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ACCA Financial Reporting (FR) 2026 past questions and answers

This 2026 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 2026 set with instant marking.

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Sample ACCA Financial Reporting (FR) 2026 questions

1. At year end, an accountant has persuasive evidence that a material impairment loss is required. The finance director asks the accountant to omit it because the omission would help meet a loan covenant and preserve the director's bonus. What is the most appropriate response?
  1. Omit the loss because the finance director is responsible for the financial statements
  2. Challenge the request, apply the relevant evidence objectively, and use appropriate escalation if pressure continues
  3. Record the loss only if the lender asks about the asset
  4. Use an unsupported estimate that produces a smaller loss

Answer: B. Challenge the request, apply the relevant evidence objectively, and use appropriate escalation if pressure continues

The accountant should uphold integrity and objectivity, apply the reporting requirements using evidence, and address the pressure through appropriate channels. Director approval does not justify knowingly misleading reporting.

2. A manufacturer buys a production line containing a major furnace that must be replaced every four years and a main structure expected to last 20 years. Both components have significant costs and can be measured reliably. How should the manufacturer depreciate them under IAS 16?
  1. Depreciate the entire production line over 20 years
  2. Depreciate the entire production line over four years
  3. Depreciate the significant furnace and structure separately over their respective useful lives
  4. Expense the furnace cost immediately and depreciate only the structure

Answer: C. Depreciate the significant furnace and structure separately over their respective useful lives

IAS 16 requires each significant component of an item of PPE to be depreciated separately over its own useful life. Applying one life to the complete line would ignore the furnace's shorter replacement cycle.

3. A software company spends $30,000 researching a new platform. On 1 July it can first demonstrate all IAS 38 development recognition criteria, including technical feasibility, intention and ability to complete, probable benefits, resources, and reliable measurement. It then incurs a further $46,000 of directly attributable development costs before launch. How much of these costs may be recognised as an intangible asset, assuming no other restriction applies?
  1. $46,000
  2. $76,000
  3. $30,000
  4. $0

Answer: A. $46,000

Only qualifying development expenditure incurred from the date all recognition criteria are met is capitalised, so $46,000 qualifies. The earlier research expenditure is expensed and cannot be reinstated later.

4. At the reporting date, a machine has a carrying amount of $500,000. Its fair value less costs of disposal is $440,000 and its value in use is $465,000. What impairment loss should be recognised under IAS 36?
  1. $25,000
  2. $60,000
  3. Nil
  4. $35,000

Answer: D. $35,000

Recoverable amount is the higher of fair value less costs of disposal and value in use, which is $465,000. The impairment loss is $500,000 minus $465,000, or $35,000; using the lower measure would overstate the loss.

5. An entity applies the IAS 40 fair value model to a building held to earn rentals. Its carrying amount at the start of the year is $800,000 and its fair value at year end is $920,000. How should the $120,000 increase be recognised?
  1. In other comprehensive income as a revaluation surplus
  2. In profit or loss for the year
  3. Directly in retained earnings without passing through profit or loss
  4. As a reduction of the building's depreciation expense only

Answer: B. In profit or loss for the year

Under the IAS 40 fair value model, fair value changes are recognised in profit or loss in the period in which they arise. Treating the gain as an IAS 16 revaluation surplus is the main distractor.

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