ACCA FR — Financial Reporting Practice Exam 2

Section A

GlobalHealth NGO recently changed its accounting policy for valuing medical inventory from FIFO to Weighted Average to better align with its international donor reporting requirements. According to the IASB Conceptual Framework, which qualitative characteristic is primarily enhanced by this change if it allows donors to evaluate the NGO alongside similar global entities?

Section A

CloudSync, a tech startup, signs a contract to provide a customer with a customized SaaS platform. The contract requires a non-refundable upfront fee of $120,000 for initial setup (which does not transfer a distinct good or service to the customer) and a monthly subscription fee of $10,000 for 24 months. How much revenue should CloudSync recognize in the first month of the contract under IFRS 15?

Section A

AgriCorp owns a specialized automated harvester purchased for $200,000 on 1 January 20X1, with a 10-year useful life and nil residual value. On 31 December 20X3, AgriCorp adopts the revaluation model. The harvester's fair value is assessed at $168,000. What is the revaluation surplus recorded in Other Comprehensive Income on 31 December 20X3?

Section A

MetroWater, a public utility, operates a water treatment plant with a carrying amount of $5.2 million. Due to new environmental regulations, its capacity is restricted. The plant could be sold to a neighboring municipality for $4.5 million, with legal and transfer costs of $200,000. Alternatively, MetroWater can continue using it, generating discounted future cash flows of $4.6 million. What is the impairment loss to be recognized under IAS 36?

Section A

Oceanic Drillers, a cross-border multinational, has a decommissioning provision for an offshore rig. At 1 January 20X5, the provision was $800,000, based on a discount rate of 5%. During 20X5, the unwinding of the discount was recorded. On 31 December 20X5, due to rising interest rates, the appropriate discount rate increased to 7%, reducing the present value of the obligation by $60,000. How should this $60,000 decrease be accounted for, assuming the related asset is measured under the cost model?