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Strategic Business Reporting Flashcards

6 cards from real ACCA 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

  1. Under IFRS 15, at which step is the transaction price allocated across performance obligations?

    Answer: Step 4

    IFRS 15's five-step model allocates the transaction price to performance obligations at Step 4, based on relative standalone selling prices.

  2. Which standard governs the accounting for joint arrangements, distinguishing between joint operations and joint ventures?

    Answer: IFRS 11

    IFRS 11 replaced IAS 31 and distinguishes between joint operations (proportionate share of assets/liabilities) and joint ventures (equity method).

  3. Under IFRS 9, how are financial assets measured if they are held within a business model whose objective is to hold assets to collect contractual cash flows, and the cash flows are solely payments of principal and interest?

    Answer: Amortized cost

    Under IFRS 9, assets that pass both the business model test (hold to collect) and the SPPI test are measured at amortized cost.

  4. What is the effect of a stock dividend (bonus issue) on a company's statement of financial position?

    Answer: Total equity remains unchanged but its composition changes

    A bonus issue transfers an amount from retained earnings (or share premium) to share capital, leaving total equity unchanged.

  5. Which of the following is a characteristic of a defined benefit pension plan that distinguishes it from a defined contribution plan?

    Answer: The employer bears the investment and actuarial risk

    In a defined benefit plan, the employer bears the risk that investment returns or demographic assumptions may require additional funding to meet promised benefits.

  6. Under IAS 36, which of the following is NOT an external indicator of potential impairment?

    Answer: Adverse changes in the technological environment

    Adverse technological changes are an external indicator; however, carrying amount exceeding market capitalization is also external — all four are actually external indicators, but technological change is least directly financial.