ACCA SBR
ACCA Strategic Business Reporting (SBR) Flashcards
Which body issues the IFRS Sustainability Disclosure Standards, and how does it sit alongside the IASB?
State the objective of IFRS S1 and identify the users it is written for.
Set out the four pillars of core content required by IFRS S1 and IFRS S2.
What does IFRS S1 mean by ‘connected information’, and why does the exam care about it?
When must sustainability-related disclosures be published under IFRS S1, and for what period?
Where an ISSB standard does not address a particular sustainability risk, what does IFRS S1 require an entity to do?
How does IFRS S1 deal with measurement uncertainty and with errors in sustainability data?
What relief does IFRS S1 give an entity that argues sustainability information is commercially sensitive?
A director says the climate disclosures can be omitted because ‘the effects are too far in the future to be reliable’. Evaluate that position.
Which climate-related risks does IFRS S2 require an entity to distinguish, and why does the split matter?
Define scope 1, scope 2 and scope 3 greenhouse gas emissions as measured under IFRS S2.
Why is scope 3 emissions disclosure the most contested part of IFRS S2, and what did the ISSB do about it?
What is climate resilience analysis under IFRS S2, and what must be disclosed about it?
How should an investor judge whether an entity’s climate-related disclosures are actually useful?
Explain the difference between single materiality and double materiality, and state which the ISSB applies.
Set out the key differences between the IFRS Sustainability Disclosure Standards and the European Sustainability Reporting Standards.
A group prepares an ESRS-compliant report and asks whether it can also claim compliance with IFRS S1. Advise.
What does ‘greenwashing’ mean in a reporting context, and which reporting principles does it breach?
An entity adopts a new IFRS Accounting Standard. What must it consider and disclose about the adoption?
A hurricane destroys a major production facility two weeks after the reporting date. Explain how this is reported.
How should a holding of cryptocurrency held for investment be classified and measured?
A mining group announces a plan to close its coal operations ten years earlier than planned because of climate policy. Identify the financial reporting consequences.
Explain the reporting implications of a government-imposed carbon emissions trading scheme for a manufacturer.
Name the five categories into which IFRS 18 requires income and expenses to be classified in the statement of profit or loss.
Which two subtotals does IFRS 18 make mandatory in the statement of profit or loss?
What belongs in the investing category under IFRS 18?
What belongs in the financing category under IFRS 18?
Why does IFRS 18 give entities with ‘specified main business activities’ different classification rules?
A retailer that also owns a portfolio of let investment property earns rental income and a fair value gain. Where do these appear under IFRS 18?
Define a management-defined performance measure (MPM) under IFRS 18.
What must be disclosed about each management-defined performance measure?
Why did the IASB decide to bring management-defined performance measures inside the financial statements?
Explain the roles of aggregation and disaggregation under IFRS 18.
An entity presents operating expenses by function. What extra disclosure does IFRS 18 require?
Under IFRS 18, how is the statement of cash flows affected compared with the previous IAS 7 treatment?
State the principles IFRS 18 sets for making disclosure notes useful.
When may an entity offset assets and liabilities, or income and expenses?
On what basis is an asset classified as current in the statement of financial position?
A loan is repayable in five years but the entity breached a covenant before the year end. How is the liability classified?
What are the two choices for measuring non-controlling interest at acquisition, and what does each produce?
Why does the choice of NCI measurement matter when a subsidiary’s goodwill is later impaired?
How is contingent consideration measured in a business combination, and how are later changes treated?
A parent agrees to pay $10m in three years’ time for a subsidiary. How is that consideration measured, and what happens between acquisition and payment?
Which acquisition-related costs may be included in the cost of a business combination?
Which intangible assets of an acquiree must be recognised on consolidation that the acquiree itself could not recognise?
How is a bargain purchase (negative goodwill) dealt with, and what must happen first?
Explain how unrealised profit on intra-group trading is eliminated and who bears the adjustment.
What consolidation adjustment is needed if a subsidiary uses accounting policies different from the group’s?
When must a parent measure an investment at fair value through profit or loss rather than consolidate?
In what circumstances may an intermediate parent avoid preparing consolidated financial statements?
How does a parent account for its investments in subsidiaries in its own separate financial statements?
An entity holds a 15% equity investment and then buys a further 45%, obtaining control. How is the goodwill calculated?
A parent increases its holding in a subsidiary from 70% to 90%. How is the purchase accounted for?
A parent sells a 15% interest in an 80%-owned subsidiary, retaining 65% and control. What is the accounting?
A parent disposes of its entire 80% holding in a subsidiary mid-year. How is the group gain or loss on disposal calculated?
A parent reduces its holding in a subsidiary from 90% to 30%, so the entity becomes an associate. Set out the treatment.
Why does loss of control trigger remeasurement of the retained interest while a partial disposal that keeps control does not?
A subsidiary is acquired exclusively with a view to resale within twelve months. How is it presented?
In a group statement of cash flows, how is the acquisition of a subsidiary during the year presented?
Explain how the dividend paid to non-controlling interests is derived for the group statement of cash flows.
How is a subsidiary’s foreign exchange translation dealt with when constructing a group statement of cash flows?
List the five fundamental principles of the ACCA Code of Ethics and Conduct.
Name the five categories of threat to the fundamental principles and give a corporate reporting example of each.
Set out the process an accountant in business should follow when faced with an ethical conflict over an accounting treatment.
Explain how confidentiality applies when an accountant discovers a material misstatement that management refuses to correct.
What is NOCLAR, and what does the Code require an accountant in business to do about it?
A finance director asks the reporting accountant to classify a recurring restructuring cost as ‘exceptional’ in an adjusted earnings measure. Evaluate.
Assess the consequences of management deliberately understating a provision to meet a profit forecast.
Why is aggressive earnings management a reporting problem even when each individual judgement sits within an acceptable range?
An accountant is asked to prepare an accounting treatment in an area they have never dealt with. What does the Code require?
What ethical issues arise where a company’s directors have significant influence over the assumptions used in a defined benefit or impairment valuation?
A director tells the accountant that a related party transaction with the director’s spouse ‘need not be disclosed because it was at arm’s length’. Respond.
Which stakeholders are harmed by unethical corporate reporting, and how does that shape the accountant’s duty?
On what two tests does IFRS 9 classify a debt instrument held as a financial asset?
Match the three IFRS 9 measurement categories for debt instruments to their business models.
How are investments in equity instruments measured under IFRS 9, and what election is available?
A company issues a bond convertible into a fixed number of its own shares. How is it accounted for on issue?
Distinguish a financial liability from equity, and give an instrument that looks like equity but is not.
Why does the fair value gain on a financial liability designated at fair value through profit or loss not go entirely to profit or loss?
Describe the three stages of the IFRS 9 expected credit loss model.
What indicates a significant increase in credit risk, and what is the effect of concluding that one has occurred?
How is a purchased or originated credit-impaired (POCI) financial asset accounted for?
When is a financial asset derecognised under IFRS 9?
A borrower renegotiates a loan with its lender. When is this an extinguishment rather than a modification?
When may a financial asset be reclassified between IFRS 9 measurement categories?
What are the three criteria, any one of which means a performance obligation is satisfied over time?
How is variable consideration measured, and what is the constraint?
How does an entity decide whether it is acting as principal or as agent?
How is a contract modification accounted for under IFRS 15?
How is a sale with a right of return accounted for?
Distinguish an assurance-type warranty from a service-type warranty.
A company sells goods and agrees to repurchase them in two years at a fixed price above the original selling price. How is this arrangement accounted for, and why is it not revenue?
Explain when a contract with a customer contains a significant financing component, and the effect.
Distinguish a contract asset from a trade receivable, and explain why the distinction matters.
A company revalues a class of PPE upwards. Where does the gain go, and what changes afterwards?
When can an impairment loss be reversed, and what limits apply?
Why must goodwill be allocated to cash-generating units, and how is a CGU impairment loss allocated?
Give three examples of development expenditure failing the IAS 38 capitalisation criteria and state the consequence.
How is an intangible asset with an indefinite useful life accounted for after initial recognition?
Explain component depreciation and why IAS 16 requires it.
What conditions must be met before an asset is classified as held for sale, and how is it then measured?
What are the two recognition exemptions available to a lessee, and how do they work?
What is included in the initial measurement of a right-of-use asset?
In what circumstances must a lessee remeasure the lease liability, and how is the adjustment recorded?
How should a lessee separate the components of a contract that covers both the use of an asset and related services?
How does an intermediate lessor account for a sublease?
How does a lessor decide whether a lease is a finance lease?
Explain the asset ceiling test for a defined benefit plan in surplus.
Distinguish a settlement from a curtailment of a defined benefit plan, and state where the gain or loss is recognised.
What is past service cost and how is it recognised?
How does accounting for a defined contribution plan differ from a defined benefit plan, and where does risk sit?
What is an onerous contract and how is it measured?
How is a decommissioning provision recognised and then unwound?
How is the amount of a provision measured under IAS 37?
Why does IAS 37 prohibit a provision for future operating losses, and what should be done instead?
Set out the four types of condition attaching to a share-based payment and how each affects the charge.
How are a modification, a cancellation and a settlement of an equity-settled share-based payment accounted for?
Distinguish Level 1, Level 2 and Level 3 inputs in the fair value hierarchy.
Name the three valuation techniques permitted by IFRS 13 and when each is appropriate.
Explain the difference between the principal market and the most advantageous market.
Why is fair value described as an exit price based on market participants, and what does that exclude?
Explain what a temporary difference is and how the tax base of an asset is determined.
When is deferred tax recognised on the unremitted profits of a subsidiary, associate or joint venture?
What is the initial recognition exemption in IAS 12, and why does it exist?
Distinguish a change of accounting policy from a change in accounting estimate, and state the different treatments.
Name three significant differences between the IFRS for SMEs Standard and full IFRS Accounting Standards.
At what amount is inventory measured, and what does ‘net realisable value’ mean?
Which costs must be excluded from the cost of inventory?
Why does the measurement of inventory frequently feature as an ethical or judgement issue in an SBR scenario?
State the objective of general purpose financial reporting and identify the primary users.
Which measurement bases does the Conceptual Framework identify, and what drives the choice?
What is measurement uncertainty, and does it prevent recognition?
When is an asset derecognised under the Conceptual Framework, and what problem does derecognition accounting try to solve?
Discuss the limitations of the Conceptual Framework.
How is a joint arrangement classified, and what determines the answer?
How does a joint operator account for its interest in a joint operation?
What indicators suggest significant influence over an investee?
How are transactions between an investor and its associate eliminated?
What happens under the equity method when an associate makes losses exceeding the investor’s interest?
Set out the rates used to translate a foreign subsidiary into the group’s presentation currency, and where the difference goes.
What happens to the foreign exchange translation reserve when a foreign operation is disposed of?
Distinguish functional currency from presentation currency, and explain the consequence of the distinction.
A subsidiary’s circumstances change and its functional currency changes. How is this dealt with?
How is a monetary item that forms part of the net investment in a foreign operation treated?
What is diluted EPS, and why do users pay attention to it?
Explain how the information needs of a lender, an equity investor and an employee differ when reading a set of financial statements.
What should management commentary contain, and what makes it useful?
Set out the main limitations of ratio analysis for a user comparing two entities.
Assess the usefulness of operating segment disclosures to an investor.
How does an entity identify its reportable segments?
What are the risks to users of alternative performance measures, and how should a user respond to them?
What are the 6 qualitative characteristics of financial information?
Define an asset
Identify 5 headings in other comprehensive income
Define joint arrangement.
How are joint ventures accounted for?
Define Functional Currency.
In a cash flow statement where would you show dividends from associates, and dividends paid to NCI?
Should you depreciate PPE and investment properties if held at FV?
In what circumstances should borrowing costs be capitalised?
Can you capitalise non purchased intangibles?
Define value in use and explain its relevance.
At what value are non-current assets held for sale recognised in the SFP?
Where in the P&L would you record a discontinued operation?
Where in the SFP would you record a non-current assets held for sale?
What is a defined benefit pension scheme?
Which type of pension scheme will normally appear in an employer’s SFP?
How do you measure the P&L charge for equity-settled share based pay schemes?
How do you measure the P&L charge for cash-settled share based pay schemes?
What is the accounting for negative goodwill?
Should goodwill be amortised?
Define liability and financial liability
Define derivative.
Andrew owns some sausages and an option to sell the sausages. What sort of hedge accounting can he use?
Mary expects to sell some sausages to the King of Neverland next year. She enters a currency forward to sell the Neverland dollars when she receives them. What sort of hedge accounting can she use?
Define a Level 1 input for fair value purposes, and give an example of an asset for which Level 1 would be used.
Define operating segment.
What are the five stages of the revenue recognition model?
Define a lease
How should the lessee normally reflect a lease in the financial statements?
In what circumstances should a company recognise a deferred tax asset relating to losses?
What are the 3 key related party disclosures?
Define a provision
In what circumstances can you recognise a provision for reorganisation?
When should contingent liabilities and contingent assets be disclosed?
In what 2 situations should you make a prior period adjustment?
What is the formula for EPS?
For SMEs what is the accounting treatment of development costs?
For integrated reporting identify the six capitals.
If an ACCA accountant does not know the accounting treatment of leases, what is the ethical issue?
In what circumstances should an asset be recognised in the financial statements?
Define equity.
Parent has December year-end. Subsidiary has October year-end. Can parent consolidate subsidiary?
Give examples of monetary assets and explain their relevance in SBR
If a company is using the fair value model, how often should it revalue PPE and IP?
How should a company account for a government grant?
Define investment property.
In what 3 circumstances should a company conduct an impairment review?
How are derivatives recognised in the financial statements?
If an ACCA accountant deliberately fails to consolidate a subsidiary, what is the ethical issue?
What are the three attributes of faithful representation?
In what circumstances should liabilities be recognised, according to the Framework?
How should fair value be determined for non-financial assets (e.g., investment properties)?
If directors have a profit-related bonus, what ethical threat does this represent?
Identify three circumstances when gains recognised in OCI are later recycled to P&L?
What are the key components of a discontinued operation?
What is the accounting treatment of a change in depreciation rate?
What is a performance obligation?
What are the primary factors in determining functional currency?
A company buys inventory from a foreign country on credit. At the reporting date, how should the inventory and the payable be translated?
In what order should losses be allocated to cash-generating units?
Define cash-generating unit
In what circumstances is an intangible asset ‘identifiable’?
What is the accounting treatment if PPE is transferred to IP? The company uses historic cost for PPE and fair value for IP. Prices are rising.
A company buys a building which it intends to use as a hotel. Can it classify it as an investment property?
In revenue recognition how should the transaction price be allocated to separate performance obligations?
How should the lessor reflect a finance lease in the financial statements?
A company sells PPE with a life of 50 years, and rents it back for 10 years. How will this be accounted for?
What are the main items recognised in the P&L for a defined benefit pension scheme?
What is the main item recognised in OCI for a defined benefit pension scheme?
How do you account for share based pay where the employee has the choice of shares or cash?
Define an adjusting subsequent event.
In the context of derivatives, what is an executory contract and how would it be accounted for?
A company buys an investment property financed by a loan. What is the accounting? (The company prefers to use the fair value model)
How should a company account for doubtful debts for trade receivables?
How is deferred tax on an UPWARD REVALUATION of PPE recognised, when the gain will be taxed only on sale?
How is deferred tax on a PROVISION recognised, where the expense is allowed for tax only when paid?
How is deferred tax on a FAIR VALUE UPLIFT to a subsidiary's assets recognised on consolidation?
What are the quantitative thresholds for a reportable segment under IFRS 8, Operating Segments?
How would you refer to a transaction involving the husband of a company director under IAS 24?
For SMEs what is the accounting treatment of borrowing costs?
A company owns 30% of another company. What are the possibilities for accounting?
How does IFRS 10 define control?
What is required for a ‘business’ and why is it relevant for group accounts?
In calculating goodwill, how would you deal with a legal claim against a subsidiary?
How are DB pension plans dealt with in the operating section of a cash flow statement?
Define receivable days
Define PE ratio
Define Free Cash Flow
Which body publishes standards on sustainability reporting?
How should a cryptocurrency be recognised in the SOFP?
What are three characteristics of materiality?
Which method of cash flow preparation is preferred by IAS 7 and by accounts preparers? Why?
How would a revaluation of PPE (upwards) affect ROCE?
How should goodwill be translated for a foreign subsidiary?
What is a market-based condition (in the context of share-based pay) and what is its relevance?
A company sells PPE with a life of 50 years, and rents it back for 50 years? How will this be accounted for and why?
How should a subsequent event which is non-adjusting but will cause the entity to cease trading be dealt with in FS?
In what circumstances can financial assets and liabilities be offset?
Define a financial asset.
Card 1 of 250. Question side.