ACCA - Association of Chartered Certified Accountants International Financial Reporting Standards Questions and Answers

Question 1

According to IFRS 15 Revenue from Contracts with Customers, which of the following is NOT one of the five steps for revenue recognition?

Accepted Answer

Assess the creditworthiness of the customer.

Answer

Identify the performance obligations in the contract.

Answer

Determine the transaction price.

Answer

Recognise revenue when (or as) the entity satisfies a performance obligation.

Question 2

A company leases a machine for a 5-year term. The lease payments are $10,000 per year, payable at the beginning of each year. The interest rate implicit in the lease is 8%. The present value of the lease payments is $43,121. The lessee also incurred initial direct costs of $2,000. Under IFRS 16 Leases, what is the initial carrying amount of the right-of-use asset?

Accepted Answer

$45,121

Answer

$41,121

Answer

$43,121

Answer

$52,000

Question 3

A company holds inventory with a cost of $100,000. Due to market changes, the estimated selling price for this inventory is now $95,000. Estimated costs to complete and sell the inventory amount to $10,000. In accordance with IAS 2 Inventories, at what amount should this inventory be valued in the statement of financial position?

Accepted Answer

$85,000

Answer

$95,000

Answer

$100,000

Answer

$90,000

Question 4

Under IFRS 9 Financial Instruments, a financial asset shall be measured at amortised cost if which two conditions are met?

Accepted Answer

The entity's business model is to hold the asset to collect contractual cash flows, and the contractual cash flows represent solely payments of principal and interest.

Answer

The asset is held for trading, and the contractual cash flows represent solely payments of principal and interest.

Answer

The entity has designated the asset at fair value through profit or loss, and the business model is to hold and sell.

Answer

The contractual cash flows represent solely payments of principal and interest, and the asset is an equity instrument.

Question 5

A cash-generating unit (CGU) has a carrying amount of $500,000, which includes goodwill of $50,000. An impairment review reveals that the recoverable amount of the CGU is $420,000. According to IAS 36 Impairment of Assets, how should the impairment loss be allocated?

Accepted Answer

The loss is first allocated to reduce the carrying amount of goodwill to zero, and the remaining loss is allocated pro-rata to the other assets.

Answer

The entire loss of $80,000 is allocated to goodwill.

Answer

The loss is allocated pro-rata to all assets in the CGU, including goodwill.

Answer

The loss is first allocated to the other assets on a pro-rata basis, and any remainder is allocated to goodwill.

Question 6

Which of the following statements best describes the principle for recognizing a provision under IAS 37 Provisions, Contingent Liabilities and Contingent Assets?

Accepted Answer

A provision should be recognised when an entity has a present obligation as a result of a past event, it is probable that an outflow of resources will be required to settle the obligation, and a reliable estimate can be made of the amount.

Answer

A provision should be recognised for all possible future obligations.

Answer

A provision should be recognised when an entity has a possible obligation arising from past events whose existence will be confirmed only by the occurrence of one or more uncertain future events not wholly within the control of the entity.

Answer

A provision should be recognised only when a legal obligation exists and the amount can be determined with certainty.