answer

To reconcile the opening and closing balances of all equity components

Answer

To show dividends paid to shareholders during the year

Answer

To disclose the fair value changes in available-for-sale assets

Answer

To summarize cash flows from financing activities

Question 3

Under IAS 8, what is the correct treatment when an entity changes an accounting policy?

Accepted Answer

Apply the change retrospectively, restating prior periods unless impracticable

Answer

Apply the change prospectively from the current period only

Answer

Disclose the change but no restatement is required

Answer

Apply the change from the beginning of the following financial year

Question 4

Which IFRS standard addresses segment reporting, and what is the 'management approach' it requires?

Accepted Answer

IFRS 8; segments are based on how the chief operating decision maker reviews internal reports

Answer

IAS 14; segments are defined by industry and geography

Answer

IFRS 5; segments are assets held for sale

Answer

IAS 10; segments are post-balance sheet events

Question 5

Under IAS 10, which of the following is classified as an 'adjusting event after the reporting period'?

Accepted Answer

Discovery of a fraud that existed at the balance sheet date

Answer

A major acquisition announced after the year-end

Answer

A catastrophic fire that destroyed assets after the year-end

Answer

Announcement of a new dividend after the year-end

Question 6

What is the 'fair value hierarchy' under IFRS 13, and which level represents the most reliable fair value inputs?

Accepted Answer

Level 1 — quoted prices in active markets for identical assets

Answer

Level 3 — unobservable inputs developed by management

Answer

Level 2 — observable inputs other than Level 1 prices

Answer

All levels are equally reliable under IFRS 13