1. Which is not a purpose of the Conceptual Framework?

A.Provide definitions of key terms and concepts

B.Provide specific guidelines for resolving situations not covered by existing accounting
standards
C.Assist accountants in selecting among alternative accounting and reporting methods
D.Assist IASB in the standard-setting process
2. According to the IASB Conceptual Framework, which TWO of the following
characteristics are described as fundamental qualitative characteristics that make the
information provided in financial statements useful to users?
A.Comparability
B.Understandability
C.Relevance
D.Faithful representation
3. According to IAS 2 Inventories, which one of the following lists consists only of items
which may be included in the cost of inventories?
A.Supervisor's wages, carriage inwards, carriage outwards, raw materials
B.Raw materials, carriage inwards, costs of storage of finished goods, plant depreciation
C.Plant depreciation, carriage inwards, raw materials, Supervisor's wages
D.Carriage outwards, raw materials, Supervisor's wages, plant depreciation
4. Which of the following may be included in the cost of finished goods of a manufacturing
company?
A.Production labour wages
B.Storage expenses for finished goods
C.Depreciation of delivery vehicles
D.Carriage outwards
5. If one or more assets are exchanged for a new asset, the new asset is valued at:
A.Replacement cost
B.Fair value
C.Residual value
6. Under IAS 16, using the cost model, the asset in accounted for at:
A.Cost less accumulated depreciation
B.Cost
C.Cost less accumulated depreciation and any impairment losses
D.Cost less accumulated impairment losses
7. Under IAS 16, if the entity applies revaluation model, PPE are revaluated:
A.Every 3-5 years
B.When fair values change, or are expected to change
C.Annually
D.As request of the competent authorities
8. Which of the following shall be accounted in accordance with IAS 38?
A.Motion picture films
B.Patents and copyrights
C.Manuscripts
D.All of the above
9. The definition of an intangible asset comprises: (i) Identifiability; (ii) Control over a
resource; (iii) Existence of future benefits; (iv) Residual value
A.(i) and (ii)
B.(i) and (iii)
C.(i), (ii) and (iii)
D.(i), (ii), (iii) and (iv)
10. Using the revaluation option, can fair values be estimated, if there is no market-based
evidence?
A.Yes, if the asset is specialised and rarely sold, by using an income, or a depreciated
replacement cost approach
B.Yes, if the asset is specialised and rarely sold, by using indexation
C.No
D.Yes, if expert valuation is available
11. Happy Plc year end is 30 September 20X4. Happy Plc commenced the development
stage of a project to produce a new pharmaceutical drug on 1 January 20X4. Expenditure of
$40,000 per month was incurred until the project was completed on 30 June 20X4 when the
drug went into immediate production. The directors became confident of the project's success
on 1 March 20X4. The drug has an estimated life span of five years; time apportionment is
used by Happy Plc where applicable. What amount will Happy Plc charge to profit or loss for
development costs, including any amortisation, for the year ended 30 September 20X4?
A.$40,000
B.$8,000
C.$88,000
D.$80,000
12. Which of the following does not define investment property?
A.Property held to earn rentals
B.Property held for capital appreciation
C.Property used in the production or supply of goods or services
D.A and C
13. The cost of a property interest held under a lease should be valued at:
A.Fair value
B.The higher of fair value and PV of minimum lease payments
C.The lower of fair value and PV of minimum lease payments
D.The present value of the minimum lease payments
14. Following initial recognition, investment property can be held at either cost or fair value
A.True
B.False
15. The lease payments shall be discounted using __________, if that rate can be readily
determined.
A.The lessee’s incremental borrowing rate
B.Benchmark interest rate
C.Interest rate implicit in the lease
D.Weighted average cost of capital rate
E.Internal rate of return
16. Which TWO of the following are listed in the IASB Framework as enhancing qualitative
characteristics' regarding financial statements?
A.The financial statements are reliable
B.Any changes of accounting policy are neutral
C.The financial statements are prepared in a timely manner
D.The financial statements are verifiable
17. Which ONE of the following statements best describes the term 'going concern'?
A.When current liabilities of an entity exceed current assets
B.The ability of the entity to continue in operation for the foreseeable future
C.The potential to contribute to the flow of cash and cash equivalents to the entity
D.The expenses of an entity exceed its income
18. Which ONE of the following terms best describes information in financial statements that
is neutral?
A.Understandable
B.Reliable
C.Relevant
D.Unbiased
19. At year end, Lagon plc has 5,000 goods A costing £6 each and 3,000 goods B costing £5
each. However, 300 goods A are defective and can only be sold at £5 each with selling
expenses of £1 each. What is total inventory stated in the Lagon plc’s statement of financial
position?
A.£45,000
B.£44,700
C.£44,400
D.£44,000
20. Ooran Ltd has 400 products in inventory as at 30 November 20X1. The product costs £15
per unit to manufacture and can be sold for £30 per unit. However, 200 products in inventory
at 30 November 20X1 have been damaged and will require rectification work costing £15 per
unit before they can be sold. Selling costs are £1 per unit. What is the value of inventory of
Ooran Ltd at 30 November 20X1?
A.£6,000
B.£5,900
C.£5,800
D.£5,700
21. Using the revaluation option, can fair values be estimated, if there is no market-based
evidence?
A.Yes, if the asset is specialised and rarely sold, by using an income, or a depreciated
replacement cost approach
B.Yes, if the asset is specialised and rarely sold, by using indexation
C.No
D.Yes, if expert valuation is available
22. Happy Plc year end is 30 September 20X4. Happy Plc commenced the development
stage of a project to produce a new pharmaceutical drug on 1 January 20X4. Expenditure of
$40,000 per month was incurred until the project was completed on 30 June 20X4 when the
drug went into immediate production. The directors became confident of the project's success
on 1 March 20X4. The drug has an estimated life span of five years; time apportionment is
used by Happy Plc where applicable. What amount will Happy Plc charge to profit or loss for
development costs, including any amortisation, for the year ended 30 September 20X4?
A.$40,000
B.$8,000
C.$88,000
D.$80,000
23. Which of the following shall a lessee recognise at the commencement date?
A.A right-of use asset
B.A lease liability
C.Deferred income
D.A and B
E.B and C
24. If right-of-use assets relate to a class of property, plant and equipment to which the lessee
applies the revaluation model in IAS 16, a lessee may elect to apply that revaluation model to
all of the right-of-use assets that relate to that class of property, plant and equipment.
A.True
B.False
25. According to IFRS 16 Leases, any initial direct costs incurred by a lessee are added to the
amount of the asset recognised in the statement of financial position.
A.True
B.False
26. Flappy Co entered into a 4-year lease agreement on 1 January 20X5. The agreement
meets the definition of a lease in accordance with IFRS 16. An initial payment of $160,000
was made on 1 January 20X5 followed by three annual payments on 1 January of $150,000
each. The rate implicit in the lease is 10%. Flappy Co incurred initial direct costs of $20,000
to set up the lease. Which of the following entries could fully reflect the event at 1 January
20X5?
A.Debit right-of-use asset $553,028, Credit Lease liability $553,028
B.Debit right-of-use asset $533,028, Credit Lease liability $533,028
C.Debit right-of-use asset $553,028, Credit Lease liability $393,028, Credit Cash $160,000
D.Debit right-of-use asset $533,028, Credit Lease liability $373,028, Credit Cash $160,000
27. According to IAS 12 Income taxes, where accumulated depreciation on an asset is greater
than accumulated tax depreciation, the amount should be classified under deductible
temporary differences.
A.True
B.False
28. According to IFRS 15 Revenue from contracts with customers, which of the following
factors is not taken into account when establishing the transaction price of a contract?
A.Financing components
B.Variable consideration in contract price
C.Non-cash consideration
D.Customer credit quality
29. IFRS 15 allows the recognition of revenue through the duration of a contract for services
if it has been demonstrated that the performance obligation is met over time.
A.Revenue to date divided by total contract revenue
B.Advances received to date as a percentage of the total amount receivable
C.Surveys of work performed
D.Machine hours worked to date
30. Should the cost of maintaining an acquisitions department be included in the
consideration transferred in a business combination, according to IFRS 3 Business
combinations?
A.Yes
B.No
31. Which TWO of the following are listed in the IASB Framework as enhancing qualitative
characteristics' regarding financial statements?
A.The financial statements are reliable
B.Any changes of accounting policy are neutral
C.The financial statements are prepared in a timely manner
D.The financial statements are verifiable
32. Which ONE of the following statements best describes the term 'liability'?
A.An excess of equity over current assets
B.Resources to meet financial commitments as they fall due
C.The residual interest in the assets of the entity after deducting all its liabilities
D.A present obligation of the entity arising from past events
33. Which ONE of the following statements best describes the term 'going concern'?
A.When current liabilities of an entity exceed current assets
B.The ability of the entity to continue in operation for the foreseeable future
C.The potential to contribute to the flow of cash and cash equivalents to the entity
D.The expenses of an entity exceed its income
34. Trade discounts received must be deducted in measuring cost of inventories.
A.True
B.False
35. IAS 16 applies to bearer plants but it does not apply to the produce on bearer plants.
A.True
B.False
36. Under IAS 16, if a company builds an office building for its own use, it may account for
the building at historical cost less accumulated depreciation and impairment losses, with
depreciation and impairment losses recognised in profit or loss.
A.True
B.False
37. On 1 January 20X1, Pink Plc purchased some plant at a cost of £33,000. It cost £800 to
deliver the plant to Pink Plc’s factory and set it up, plus £1,000 for a licence to operate it. At
that time, the directors of Pink Plc planned to depreciate the plant on the straight-line basis
over 8 years to its residual value of £2,000. On 1 January 20X3, the directors of Pink Plc
decided to change the depreciation method to reducing balance, at 40%. What is the carrying
amount of Pink Plc’s plant in its statement of financial position at 31 December 20X3?
A.£15,210
B.£15,660
C.£15,510
D.£15,960
38. Which of the following does not define an “asset”?
A.A resource that is controlled by an entity as a result of past events
B.A resource which value in use exceeds its historical cost
C.A resource from which future economic benefits are expected to flow to the entity
D.None of the above
39. Which of the following disclosures is not required by IAS 38?
A.Fair value of similar intangible assets used by its competitors.
B.Reconciliation of carrying amount at the beginning and the year-end.
C.Contractual commitments for the acquisition of intangible assets.
D.Useful lives of the intangible assets.
40. How shall a lessee measure the lease liability after the commencement date?
A.By increasing the carrying amount to reflect interest on the lease liability
B.By reducing the carrying amount to reflect the lease payments made
C.By remeasuring the carrying amount to reflect any reassessment or lease modifications or
to reflect revised in-substance fixed lease payments
D.B and C
E.All of the above
41. According to IAS 36, an asset is impaired if:
A.Its carrying amount equals the amount to be recovered through use (or sale) of the asset
B.If it has been damaged
C.Its carrying amount exceeds the amount to be recovered through use (or sale) of the asset
D.The amount to be recovered through use (or sale) of the asset exceeds its carrying amount
42. Which of the following statements does more likely define the term “restructuring”?
A.Significant change in the scope of a business undertaken by an entity
B.Significant change in the manner in which that business is conducted
C.Significant change in political and legal environment that regulates reporting matters of an
entity
D.A or B
E.All of the above
43. Should the fees paid to accountants to effect the combination be included in the
consideration transferred in a business combination, according to IFRS 3 Business
combinations?
A.Yes
B.No
44. Figy Co entered into a 4-year lease agreement on 1 January 20X5. The agreement meets
the definition of a lease in accordance with IFRS 16. An initial payment of $100,000 was
made on 1 January 20X5 followed by three annual payments on 1 January of $100,000 each.
The rate implicit in the lease is 10%. Figy Co incurred initial direct costs of $20,000 to set up
the lease. What is the cost of the right-of-use asset as at 1 January 20X5?
A.348,685
B.400,000
C.368,685
D.420,000
45. In cases of conflict, the requirements of the Framework prevail over those of the relevant
IFRS.
A.True
B.False
46. Custom duties are included in the cost of inventories.
A.True
B.False
47. If the closing inventory is understated, then the current year's profit will be understated
and next year's profit will be overstated.
A.True
B.False
48. Repairs and maintenance costs are normally:
A.Recorded as deferred expenses
B.Expensed in the profit or loss as incurred
C.Capitalised
49. Under IAS 40 Investment property, which one of the following additional disclosures
must be made when an entity chooses the cost model as its accounting policy for investment
property?
A.The present value of the property
B.The net realisable value of the property
C.The value in use of the property
D.The fair value of the property
50. An entity shall apply IFRS 16 to all leases, except leases of right-of-use assets in a
sublease.
A.True
B.False
51. A contract is, or contains, a lease if the contract conveys the right __________ an
identified asset for a period of time in exchange for consideration.
A.To use
B.To control the use of
C.To obtain economic benefits from
D.To recognise depreciation changes of
52. At the commencement date, a lessee shall measure the lease liability at the future value
of the lease payments that are paid at that date.
A.True
B.False
53. Flappy Co entered into a 4-year lease agreement on 1 January 20X5. The agreement
meets the definition of a lease in accordance with IFRS 16. An initial payment of $160,000
was made on 1 January 20X5 followed by three annual payments on 1 January of $150,000
each. The rate implicit in the lease is 10%. Flappy Co incurred initial direct costs of $20,000
to set up the lease. What amount will be charged to the statement of profit or loss in respect
of this asset for the year ended at 31 December 20X6?
A.$138,257
B.$159,290
C.$164,290
D.$175,560
54. According to IAS 37 Provisions, contingent liabilities and contingent assets, an
obligation as a result of the entity creating a valid expectation that it will discharge its
responsibilities is a contingent liability.
A.True
B.False
55. According to IFRS 15 Revenue from contracts, which TWO of the following are
indicators that a performance obligation is satisfied over time rather than at a point in time?
A.The customer simultaneously receives and consumes the benefits as the entity performs
B.The entity's performance creates or enhances an asset that the customer controls as it is
created or enhanced
C.The entity takes a substantial period of time to meet the performance obligation
D.The entity is entitled to stage payments as the work progresses
56. Under IFRS 3, the acquirer shall measure the identifiable assets acquired and the
liabilities assumed at their:
A.Acquisition-date fair values
B.Acquisition-date historical cost
C.Reporting-date net book value
D.Reporting-date present value
57. Select the correct statement with regards to intragroup balances and transactions during
consolidation:
A.Intragroup balances and transactions must be eliminated
B.Intragroup balances and transactions must be eliminated to the extent of non-controlling
interest
C.Intragroup balances and transactions must be eliminated in proportion to the percentage of
effective ownership
D.Intragroup balances and transactions do not have to be eliminated
58. A company sells goods with a warranty for the cost of repairs required in the first 2
months after purchase. Past experience suggests: 88% of the goods sold will have no defects,
7% will have minor defects, 5% will have major defects. If minor defects were detected in all
products sold, the cost of repairs will be £24,000; if major defects were detected in all
products sold, the cost would be £200,000. What amount of provision should be made?
A.11,000
B.11,680
C.12,000
D.12,680
59. The Grand Company placed an order with The Little Company for new specialist
machinery. The order was non-cancellable once signed and Grand agreed to pay for the
machinery at the time the order was signed on 1 February 20X9. Little held the machinery to
Grand's order from 1 June 20X9, the date on which it was completed. Grand commenced
using the machinery on 1 August 20X9 when Little completed the installation process. Little
had staff on standby to deal with any operating problems until the warranty period ended on
1 November 20X9. Under IFRS 15 Revenue from contracts with customers, Little should
recognise the revenue from the sale of this specialist machinery on:
A.1 Nov X9
B.1 Aug X9
C.1 Jun X9
D.1 Feb X9
60. Closing inventory is a credit in the statement of profit or loss.
A.True
B.False
61. At year end, Lagon plc has 5,000 goods A costing £6 each and 3,000 goods B costing £5
each. However, 300 goods A are defective and can only be sold at £5 each with selling
expenses of £1 each. What is total inventory stated in the Lagon plc’s statement of financial
position?
A.£45,000
B.£44,700
C.£44,400
D.£44,000
62. According to IAS 16 Property, plant and equipment, the cost includes the fair value of
any non-monetary consideration given to acquire an asset.
A.True
B.False
63. Which of the following disclosures is not required by IAS 38?
A.Fair value of similar intangible assets used by its competitors.
B.Reconciliation of carrying amount at the beginning and the year-end.
C.Contractual commitments for the acquisition of intangible assets.
D.Useful lives of the intangible assets.
64. At 30 September 20X9, Chicky’s trial balance showed a brand at cost of $30 million, less
accumulated amortisation brought forward at 1 October 20X8 of $9 million. Amortisation is
based on a ten-year useful life. An impairment review on 1 April 20X9 concluded that the
brand had a value in use of $12 million and a remaining useful life of three years. However,
on the same date Chicky received an offer to purchase the brand for $15 million. What
should be the carrying amount of the brand included in Chicky’s statement of financial
position as at 30 September 20X9?
A.$10m
B.$18m
C.$12.5m
D.$15m
65. Which of the following does not define investment property?
A.Property held to earn rentals
B.Property held for capital appreciation
C.Property used in the production or supply of goods or services
D.A and C
66. At the commencement date, a lessee shall measure the right-of-use asset at __________.
A.Cost
B.Fair value
C.Present value
D.Value in use
67. Which one of the following is not required to be disclosed in a lessee's financial
statements in relation to its leases, to comply with the requirements of IFRS 16 Leases?
A.Interest expense on lease liabilities
B.A reconciliation between the total of future minimum lease payments and their present
value
C.Total cash outflow for leases
D.Income from sub-leasing right of use assets
68. An impairment loss relates to an asset that has been revalued should be recognized in
A.Profit or Loss
B.Revaluation reserve that relates to the revalued asset
C.Opening retained profits
D.Any reserve in equity
69. Contingent assets must not be recognised in financial statements unless an inflow of
economic benefits is virtually certain to arise.
A.True
B.False
70. According to IAS 37 Provisions, contingent liabilities and contingent assets, a present
obligation that arises from past events but cannot be reliably measured is a contingent
liability.”
A.True
B.False
71. If the assets acquired are not a business, the reporting entity shall account for the
transaction or other event as __________.
A.A non-controlling interest
B.An asset acquisition
C.An adjusting event
D.A business combination
72. For each business combination, one of the combining entities shall be identified as the
__________.
A.Entity that has joint control
B.Controlling entity
C.Acquirer
D.Combined entity
73. IFRS 3 Business Combinations outlines the accounting required when one business
combines with another, such as during an acquisition or merger. A business combination is
defined as when one or more entities (subsidiaries) gains some control of another (the
parent).
A.True
B.False
74. Which one of the following is the best description of “faithful representation” in relation
to information in financial statements?
A.Inclusion of a degree of caution
B.Complete, neutral and free from error
C.Influence on the economic decisions of users
D.Comprehensibility to users
75. Inventory should be valued at the lowest of cost, net realisable value and replacement
cost.
A.True
B.False
76. Custom duties are included in the cost of inventories.
A.True
B.False
77. Which one of the following terms best describes the removal of an asset from an entity’s
statement of financial position?
A.Write-off
B.Depreciation
C.Impairment
D.Derecognition
78. The definition of an intangible asset comprises: (i) Identifiability; (ii) Control over a
resource; (iii) Existence of future benefits; (iv) Residual value
A.(i) and (ii)
B.(i) and (iii)
C.(i), (ii) and (iii)
D.(i), (ii), (iii) and (iv)
79. According to IAS 38 Intangible assets, intangible assets with a finite useful life should be
measured at cost and tested annually for impairment.
A.True
B.False
80. At the commencement date, a lessee shall measure the lease liability at the future value of
the lease payments that are paid at that date.
A.True
B.False
81. If right-of-use assets relate to a class of property, plant and equipment to which the lessee
applies the revaluation model in IAS 16, a lessee may elect to apply that revaluation model to
all of the right-of-use assets that relate to that class of property, plant and equipment.
A.True
B.False
82. Which of the following statements do agree with IAS 36?
A.An entity shall assess at the end of each reporting period whether there is any indication
that its assets may be impaired
B.An entity shall assess at the end of each reporting period the recoverable amount of its
assets
C.An entity shall test its assets on impairment at the end of each reporting period
D.All of the above
83. According to IAS 36, goodwill should be tested for impairment
A.Only if there is an indication of impairment.
B.Every five years
C.Annually
D.On the acquisition of a subsidiary
84. Which of the following statements does more likely define the term “restructuring”?
A.Significant change in the scope of a business undertaken by an entity
B.Significant change in the manner in which that business is conducted
C.Significant change in political and legal environment that regulates reporting matters of an
entity
D.A or B
E.All of the above
85. According to IAS 37 Provisions, contingent liabilities and contingent assets, an
obligation as a result of the entity creating a valid expectation that it will discharge its
responsibilities is a contingent liability.
A.True
B.False
86. The Caspian Company leased a warehouse with adjoining land for a period of 15 years.
The land has an indefinite useful life whereas the warehouse has a useful life of 15 years.
Title to the land is not expected to pass at the end of the lease. Under IFRS 16 Leases, in
respect of which items should a right-of-use asset and a lease liability be recognised in the
financial statements of Caspian?
A.Only the warehouse
B.Both the land and the warehouse
C.Neither asset
D.Only the land
87. Under IASB Conceptual Framework for Financial Reporting, which one of the following
terms best describes information that influences the economic decisions of users?
A.Relevant
B.Prospective
C.Understandable
D.Reliable
88. Which ONE of the following terms best describes information in financial statements that
is neutral?
A.Understandable
B.Reliable
C.Relevant
D.Unbiased
89. Delphi plc had £25,000 inventories at 1 April 20X5. During 20X5, it purchased
£245,600, carriage inwards was £12,450 and carriage outwards incurred was £23,540.
Closing inventory at 31 March 20X6 was valued at £38,000. Which amount should appear as
the cost of sales in the statement of profit or loss for the year ended at 31 March 20X6?
A.£245,050
B.£221,510
C.£268,590
D.£234,150
90. If the closing inventory is understated, then the current year's profit will be understated
and next year's profit will be overstated.
A.True
B.False
91. If one or more assets are exchanged for a new asset, the new asset is valued at:
A.Replacement cost
B.Fair value
C.Residual value
92. Using the revaluation option, can fair values be estimated, if there is no market-based
evidence?
A.Yes, if the asset is specialised and rarely sold, by using an income, or a depreciated
replacement cost approach
B.Yes, if the asset is specialised and rarely sold, by using indexation
C.No
D.Yes, if expert valuation is available
93. If an investment property is held at fair value, this must be applied to all of the entity's
investment properties
A.True
B.False
94. Which of the following shall a lessee recognise in profit or loss after the commencement
date?
A.Interest on the lease liability
B.Variable lease payments not included in the measurement of the lease liability in the period
in which the event or condition that triggers those payments occurs
C.Net investment in the lease
D.A and B
E.B and C
95. According to IFRS 16 Leases, any initial direct costs incurred by a lessee are added to the
amount of the asset recognised in the statement of financial position.
A.True
B.False
96. Flappy Co entered into a 4-year lease agreement on 1 January 20X5. The agreement
meets the definition of a lease in accordance with IFRS 16. An initial payment of $160,000
was made on 1 January 20X5 followed by three annual payments on 1 January of $150,000
each. The rate implicit in the lease is 10%. Flappy Co incurred initial direct costs of $20,000
to set up the lease. Which of the following entries could fully reflect the event at 1 January
20X5?
A.Debit right-of-use asset $553,028, Credit Lease liability $553,028
B.Debit right-of-use asset $533,028, Credit Lease liability $533,028
C.Debit right-of-use asset $553,028, Credit Lease liability $393,028, Credit Cash $160,000
D.Debit right-of-use asset $533,028, Credit Lease liability $373,028, Credit Cash $160,000
97. Which of the following statements do agree with IAS 36?
A.An entity shall assess at the end of each reporting period whether there is any indication
that its assets may be impaired
B.An entity shall assess at the end of each reporting period the recoverable amount of its
assets
C.An entity shall test its assets on impairment at the end of each reporting period
D.All of the above
98. The existence of which of the following in the entity’s internal reporting does indicate
that an asset may be impaired?
A.Cash flows for acquiring the asset, or subsequent cash needs for operating or maintaining
it, that are significantly lower than those originally budgeted
B.Actual net cash flows or operating profit or loss flowing from the asset that are
significantly worse than those budgeted
C.A significant decline in budgeted net cash flows or operating profit, or a significant
increase in budgeted loss, flowing from the asset
D.A and B
E.B and C
99. According to IFRS 15 Revenue from contracts with customers, which of the following
factors is not taken into account when establishing the transaction price of a contract?
A.Financing components
B.Variable consideration in contract price
C.Non-cash consideration
D.Customer credit quality
100. Under IFRS 3, the acquirer shall measure the identifiable assets acquired and the
liabilities assumed at their:
A.Acquisition-date fair values
B.Acquisition-date historical cost
C.Reporting-date net book value
D.Reporting-date present value
101. Can research costs be capitalised?
A.Never
B.Yes, when the development stage is complete
C.Yes, when the development stage has begun
D.Always
102. Which of the following terms does this statement define: “the amount of cash or cash
equivalents paid or the fair value of other consideration given to acquire an asset at the time
of its acquisition or construction”?
A.Cost
B.Deemed cost
C.Fair value
D.Present value
103. Uggy Co entered into a 4-year lease agreement on 1 January 20X5. The agreement
meets the definition of a lease in accordance with IFRS 16. An initial payment of $150,000
was made on 1 January 20X5 followed by three annual payments on 1 January of $110,000
each. The rate implicit in the lease is 10%. Uggy Co incurred initial direct costs of $20,000 to
set up the lease. What is the carrying amount of the lease liability at 31 December 20X6?
A.$230,000
B.$300,909
C.$210,000
D.$110,000
104. An onerous contract is a contract in which __________ of meeting the obligations under
the contract __________ the economic benefits expected to be received under it.
A.Sunk costs; exceed
B.Unavoidable costs; exceed
C.Opportunity costs; are less than
D.Avoidable costs; are less than
105. Which of the following statements does more likely define the term “restructuring”?
A.Significant change in the scope of a business undertaken by an entity
B.Significant change in the manner in which that business is conducted
C.Significant change in political and legal environment that regulates reporting matters of an
entity
D.A or B
E.All of the above
106. Deferred tax assets are the amount of income taxes recoverable in future periods in
respect of:
A.Permanent differences
B.Taxable temporary differences
C.Deductible temporary differences
107. According to IFRS 15, which one of the following criteria must be satisfied before
revenue from the sale of goods should be recognised in profit or loss?
A.The customer has no rights to return
B.The outcome of the transaction is certain
C.A performance obligation has been met
D.The transaction price has been settled in full by the customer
108. The Junior Company leased out a freehold building for 20 years with effect from 1
January 20X1. The economic life of the building is 40 years. As part of the negotiations for
the lease, Junior granted the tenant a rent-free period. Annual rentals of £1.6 million are
payable in advance on 1 January, commencing in 20X2. What income should Junior
recognise in profit or loss in the year ended 31 December 20X1, according to IFRS 16
Leases?
A.1.52 million
B.0
C.1.44 million
D.1.60 million
109. What is a benefit of having a Conceptual Framework?
A.To enable the accountancy profession to more quickly solve emerging practical problems.
B.To provide information from which to build more useful standards.
C.To enable standard setting body to issue more useful and consistent pronouncements over
time
D.All of these.
110. In cases of conflict, the requirements of the Framework prevail over those of the
relevant IFRS.
A.True
B.False
111. Which ONE of the following terms best describes the amount of cash or cash
equivalents that could currently be obtained by selling an asset in an orderly disposal?
A.Fair value
B.Realisable value
C.Residual value
D.Value in use
112. Which ONE of the following statements best describes the term 'liability'?
A.An excess of equity over current assets
B.Resources to meet financial commitments as they fall due
C.The residual interest in the assets of the entity after deducting all its liabilities
D.A present obligation of the entity arising from past events
113. At year end, Lagon plc has 5,000 goods A costing £6 each and 3,000 goods B costing £5
each. However, 300 goods A are defective and can only be sold at £5 each with selling
expenses of £1 each. What is total inventory stated in the Lagon plc’s statement of financial
position?
A.£45,000
B.£44,700
C.£44,400
D.£44,000
114. Under IAS 16, if the entity applies revaluation model, PPE are revaluated:
A.Every 3-5 years
B.When fair values change, or are expected to change
C.Annually
D.As request of the competent authorities
115. Once recognized, intangible assets can be carried at:
A.Revalued amount less accumulated impairment.
B.Cost less accumulated impairment and less accumulated amortization.
C.Cost less accumulated impairment.
D.Cost plus a notional increase in fair value since the intangible asset is acquired.
116. Happy Plc year end is 30 September 20X4. Happy Plc commenced the development
stage of a project to produce a new pharmaceutical drug on 1 January 20X4. Expenditure of
$40,000 per month was incurred until the project was completed on 30 June 20X4 when the
drug went into immediate production. The directors became confident of the project's success
on 1 March 20X4. The drug has an estimated life span of five years; time apportionment is
used by Happy Plc where applicable. What amount will Happy Plc charge to profit or loss for
development costs, including any amortisation, for the year ended 30 September 20X4?
A.$40,000
B.$8,000
C.$88,000
D.$80,000
117. The cost of a property interest held under a lease should be valued at:
A.Fair value
B.The higher of fair value and PV of minimum lease payments
C.The lower of fair value and PV of minimum lease payments
D.The present value of the minimum lease payments
118. The Plaice Company acquired a new filing machine, the list price of which was
$49,000. The supplier allowed a trade discount of $1,700 off the list price. On delivery, the
cost of installing the machine in its desired location was $450. According to IAS 16 Property,
plant and equipment, at what cost should the filing machine be measured in the financial
statements of Plaice?
A.49,000
B.47,750
C.49,450
D.47,300
119. The Huang Company has a non-current asset which had a carrying amount in the
financial statements of $18,000 at 31 December 20X9. Its tax written down value (the tax
base) at that date was $9,000. The tax rate is 30%. In accordance with IAS 12 Income taxes,
what is the deferred tax balance in respect of this asset at 31 December 20X9?
A.2,700 asset
B.2,700 liability
C.9,00 asset
D.9,000 liability
120. In arriving at its profit before tax for the year ended 31 December 20X9 The Ryan
Company has accrued royalties receivable of CU200,000 and interest payable of CU250,000.
Both royalties and interest are dealt with on a cash basis in tax computations. What are
Ryan's net temporary differences at 31 December 20X9, according to IAS 12 Income taxes?
A.Câu trả lời thứ 1
B.B. Taxable temporary differences of CU450,000
C.C. Taxable temporary differences of CU50,000
D.D. Deductible temporary differences of CU50,000
121. The Grand Company placed an order with The Little Company for new specialist
machinery. The order was non-cancellable once signed and Grand agreed to pay for the
machinery at the time the order was signed on 1 February 20X9. Little held the machinery to
Grand's order from 1 June 20X9, the date on which it was completed. Grand commenced
using the machinery on 1 August 20X9 when Little completed the installation process. Little
had staff on standby to deal with any operating problems until the warranty period ended on
1 November 20X9. Under IFRS 15 Revenue from contracts with customers, Little should
recognise the revenue from the sale of this specialist machinery on:
A.1 Nov X9
B.1 Aug X9
C.1 Jun X9
D.1 Feb X9
122. According to IAS 38 Intangible assets, intangible assets with a finite useful life should
be measured at cost and tested annually for impairment. FALSE
123. At 30 September 20X9, Chicky’s trial balance showed a brand at cost of $30 million,
less accumulated amortisation brought forward at 1 October 20X8 of $9 million.
Amortisation is based on a ten-year useful life. An impairment review on 1 April 20X9
concluded that the brand had a value in use of $12 million and a remaining useful life of
three years. However, on the same date Chicky received an offer to purchase the brand for
$15 million. What should be the carrying amount of the brand included in Chicky’s statement
of financial position as at 30 September 20X9?
A.$10m
B.$18m
C.$12.5m
D.$15m
124. According to IAS 40, transfer to or from investment property should only be made when
there is a change in their use
A.True
B.False
125. Following initial recognition, investment property can be held at either cost or fair value
A.True
B.False
126. An investment property is initially measured at cost, including transaction costs
A.True
B.False
127. Under IAS 40 Investment Property, companies have a choice to use either the cost
model or the fair value model. Which one of the following disclosures should be made when
the fair value model has been adopted?
A.Useful lives or depreciation rates used
B.The amount of impairment losses recognised
C.Net gains or losses from fair value adjustments
D.Depreciation methods used
128. According to IAS 36, an asset is impaired if:
A.Its carrying amount equals the amount to be recovered through use (or sale) of the asset
B.If it has been damaged
C.Its carrying amount exceeds the amount to be recovered through use (or sale) of the asset
D.The amount to be recovered through use (or sale) of the asset exceeds its carrying amount
129. According to IAS 12 Income taxes, “The tax base for a machine for tax purposes is
greater than the carrying amount in the financial statements up to the end of the reporting
period. This will give rise to a deferred tax asset.”
A.True
B.False
130. Doogie Plc’s draft net profit for the year ended 31 December 20X4 was £67,890 before
recording the depreciation charge on a new machine. Doogie Plc acquired this machine on 1
October 20X4 for £50,000. Doogie Plc planned to depreciated this new machine monthly on
the straight-line basis over four years to its residual value of £2,000. What is Doogie Plc’s net
profit for the year ended 31 December 20X4 after charging depreciation on the machine?
A.£70,890
B.£64,890
C.Câu trả lời thứ 3
D.£64,765
131. A business received a delivery of goods on 29 June 20X6, which was included in
inventory at 30 June 20X6. The invoice for the goods was recorded in July 20X6. What
effect will this have on the business?
A.Profit for the year ended 30 June 20X6 will be overstated
B.Inventory at 30 June 20X6 will be understated
C.Profit for the year ended 30 June 20X7 will be overstated
D.Inventory at 30 June 20X7 will be understated
132. Which of the following may be included in the cost of finished goods of a
manufacturing company?
A.Production labour wages
B.Storage expenses for finished goods
C.Depreciation of delivery vehicles
D.Carriage outwards
133. Inventory items should be valued at the lower of cost and net realisable value.
A.True
B.False
134. The cost of goods manufactured by an entity cannot include overhead costs.
A.True
B.False
135. Which of the following is not an example of directly attributable costs according to IAS
16?
A.Costs of employee benefits arising directly from the construction or acquisition of the item
of property, plant and equipment
B.Costs of site preparation
C.Costs of conducting business in a new location or with a new class of customer
D.Initial delivery and handling costs
E.Professional fees
136. Which one of the following terms best describes the removal of an asset from an entity’s
statement of financial position?
A.Write-off
B.Depreciation
C.Impairment
D.Derecognition
137. According to IAS 36, costs of disposal are:
A.Incremental costs, directly attributable to the disposal of an asset (or cash-generating unit),
plus finance costs and income tax expense
B.Incremental costs, directly attributable to the disposal of an asset, excluding finance costs
and income tax expense
C.Incremental costs, directly attributable to the disposal of an asset (or cash-generating unit),
plus finance costs, but excluding income tax expense
D.Incremental costs, directly attributable to the disposal of an asset (or cash-generating unit),
plus tax expense, but excluding finance costs
138. Contingent assets must not be recognised in financial statements unless an inflow of
economic benefits is virtually certain to arise.
A.True
B.False
139. According to IAS 12 Income taxes, deferred tax assets are the amounts of income taxes
recoverable in future periods in respect of deductible permanent differences.”
A.True
B.False
140. Should the fees paid to accountants to effect the combination be included in the
consideration transferred in a business combination, according to IFRS 3 Business
combinations?
A.Yes
B.No
141. Which ONE of the following statements best describes the term 'going concern'?
A.When current liabilities of an entity exceed current assets
B.The ability of the entity to continue in operation for the foreseeable future
C.The potential to contribute to the flow of cash and cash equivalents to the entity
D.The expenses of an entity exceed its income
142. Which of the following is not an example of directly attributable costs according to IAS
16?
A.Costs of employee benefits arising directly from the construction or acquisition of the item
of property, plant and equipment
B.Costs of site preparation
C.Costs of conducting business in a new location or with a new class of customer
D.Initial delivery and handling costs
E.Professional fees
143. Under IAS 16, if a company builds an office building for its own use, it may account for
the building at historical cost less accumulated depreciation and impairment losses, with
depreciation and impairment losses recognised in profit or loss.
A.True
B.False
144. How shall a lessee measure the lease liability after the commencement date?
A.By increasing the carrying amount to reflect interest on the lease liability
B.By reducing the carrying amount to reflect the lease payments made
C.By remeasuring the carrying amount to reflect any reassessment or lease modifications or
to reflect revised in-substance fixed lease payments
D.B and C
E.All of the above
145. Under IAS 36 Impairment of assets, which one of the following statements best
describes 'value in use'?
A.The amount of cash or cash equivalents that could currently be obtained by selling an asset
in an orderly disposal
B.The present value of estimated future cash flows expected to arise from the continuing use
of an asset and from its ultimate disposal
C.The net amount which an entity expects to obtain for an asset at the end of its useful life
D.The amount at which an asset could be exchanged between knowledgeable, willing parties
in an arm's length transaction
146. Under IAS 36, for impairment testing, a cash-generating unit is
A.The lowest aggregation of assets that can generate independent cash inflows
B.Any unit that generates cash
C.Corporate assets
D.The highest aggregation of assets that can generate independent cash inflows
147. According to IAS 36, value-in-use is
A.The amount at which an asset is recognized in the statement of financial position
B.The discounted present value of future cash flows arising from use of the asset and from its
disposal.
C.The higher of an asset’s fair value less cost to sell and its market value.
D.The market value.
148. The financial statements of the Farren Company for the year ended 31 December 20X8
included a provision for restructuring of £7 million and an environmental provision of £3
million. At 31 December 20X9, the environmental provision was no longer required and £2
million of the restructuring provision was no longer required. Under IAS 37, the
environmental provision is to be written back to profit or loss.
A.True
B.False
149. Which of the following areas does IFRS 3 apply to?
A.The accounting for the formation of a joint arrangement in the financial statements of the
joint arrangement itself
B.The acquisition of an asset or a group of assets that does not constitute a business
C.A combination of entities or businesses under common control
D.None of the above
E.A and B
150. A contingent liability is not recognised in the statement of financial position
A.True
B.False
151. The Plaice Company acquired a new filing machine, the list price of which was
$49,000. The supplier allowed a trade discount of $1,700 off the list price. On delivery, the
cost of installing the machine in its desired location was $450. According to IAS 16 Property,
plant and equipment, at what cost should the filing machine be measured in the financial
statements of Plaice?
A.49,000
B.47,750
C.49,450
D.47,300
152. Which of the following is not an example of directly attributable costs according to IAS
16?
A.Costs of employee benefits arising directly from the construction or acquisition of the item
of property, plant and equipment
B.Costs of site preparation
C.Costs of conducting business in a new location or with a new class of customer
D.Initial delivery and handling costs
E.Professional fees
153. Panda plc has an administration building which it no longer needs. On 1 July 20X9
Panda plc entered into an agreement to lease the building out to another company. The
building cost $500,000 on 1 January 20X0 and is being depreciated over 50 years, based on
the IAS 16 cost model. Panda plc applies the fair value model under IAS 40 Investment
property and the fair value of the building was judged to be $450,000 on 1 July 20X9. This
valuation had not changed at 31 December 20X9. What is the amount of the revaluation
surplus that will be recognised in respect of the building?
A.35,000
B.45,000
C.55,000
D.65,000
154. An entity shall apply IFRS 16 to all leases, except leases of right-of-use assets in a
sublease.
A.True
B.False
155. Which one of the following is not required to be disclosed in a lessee's financial
statements in relation to its leases, to comply with the requirements of IFRS 16 Leases?
A.Interest expense on lease liabilities
B.A reconciliation between the total of future minimum lease payments and their present
value
C.Total cash outflow for leases
D.Income from sub-leasing right of use assets
156. Flappy Co entered into a 4-year lease agreement on 1 January 20X5. The agreement
meets the definition of a lease in accordance with IFRS 16. An initial payment of $160,000
was made on 1 January 20X5 followed by three annual payments on 1 January of $150,000
each. The rate implicit in the lease is 10%. Flappy Co incurred initial direct costs of $20,000
to set up the lease. Which of the following entries could fully reflect the event at 1 January
20X5?
A.Debit right-of-use asset $553,028, Credit Lease liability $553,028
B.Debit right-of-use asset $533,028, Credit Lease liability $533,028
C.Debit right-of-use asset $553,028, Credit Lease liability $393,028, Credit Cash $160,000
D.Debit right-of-use asset $533,028, Credit Lease liability $373,028, Credit Cash $160,000
157. Under IAS 36, for impairment testing, a cash-generating unit is
A.The lowest aggregation of assets that can generate independent cash inflows
B.Any unit that generates cash
C.Corporate assets
D.The highest aggregation of assets that can generate independent cash inflows
158. Under IFRS 3, the acquirer shall measure the identifiable assets acquired and the
liabilities assumed at their:
A.Acquisition-date fair values
B.Acquisition-date historical cost
C.Reporting-date net book value
D.Reporting-date present value
159. Figy Co entered into a 4-year lease agreement on 1 January 20X5. The agreement meets
the definition of a lease in accordance with IFRS 16. An initial payment of $100,000 was
made on 1 January 20X5 followed by three annual payments on 1 January of $100,000 each.
The rate implicit in the lease is 10%. Figy Co incurred initial direct costs of $20,000 to set up
the lease. What is the cost of the right-of-use asset as at 1 January 20X5?
A.348,685
B.400,000
C.368,685
D.420,000
160. In a period of rising purchase costs, FIFO usually gives a lower taxable income than
AVCO and therefore, yeilds a tax advantage FALSE
161. In a period of rising prices, applying the FIFO method in measuring cost of inventories
would result in a lower gross profit figure than the AVCO method.
A.True
B.False
162. Which of the following items qualify as an intangible asset under IAS 38?
A.College tuition fees paid to employees who decide to enroll in an executive M.B.A
program at Harvard University while working with the company.
B.Legal costs paid to intellectual property lawyers to register a patent.
C.Advertising and promotion on the launch of a huge product.
D.Operating losses during the initial stages of the project.
163. An investment property is initially measured at cost, including transaction costs TRUE
164. An entity shall not recognise a contingent liability __________.
A.Unless an entity has a present liability as a result of a past event
B.Unless it is probable that an outflow of resources embodying economic benefits will be
required to settle this liability
C.Unless a reliable estimate can be made of the amount of this liability
D.None of the above
165. According to IFRS 15 Revenue from contracts, which TWO of the following are
indicators that a performance obligation is satisfied over time rather than at a point in time?
A.The customer simultaneously receives and consumes the benefits as the entity performs
B.The entity's performance creates or enhances an asset that the customer controls as it is
created or enhanced
C.The entity takes a substantial period of time to meet the performance obligation
D.The entity is entitled to stage payments as the work progresses