ACCA AS Financial Reporting (FR)

Question 1

Under IAS 16 Property, Plant and Equipment, which of the following costs should be included in the initial measurement of an item of PPE?

Accepted Answer

Cost of testing whether the asset functions properly

Answer

Staff training costs for operating the asset

Answer

Administration and general overhead costs

Answer

Costs of relocating the asset to a different site after initial installation

Question 2

According to IAS 37 Provisions, Contingent Liabilities and Contingent Assets, when should a provision be recognised?

Accepted Answer

When there is a present obligation from a past event, and it is probable that an outflow of resources will be required, and a reliable estimate can be made

Answer

When there is a possible obligation arising from past events

Answer

Whenever management considers a future cost is likely

Answer

Only when the exact amount of the obligation is known with certainty

Question 3

Under IFRS 15 Revenue from Contracts with Customers, at which step is revenue recognised?

Accepted Answer

Step 5: Recognise revenue when (or as) the entity satisfies a performance obligation

Answer

Step 1: Identify the contract

Answer

Step 3: Determine the transaction price

Answer

Step 2: Identify the performance obligations

Question 4

A company revalues land from its carrying amount of £200,000 to its fair value of £350,000. How should the revaluation surplus of £150,000 be treated?

Accepted Answer

Recognised in other comprehensive income and accumulated in the revaluation surplus within equity

Answer

Recognised in profit or loss as a gain

Answer

Offset against accumulated depreciation

Answer

Treated as a prior period adjustment

Question 5

Under IAS 10 Events After the Reporting Period, which of the following is an adjusting event?

Accepted Answer

Settlement after the reporting date of a court case confirming the entity had a present obligation at the reporting date

Answer

A major acquisition of another entity announced after year end

Answer

Destruction of a factory by flood after the reporting date

Answer

A decline in market value of investments after year end

Question 6

Under IAS 38 Intangible Assets, how should research expenditure be treated?

Accepted Answer

Expensed as incurred

Answer

Capitalised as an intangible asset

Answer

Capitalised if the project is expected to be profitable

Answer

Deferred and amortised over the expected benefit period