Strategic Business Reporting Flashcards
6 cards from real ACCA SP practice questions. Tap to flip, then mark Knew It or Still Learning — missed cards come back until you master them.
Read the first 6 Strategic Business Reporting flashcards as text
Under IFRS 16, how does the lessee account for a lease on commencement?
Answer: Recognise a right-of-use asset and a lease liability at the present value of future lease payments
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.
Under IAS 19, actuarial gains and losses on a defined benefit pension plan are recognised:
Answer: In other comprehensive income (OCI) as remeasurements
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.
Under IFRS 9, the expected credit loss (ECL) model requires entities to:
Answer: Recognise expected credit losses based on forward-looking information at all times, not just when a default occurs
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.
The 'substance over form' principle in financial reporting means:
Answer: Transactions should be accounted for in accordance with their economic substance, not merely their legal form
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.
Under IFRS 8, operating segments should be reported separately if they:
Answer: Meet the quantitative thresholds: 10% of combined revenue, profit or assets of all segments
IFRS 8 uses the 'management approach' to identify segments, reporting separately those meeting quantitative thresholds: 10% of combined (absolute) revenue, profit/loss or assets.
Which of the following transactions requires elimination on consolidation?
Answer: Intra-group sales of goods that remain in the subsidiary's closing inventory
Unrealised profit on intra-group transactions (goods in closing inventory) must be eliminated on consolidation to avoid double-counting. The profit has not been realised through an external sale.