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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 IFRS 15, revenue is recognised when:

    Answer: A performance obligation is satisfied by transferring a promised good or service to the customer

    IFRS 15 uses a five-step model: identify contract, identify performance obligations, determine transaction price, allocate price, recognise revenue when (or as) each obligation is satisfied.

  2. Under IAS 16, property, plant and equipment is initially recognised at:

    Answer: Cost

    Under IAS 16, PPE is initially measured at cost, comprising purchase price plus directly attributable costs of bringing the asset to its intended location and condition.

  3. The revaluation model under IAS 16 requires that when an asset is revalued upwards:

    Answer: The gain is recognised in other comprehensive income and accumulated in the revaluation reserve

    Upward revaluations under IAS 16 are credited to other comprehensive income, accumulating in the revaluation reserve (a component of equity), not profit or loss.

  4. Under IFRS 9, a financial asset measured at amortised cost is one held:

    Answer: Within a business model to collect contractual cash flows, which are solely payments of principal and interest

    IFRS 9 requires amortised cost for financial assets held within a 'hold to collect' business model where cash flows are solely SPPI (solely payments of principal and interest).

  5. Under IAS 37, a provision should be recognised when:

    Answer: There is a present obligation, a probable outflow of resources, and a reliable estimate can be made

    IAS 37: a provision is recognised when (1) there is a present obligation (legal or constructive), (2) it is probable that an outflow of economic resources will be required, and (3) the amount can be reliably estimated.

  6. Which of the following is a key difference between IFRS and UK GAAP (FRS 102)?

    Answer: IFRS is mandatory for UK listed companies' consolidated statements; FRS 102 is typically used by unlisted UK entities

    UK listed companies must use IFRS for consolidated financial statements (EU-adopted/UK-endorsed IFRS). Most unlisted UK companies use FRS 102 (the UK and Ireland standard).