ACCA SP Strategic Business Reporting

Question 1

Under IFRS 3, how is goodwill measured at acquisition?

Accepted Answer

As fair value of consideration plus fair value of NCI minus fair value of identifiable net assets acquired

Answer

IFRS 3: Goodwill = Fair value of consideration transferred + Fair value of non-controlling interest (NCI) − Fair value of identifiable net assets acquired at the acquisition date.

Question 2

Under IFRS 10, which of the following criteria must be met for one entity to control another?

Accepted Answer

Power over the investee, exposure to variable returns, and ability to use power to affect those returns

Answer

IFRS 10 defines control through three elements: (1) power over the investee, (2) exposure/rights to variable returns, and (3) ability to use power to affect returns. All three must be present.

Question 3

How are associates accounted for in consolidated financial statements under IAS 28?

Accepted Answer

Equity method (share of net assets and share of profit recognised)

Answer

IAS 28 requires associates (significant influence, typically 20-50% ownership) to be accounted for using the equity method: the investment is carried at cost adjusted for the investor's share of net assets and profits.

Question 4

Under IFRS 5, a non-current asset classified as 'held for sale' should be measured at:

Accepted Answer

The lower of carrying amount and fair value less costs to sell

Answer

IFRS 5: assets held for sale are measured at the lower of (a) carrying amount and (b) fair value less costs to sell, and are no longer depreciated.

Question 5

Under IAS 12, a deferred tax liability arises when:

Accepted Answer

The carrying amount of an asset exceeds its tax base (creating a taxable temporary difference)

Answer

A deferred tax liability arises from taxable temporary differences — when the carrying amount of an asset exceeds its tax base, meaning more taxable profit will arise in the future than the accounting profit suggests.

ACCA Strategic Professional Practice Test

ACCA Strategic Professional Practice Test

ACCA SP Strategic Business Reporting