©EMILLECT 2024/2025 ACADEMIC YEAR. ALL RIGHTS RESERVED
FIRST PUBLISH OCTOBER 2024
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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, ©EMILLECT 2024/2025 ACADEMIC YEAR. ALL RIGHTS RESERVED
FIRST PUBLISH OCTOBER 2024
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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, ©EMILLECT 2024/2025 ACADEMIC YEAR. ALL RIGHTS RESERVED
FIRST PUBLISH OCTOBER 2024
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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FIRST PUBLISH OCTOBER 2024
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.
Page 1/83
, ©EMILLECT 2024/2025 ACADEMIC YEAR. ALL RIGHTS RESERVED
FIRST PUBLISH OCTOBER 2024
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
Page 2/83
, ©EMILLECT 2024/2025 ACADEMIC YEAR. ALL RIGHTS RESERVED
FIRST PUBLISH OCTOBER 2024
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.
Page 3/83
, ©EMILLECT 2024/2025 ACADEMIC YEAR. ALL RIGHTS RESERVED
FIRST PUBLISH OCTOBER 2024
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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