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Exam (elaborations)

ACCA F7 Exam Practice Questions and Answers

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ACCA F7 Exam Practice Questions and Answers How is revenue treated that is receivable 2 years after the goods are delivered? - ANSWERThe amount of revenue initially recognised is the amount receivable discounted to present value. Interst is then applied to the receivable as interest income over...

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  • October 28, 2024
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ACCA F7 Exam Practice Questions and

Answers


How is revenue treated that is receivable 2 years after the goods are delivered? - ANSWER✔✔The

amount of revenue initially recognised is the amount receivable discounted to present value.


Interst is then applied to the receivable as interest income over 2 years


IFRS 9 requires investments in equity instruments to be measured and accounted for ( in the absence of

any election at initial recognition)? - ANSWER✔✔Fair value with changes going through profit or loss


What are acceptable methods of accounting for a goverment grant relating to an asset in accordance

with IAS? - ANSWER✔✔set up the grant as deffered income


deduct the grant from the carrying amount of the asset


A sale and leaseback transaction involves the sale of an asset and the leasing back of the same asset. If

the arrangement meets the IFRS 15 criteria to be recognised as a sale, how should any 'profit' on the sale

be treated? - ANSWER✔✔Recognise proportion to related to right-of-use transferred.


How is a gain or loss arising on a biological transformation according to IAS 41? - ANSWER✔✔Included in

profit or loss for the year.

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What is a constructive obligation? - ANSWER✔✔An obligation whereby past practice has created a valid

expectation that the entity woll discharge responsibilities.


Company has decided its deprecetion method to better reflect pattern of use its equipment. How this

change should be applied? - ANSWER✔✔It's change of accounting estimate and should be applied

prospectively


To recognise provision we need - ANSWER✔✔present obligation


past event


reliable measured


Is irrecoverable debt allowance required to be shown on the face of sofp according to IAS 1? -

ANSWER✔✔Not


A contingent liability is normally simply disclossed but IAS 37 makes an exception for contigent liabilities

assumed as part of business combination then it should be - ANSWER✔✔recognised.


The gain or loss arising froam a change in the fair value of an investment property should be recognised

in - ANSWER✔✔profit or loss


An aircraft requires a planned overhaul. How should be cost of the overhaul be treated in the financial

statements? - ANSWER✔✔The expenditure should be capitalised when takes place and depreciated over




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period to the next overhaul. It should not be provided for in advance because there is no obligation

arising from apast event -the overhaul could be avoided by ceasing to operate aircraft.


A pre-production prototype is classified as a development cost, so it is eligible to be -

ANSWER✔✔capitalised. Internally generated customer lists and goodwill cannot be capitalised. IAS 38

does not allow capitalisation of research costs.


In order for capitalisation to be allowed is not necessary for development to be completed, patents to be

registered or sales contracts signed. However, an intangible asset can only be recognised if its cost can be

realiably - ANSWER✔✔measured.


What is the correct treatment of equity dividends paid under IAS 1? - ANSWER✔✔Dividends paid are

deducted from retained earnings.


A discountinued operation was disposed of in the current. How should this be presented in the

statement of profit or loss? - ANSWER✔✔A one-line entry showing post-tax profit of the operation and

the post-tax gain or loss on disposal


What may be treated as part of the cost of inventories? - ANSWER✔✔Import duties on raw materials


Labour involved in production


Fixed production overheads


Distribution, storage and wastage costs will all be treated as expenses and not subsumed.


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What are the recognition criteria for non-current asset held for sale for the sale to be considered high

probable? - ANSWER✔✔The asset must be marketed at a reasonable price


Management must be commited to a plan to sell the asset.


The sale must be expected to take place within the next six months.


What meet the definition of financial asset in accordance with IFRS9? - ANSWER✔✔An equity

iinstrument of another entity


A contract to exchange financial instruments with another entity under conditions which are potentially

favourable


Cash


When a single entity makes purchases or sales in foreign currency, it will be necassary to translate the

transactions into its functional currency before the transactions can be included in its financial records.


In accordance with IAS, which foreign rates may be used to transalte the foreign currency purchases and

sales? - ANSWER✔✔a)The rate that which existed on the day that ourchase or sale took place


b)An average rate for the year, provided there have been no significant fluctuations throughout the year


How are financial assets initially measured under IFRS 9? - ANSWER✔✔Fair value plus transaction costs




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