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Financial Reporting Flashcards

6 cards from real ACCA AS practice questions. Tap to flip, then mark Knew It or Still Learning — missed cards come back until you master them.

Read the first 6 Financial Reporting flashcards as text

  1. Under IAS 38, an internally generated brand should be:

    Answer: Expensed as incurred; it cannot be recognised as an intangible asset

    IAS 38 prohibits recognition of internally generated brands, mastheads, customer lists and similar items as intangible assets. Their costs must be expensed as incurred.

  2. Goodwill arising on consolidation is calculated as:

    Answer: Fair value of consideration paid less fair value of net assets acquired

    IFRS 3 goodwill = Fair value of consideration transferred + Fair value of non-controlling interest − Fair value of identifiable net assets acquired.

  3. Under IAS 21, which exchange rate is used to translate a foreign currency transaction at the date of a sale?

    Answer: Rate at the date of the transaction (spot rate)

    Under IAS 21, foreign currency transactions are initially recorded at the spot exchange rate at the transaction date. Monetary items are subsequently retranslated at the closing rate.

  4. Under IAS 36, an impairment loss on an asset is recognised when:

    Answer: The carrying amount exceeds the asset's recoverable amount

    IAS 36: an asset is impaired if its carrying amount exceeds its recoverable amount (the higher of fair value less costs to sell and value in use). An impairment loss is recognised immediately.

  5. Which of the following is the correct treatment for a finance lease in the lessee's financial statements under IFRS 16?

    Answer: A right-of-use asset and lease liability are recognised on the balance sheet

    IFRS 16 requires lessees to recognise a right-of-use asset (the present value of future lease payments) and a corresponding lease liability on the statement of financial position for virtually all leases.

  6. Earnings per share (EPS) under IAS 33 is calculated as:

    Answer: Profit attributable to ordinary equity holders ÷ Weighted average ordinary shares in issue

    Basic EPS = Profit attributable to ordinary equity holders of the parent ÷ Weighted average number of ordinary shares outstanding during the period.