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ACCA Financial Reporting (FR) 2024 past questions and answers

This 2024 ACCA Financial Reporting (FR) set has 20 practice questions. Try these 5 free sample questions, tap a question to reveal the answer and explanation. Then practise the whole 2024 set with instant marking.

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Sample ACCA Financial Reporting (FR) 2024 questions

1. Aster Ltd's finance director asks the financial accountant to recognise revenue from a large customer order even though the customer can cancel without penalty and no goods have been dispatched. The director says the entry is needed to meet a profit target. Which fundamental ethical principle is most directly threatened if the accountant complies?
  1. Confidentiality
  2. Integrity
  3. Professional behaviour
  4. Objectivity

Answer: B. Integrity

Recording revenue without a satisfied performance obligation would knowingly misrepresent the entity's performance, directly threatening integrity. Confidentiality concerns disclosure of information, while objectivity is not the most direct principle in this scenario.

2. On 1 January 20X4, Falcon Airways bought an aircraft for $10 million. The airframe component cost $8 million and has a 20-year useful life; the engine component cost $2 million and has a five-year useful life. Both have nil residual value and are depreciated straight-line. What depreciation expense should be charged for the year ended 31 December 20X4?
  1. $400,000
  2. $500,000
  3. $800,000
  4. $2,000,000

Answer: C. $800,000

Component depreciation is $8m/20 plus $2m/5, giving $400,000 + $400,000 = $800,000. Option A depreciates only the airframe and ignores the separately depreciated engine.

3. During the year ended 31 December 20X4, Nova Ltd incurred $120,000 researching a new process and $200,000 developing it before 1 September. From 1 September, all IAS 38 development recognition criteria were demonstrably met, and a further $320,000 of development expenditure was incurred by year-end. The process will not be available for use until 20X5. What amount is recognised as an intangible asset at 31 December 20X4?
  1. $320,000
  2. $440,000
  3. $520,000
  4. $640,000

Answer: A. $320,000

Only development expenditure incurred after the recognition criteria were met is capitalised, so the asset is $320,000. Research costs and development costs incurred before 1 September are expensed; amortisation has not started because the process is not yet available for use.

4. A cash-generating unit has a carrying amount of $1,000,000, including goodwill of $100,000. Its recoverable amount is $720,000. After writing off goodwill, the remaining loss is allocated pro rata to a building with a carrying amount of $600,000 and equipment with a carrying amount of $300,000; neither asset is subject to an individual floor. What impairment loss is allocated to the building?
  1. $100,000
  2. $120,000
  3. $180,000
  4. $280,000

Answer: B. $120,000

The total impairment is $1,000,000 − $720,000 = $280,000; $100,000 is first allocated to goodwill, leaving $180,000. The building receives 600/900 of that balance, or $120,000; option D incorrectly allocates the entire loss to the building.

5. Cedar Ltd uses the IAS 40 fair value model for its investment property. A property had a fair value of $1,500,000 at the start of the year and $1,580,000 at year-end. There were no additions or disposals. How is the change in fair value recognised in the year-end financial statements?
  1. An $80,000 gain in profit or loss
  2. An $80,000 gain in other comprehensive income
  3. An $80,000 revaluation reserve in equity
  4. No gain until the property is sold

Answer: A. An $80,000 gain in profit or loss

Under the IAS 40 fair value model, fair value changes are recognised in profit or loss in the period in which they arise. Recognition in other comprehensive income is not the IAS 40 fair value model treatment.

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