ACCA SP Strategic Business Reporting 2

Question 1

Under IFRS 16, how does the lessee account for a lease on commencement?

Accepted Answer

Recognise a right-of-use asset and a lease liability at the present value of future lease payments

Answer

IFRS 16 requires the lessee to recognise a right-of-use asset (ROU asset) and a corresponding lease liability at the commencement date, measured at the present value of future lease payments.

Question 2

Under IAS 19, actuarial gains and losses on a defined benefit pension plan are recognised:

Accepted Answer

In other comprehensive income (OCI) as remeasurements

Answer

IAS 19 requires remeasurements of defined benefit obligations (actuarial gains and losses and return on plan assets) to be recognised immediately in OCI and never recycled to profit or loss.

Question 3

Under IFRS 9, the expected credit loss (ECL) model requires entities to:

Accepted Answer

Recognise expected credit losses based on forward-looking information at all times, not just when a default occurs

Answer

IFRS 9's ECL model is forward-looking and requires entities to recognise expected losses from day one (Stage 1: 12-month ECL) and lifetime ECL when credit risk increases significantly.

Question 4

The 'substance over form' principle in financial reporting means:

Accepted Answer

Transactions should be accounted for in accordance with their economic substance, not merely their legal form

Answer

Substance over form requires that transactions are accounted for to reflect their economic reality rather than their strict legal form. A key application is lease accounting under IFRS 16.

Question 5

Under IFRS 8, operating segments should be reported separately if they:

Accepted Answer

Meet the quantitative thresholds: 10% of combined revenue, profit or assets of all segments

Answer

IFRS 8 uses the 'management approach' to identify segments, reporting separately those meeting quantitative thresholds: 10% of combined (absolute) revenue, profit/loss or assets.

ACCA Strategic Professional Practice Test

ACCA Strategic Professional Practice Test

ACCA SP Strategic Business Reporting 2