ACCA ACCA Financial Reporting Standards 1

Question 1

Under IFRS 15, when should revenue from contracts with customers be recognized?

Accepted Answer

When the performance obligation is satisfied

Answer

IFRS 15 requires revenue to be recognized when (or as) a performance obligation in a contract is satisfied by transferring control of a good or service to the customer.

Question 2

According to IAS 16, which cost elements can be capitalized as part of property, plant and equipment (PPE)?

Accepted Answer

Purchase price, directly attributable costs, and initial dismantling estimates

Answer

IAS 16 allows capitalization of the purchase price, costs directly attributable to bringing the asset to working condition, and the initial estimate of dismantling costs.

Question 3

Under IAS 36, what is an 'impairment loss' on an asset?

Accepted Answer

The excess of carrying amount over recoverable amount

Answer

An impairment loss occurs when an asset's carrying amount exceeds its recoverable amount (the higher of fair value less costs to sell and value in use).

Question 4

What is the key distinction between 'finance leases' and 'operating leases' under IFRS 16?

Accepted Answer

IFRS 16 eliminates the distinction; lessees recognize a right-of-use asset for all leases

Answer

IFRS 16 removed the lessee distinction between finance and operating leases, requiring recognition of a right-of-use asset and lease liability for almost all leases.

Question 5

Under IAS 2, how should inventories be measured on the balance sheet?

Accepted Answer

At the lower of cost and net realizable value

Answer

IAS 2 requires inventories to be measured at the lower of cost and net realizable value, applying the prudence concept to avoid overstating assets.

ACCA - Association of Chartered Certified Accountants Certification Practice Test

ACCA - Association of Chartered Certified Accountants Certification Practice Test

ACCA ACCA Financial Reporting Standards 1