ACCA FR — Financial Reporting Practice Exam 3

SECTION A

Nexus Innovations, a tech startup, is preparing its first set of financial statements under IFRS. The CFO is deciding whether to present expenses by nature or by function. According to the IASB's Conceptual Framework for Financial Reporting, which qualitative characteristic is PRIMARILY being applied when management selects the presentation method that provides the most useful information to users?

SECTION A

CyberShield Inc. sells a software license bundled with 12 months of mandatory technical support for a total contract price of $120,000. If sold separately, the software license would cost $100,000 and the technical support would cost $50,000.

Under IFRS 15 Revenue from Contracts with Customers, how much revenue should CyberShield recognize immediately upon transferring the software license to the customer?

SECTION A

Titanium Forge Co, a heavy manufacturing firm, revalued its main factory building for the first time on 31 December 20X4. The building had a carrying amount of $4,500,000 and was revalued to $5,200,000. The building originally cost $6,000,000.

What is the correct accounting entry to record this revaluation under IAS 16 Property, Plant and Equipment?

SECTION A

AgriTech Solutions is developing a new automated irrigation system. Under IAS 38 Intangible Assets, which TWO of the following criteria MUST be demonstrated by AgriTech to capitalize the development costs?

SECTION A

Skyward Aviation entered into a 5-year lease for a maintenance hangar. The annual lease payments are $200,000, payable in advance on 1 January each year. The lease commenced on 1 January 20X6. Skyward's incremental borrowing rate is 6%. The present value of an annuity due of $1 for 5 years at 6% is 4.4651.

What is the initial lease liability recognized on 1 January 20X6, immediately AFTER the first payment is made?