ACCA AS Financial Reporting

Question 1

Under IFRS 15, revenue is recognised when:

Accepted Answer

A performance obligation is satisfied by transferring a promised good or service to the customer

Answer

IFRS 15 uses a five-step model: identify contract, identify performance obligations, determine transaction price, allocate price, recognise revenue when (or as) each obligation is satisfied.

Question 2

Under IAS 16, property, plant and equipment is initially recognised at:

Accepted Answer

Cost

Answer

Under IAS 16, PPE is initially measured at cost, comprising purchase price plus directly attributable costs of bringing the asset to its intended location and condition.

Question 3

The revaluation model under IAS 16 requires that when an asset is revalued upwards:

Accepted Answer

The gain is recognised in other comprehensive income and accumulated in the revaluation reserve

Answer

Upward revaluations under IAS 16 are credited to other comprehensive income, accumulating in the revaluation reserve (a component of equity), not profit or loss.

Question 4

Under IFRS 9, a financial asset measured at amortised cost is one held:

Accepted Answer

Within a business model to collect contractual cash flows, which are solely payments of principal and interest

Answer

IFRS 9 requires amortised cost for financial assets held within a 'hold to collect' business model where cash flows are solely SPPI (solely payments of principal and interest).

Question 5

Under IAS 37, a provision should be recognised when:

Accepted Answer

There is a present obligation, a probable outflow of resources, and a reliable estimate can be made

Answer

IAS 37: a provision is recognised when (1) there is a present obligation (legal or constructive), (2) it is probable that an outflow of economic resources will be required, and (3) the amount can be reliably estimated.

ACCA Applied Skills Practice Test

ACCA Applied Skills Practice Test

ACCA AS Financial Reporting