Question Tag: Accounting Standards

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FR – Nov 2024 – L2 – Q5c – Revenue Recognition under IFRS 15

Assessing whether goods and services in a contract are distinct under IFRS 15.

Question

Togbah LTD (Togbah), a software developer, enters into a contract with a customer to transfer the following:

Software licence,
Installation service (includes changing the web screen for each user),
Software updates, and
Technical support for two years.

Togbah sells the above separately. The installation service is routinely performed by other entities and does not significantly modify the software. The software remains functional without the updates and the technical support.

Required:
Explain whether the goods or services promised to the customer are distinct in terms of IFRS 15: Revenue from Contracts with Customers.

Answer

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Tags: Accounting Standards, Contracts with Customers, IFRS 15, Performance Obligations, Revenue Recognition
Level: Level 2

Topic: Financial Reporting Standards and Their Applications
Series: Nov 2024

FR – Nov 2024 – L2 – Q5a – Barriers to Harmonisation of Accounting Standards

Identifying five barriers to the harmonisation of accounting standards across different countries.

Question

Harmonisation of accounting standards is a topical issue and is needed due to the increasing globalisation and competitiveness of governments and services. Harmonisation ensures reliable and high-quality financial reporting. However, not all countries have been able to harmonise their accounting standards in line with the International Financial Reporting Standards.

Required:
State FIVE barriers to the harmonisation of accounting standards faced by these countries.

Answer

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Tags: Accounting Standards, Barriers, Compliance, Harmonisation, IFRS, International Accounting
Level: Level 2

Topic: Corporate Reporting and Compliance
Series: Nov 2024

CR – May 2017 – L3 – Q4 – Revenue Recognition (IFRS 15)

Advise on the correct accounting treatment for transactions involving contracts, licences, and purchase of components.

Question

Dango Plc is a conglomerate company operating in Nigeria with diverse interests across Africa. It prepares its financial statements in accordance with International Financial Reporting Standards with a year-end of September 30. The following transactions relate to Dango Plc.

(a) In February 2016, Dango Plc won a significant new contract to supply large quantities of rice to the government of Guyama, a small West African country, for the next two years. Under the terms of the arrangement, payment is made in cash on delivery once goods have been cleared by customs. The rice will be delivered in batches four (4) times every year, on April 1, July 1, October 1, and January 1. The batches for April 1, 2016, and July 1, 2016, amounting to N250 million and N380 million respectively, were delivered and paid. Dango incurred significant costs on customs duties for the first batch of delivery. The October 1 batch, valued at N520 million, was shipped prior to the year-end but delivered and paid for on October 1, 2016.

(b) On October 1, 2010, a 12-year licence was awarded to Dango Plc by the Federal Government to be the sole manufacturer of a chemical used in the Nigerian pharmaceutical industry. The licence was recognised on that date at its fair value of N196 million. The award of the licence motivated Dango Plc in 2011 to purchase a division of another Nigerian competitor company making similar products. Goodwill of N240 million was recognised on the purchase of the division. Dango Plc merged the activities of the newly acquired division with its own to create a specialist chemical sub-division, which it now classifies as a separate cash-generating unit. By 2016, the revenue of this cash-generating unit now amounts to 5% of the Group’s revenue.

(c) Dango Plc buys raw materials from overseas suppliers. It has recently taken delivery of 1,000 units of component X, used in the production of chemicals. The quoted price of component X was N1,200 per unit, but Dango Plc has negotiated a trade discount of 5% due to the size of the order. The supplier offers an early settlement discount of 2% for payment within 30 days, and Dango Plc intends to achieve this. Import duties of N60 per unit must be paid before the goods are released through customs. Once the goods are released, Dango Plc must pay a delivery cost of N5,000 to have the components taken to its warehouse.

Required:
Write a report to the directors advising them on the correct accounting treatment of the above transactions in the financial statements for the year ended September 30, 2016, in accordance with the provisions of the relevant standards.

Note: You may consider the relevance of the following standards to the transactions: IAS 20, IAS 2, IAS 38, IFRS 3, and IFRS 15.

Answer

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Tags: Accounting Standards, Customs Duties, Discounts, Goodwill, Licenses, Revenue
Level: Level 3

Topic: Revenue Recognition (IFRS 15)

AAA – Nov 2013 – L3 – AII – Q9 – Quality Control in Audit Firms

Identifies the type of review conducted by a partner or manager for compliance with standards.

Question

A review by a partner or manager to ensure that the form and content of the financial statements are in accordance with accounting standards, CAMA CAPC20 LFN 2004 and Securities and Exchange Commission (SEC), where applicable is ………………….. Review.

Answer

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Tags: Accounting Standards, Audit Procedures, Financial Statements, Quality control, Review Process
Level: Level 3

Topic: Quality Control in Audit Firms
Series: NOV 2013

AAA – Nov 2012 – L3 – AII – Q15 – Regulatory Framework and Professional Standards

Identifies a major deficiency of local standards compared to IFRS in the presentation of non-current assets.

Question

One of the major deficiencies of our Local Standards over IFRS’s presentation of Non-current Assets is that our Local Standards do not recognise ……………. process.

Answer

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Tags: Accounting Standards, IFRS, Local Standards, Non-current Assets, Regulatory Differences
Level: Level 3

Topic: Regulatory Framework and Professional Standards
Series: NOV 2012

AAA – Nov 2012 – L3 – SA – Q9 – Regulatory Framework and Professional Standards

Identifying an invalid statement about the benefits and use of IFRS.

Question

Which of the statements listed below about IFRS is invalid?

A. Multinational should benefit from a number of cost savings when using IFRS
B. Companies that wish to reach a wider group of investors will find financial statements based on IFRS acceptable in all major markets
C. Using IFRS will make it easier, though more expensive, to have secondary listing in other countries of the world
D. Using the same accounting basis provides greater comparability between companies which will lead to more efficient investment
E. The original standard setter between (1973-2000) was International Accounting Standard Committee (IASC)

Answer

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Tags: Accounting Standards, Financial Reporting, IFRS, International Standards
Level: Level 3

Topic: Regulatory Framework and Professional Standards
Series: NOV 2011

FR – Nov 2023 – L2 – Q7a – Regulatory Framework for Financial Reporting

Discusses main sources of financial reporting regulations and reasons for regulatory practices.

Question

Within the context of financial reporting and regulatory frameworks:

i. Discuss the main sources of regulations. (3 Marks)
ii. Discuss TWO reasons why financial reporting practice should be regulated. (2 Marks)

Answer

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Tags: Accounting Standards, Company Law, Financial Reporting, Regulations, Regulatory Rationale, Stock Exchange
Level: Level 2

Topic: Regulatory Framework for Financial Reporting

BL – Nov 2020 – L1 – SB – Q1d – Business Ethics and Corporate Governance.

Describe ethical codes and their purpose for professional accountants.

Question

Accountants, like most professionals, are guided by the code of ethics of their profession when dealing with clients.

Required:
Explain:
i. Ethical codes
ii. The purpose of ethical codes for a professional accountant.

Answer

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Tags: Accounting Standards, Ethical Guidelines, Ethics, Professional Conduct
Level: Level 1

Topic: Business Ethics and Corporate Governance
Series: NOV 2020

FA – May 2012 – L1 – SA – Q4 – Regulatory Environment of Accounting

Identifying the function of the Financial Reporting Council of Nigeria.

Question

Which of the following is NOT a function of the Financial Reporting Council of Nigeria?

A. Promoting and enforcing compliance with the accounting standards developed by the Board
B. Developing and publishing in the public interest accounting standards to be observed in the preparation of financial statements
C. Advising State Governments on matters relating to accounting standards
D. Receiving notices of non-compliance with its standards from the preparer
E. Advising the Minister on making of regulations under Section 356 of Companies and Allied Matters, Cap C20, LFN 2004

Answer

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Tags: Accounting Standards, Financial Reporting Council, Nigerian Accounting Laws
Level: Level 1

Topic: Regulatory Environment of Accounting
Series: MAY 2012

FR – Nov 2020 – L2 – Q2c – Regulatory Framework for Financial Reporting

Highlights of the objectives of the International Accounting Standards Board (IASB).

Question

Non-accounting professionals usually wonder why an entity’s general-purpose financial reporting should be regulated without allowing users to be free to choose their presentations.

Required:

Highlight THREE objectives of the International Accounting Standards Board (IASB).

Answer

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Tags: Accounting Standards, IASB, Objectives
Level: Level 2

Topic: Regulatory Framework for Financial Reporting
Series: NOV 2020

FR – Nov 2020 – L2 – Q2b – Regulatory Framework for Financial Reporting

Explanation of two sources of accounting regulations in Nigeria.

Question

Non-accounting professionals usually wonder why an entity‟s general purpose
financial reporting should be regulated without allowing users to be free from
choice of presentations.
In order to give clarity on this subject to the non-accounting professionals in your
workplace,

Identify and explain TWO sources of accounting regulations in Nigeria. (3 Marks)

Answer

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Tags: Accounting Standards, Nigeria, Regulatory Framework
Level: Level 2

Topic: Regulatory Framework for Financial Reporting
Series: NOV 2020

FR – Nov 2020 – L2 – Q2a – Regulatory Framework for Financial Reporting

Explanation of reasons why financial reporting should be regulated in Nigeria.

Question

Non-accounting professionals usually wonder why an entity’s general-purpose financial reporting should be regulated without allowing users to be free to choose their presentations.

Required:
Explain FOUR reasons why financial reporting should be regulated in Nigeria. (4 Marks)

Answer

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Tags: Accounting Standards, Financial Reporting, Nigeria, Regulation
Level: Level 2

Topic: Regulatory Framework for Financial Reporting
Series: NOV 2020

PSAF – Nov 2021 – L2 – Q2b – International Public Sector Accounting Standards (IPSAS)

Outline changes in accounting policies and identify disclosure requirements when applying IPSAS 3.

Question

IPSAS 3 – Accounting Policies, Changes in Accounting Estimates, and Errors outlines criteria for selecting and changing accounting policies among other purposes.

Required:

Outline what constitutes changes in accounting policies under the standard.
Identify THREE disclosure requirements under the following headings:
- When the initial application of IPSAS 3 is made and has effects on prior, current, or future periods.
- When voluntary changes in accounting policy are made and have effects on current, prior, or future periods.

Answer

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Tags: Accounting Policies, Accounting Standards, Disclosure Requirements, IPSAS 3
Level: Level 2

Topic: International public sector accounting standards
Series: NOV 2021

FA – May 2013 – L1 – SA – Q4 – Accounting Concepts

The question concerns the process of eliminating variations in accounting practice.

Question

The process to reduce or eliminate variations in accounting practice and to introduce a degree of uniformity into financial reporting is:

A. Accounting Standards
B. Accounting Concepts
C. Accounting Manuals
D. Accounting Statements
E. Accounting Records

Answer

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Tags: Accounting Standards, Financial Reporting, Uniformity
Level: Level 1

Topic: Accounting Concepts
Series: MAY 2013

FA – May 2014 – L1 – SA – Q1c – Accounting for Inventories in Accordance with IAS 2

why (IAS 2) on inventories is not applicable to construction contracts

Question

Explain why International Accounting Standard (IAS 2) on inventories is not applicable to construction contracts.

Answer

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Tags: Accounting Standards, Exclusions, IAS 2, Inventories
Level: Level 1

Topic: Accounting for Inventories (IAS 2)
Series: MAY 2014

FA – May 2014 – L1 – SA – Q1b – Accounting for Inventories in Accordance with IAS 2

costs to include and exclude when measuring inventory cost under IAS 2.

Question

List the costs which should be included when measuring the cost of inventories and identify any cost which should be excluded.

Answer

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Tags: Accounting Standards, Exclusions, IAS 2, Inventories
Level: Level 1

Topic: Accounting for Inventories (IAS 2)
Series: MAY 2014

FA – May 2014 – L1 – SA – Q1a – Accounting for Inventories in Accordance with IAS 2

Definition of inventories

Question

Explain the term “inventories” as defined by International Accounting Standard (IAS 2).

Answer

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Tags: Accounting Standards, Exclusions, IAS 2, Inventories
Level: Level 1

Topic: Accounting for Inventories (IAS 2)
Series: MAY 2014

FR – MAY 2021 – L2 – Q5c – Intangible Assets Accounting

Explain accounting for manufacturing software and training costs as per IAS 38.

Question

Sawla Ltd (Sawla) prepares financial statements under International Financial Reporting Standards (IFRSs). On 1 June 2020, Sawla acquired a manufacturing software at the cost of GH¢1.5 million. The software is estimated to have a useful economic life of 5 years with no residual value. To develop staff capacity to a higher level, a training program was organised for production staff on the use of the software at a cost of GH¢250,000 during the year. Management is convinced the staff training will generate more revenue for the entity through future economic benefits. Sawla intends to adopt the revaluation model under IAS 38 Intangible Assets and to revalue the software at the end of each year. Accordingly, the software was valued by a software engineer at GH¢1.7 million on 31 December 2020. Sawla accepted this value and decided to incorporate the valuation in the financial statements.

Required:
In accordance with IAS 38: Intangible Assets, explain how to account for the above transactions for the year to 31 December 2020.
(5 marks)

Answer

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Tags: Accounting Standards, IAS 38, Intangible Assets, Revaluation Model, Training Costs
Level: Level 2

Topic: Financial Reporting Standards and Their Applications
Series: MAY 2021

FA – Nov 2013 – L1 – SA – Q24 – Regulatory Environment of Accounting

Identifying the body responsible for issuing IFRS.

Question

The responsibility for issuing International Financial Reporting Standards (IFRS) is that of ____________.

Answer

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Tags: Accounting Standards, IFRS, Regulatory Bodies
Level: Level 1

Topic: Regulatory Environment of Accounting
Series: NOV 2013

FA – Nov 2013 – L1 – SA – Q7 – Accounting for Inventories in Accordance with IAS 2

Understanding IAS 2's guidelines on inventory valuation.

Question

In accordance with IAS2, which of the following statements about the valuation of inventory is correct?

A. Selling price less estimated profit margin may be used to arrive at cost if this gives a reasonable approximation of actual cost
B. LIFO is an accepted valuation method for inventory
C. FIFO is not an accepted valuation method for inventory
D. The cost of goods manufactured by an enterprise will include materials and labour only
E. Inventory items are normally valued at the higher of cost and net realisable value

Answer

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Tags: Accounting Standards, Cost measurement, IAS 2, Inventory Valuation
Level: Level 1

Topic: Accounting for Inventories (IAS 2)
Series: NOV 2013

Question Tag: Accounting Standards

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FR – Nov 2024 – L2 – Q5c – Revenue Recognition under IFRS 15

Assessing whether goods and services in a contract are distinct under IFRS 15.

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FR – Nov 2024 – L2 – Q5a – Barriers to Harmonisation of Accounting Standards

Identifying five barriers to the harmonisation of accounting standards across different countries.

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CR – May 2017 – L3 – Q4 – Revenue Recognition (IFRS 15)

Advise on the correct accounting treatment for transactions involving contracts, licences, and purchase of components.

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AAA – Nov 2013 – L3 – AII – Q9 – Quality Control in Audit Firms

Identifies the type of review conducted by a partner or manager for compliance with standards.

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AAA – Nov 2012 – L3 – AII – Q15 – Regulatory Framework and Professional Standards

Identifies a major deficiency of local standards compared to IFRS in the presentation of non-current assets.

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AAA – Nov 2012 – L3 – SA – Q9 – Regulatory Framework and Professional Standards

Identifying an invalid statement about the benefits and use of IFRS.

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FR – Nov 2023 – L2 – Q7a – Regulatory Framework for Financial Reporting

Discusses main sources of financial reporting regulations and reasons for regulatory practices.

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BL – Nov 2020 – L1 – SB – Q1d – Business Ethics and Corporate Governance.

Describe ethical codes and their purpose for professional accountants.

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FA – May 2012 – L1 – SA – Q4 – Regulatory Environment of Accounting

Identifying the function of the Financial Reporting Council of Nigeria.

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FR – Nov 2020 – L2 – Q2c – Regulatory Framework for Financial Reporting

Highlights of the objectives of the International Accounting Standards Board (IASB).

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FR – Nov 2020 – L2 – Q2b – Regulatory Framework for Financial Reporting

Explanation of two sources of accounting regulations in Nigeria.

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FR – Nov 2020 – L2 – Q2a – Regulatory Framework for Financial Reporting

Explanation of reasons why financial reporting should be regulated in Nigeria.

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PSAF – Nov 2021 – L2 – Q2b – International Public Sector Accounting Standards (IPSAS)

Outline changes in accounting policies and identify disclosure requirements when applying IPSAS 3.

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FA – May 2013 – L1 – SA – Q4 – Accounting Concepts

The question concerns the process of eliminating variations in accounting practice.

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FA – May 2014 – L1 – SA – Q1c – Accounting for Inventories in Accordance with IAS 2

why (IAS 2) on inventories is not applicable to construction contracts

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FA – May 2014 – L1 – SA – Q1b – Accounting for Inventories in Accordance with IAS 2

costs to include and exclude when measuring inventory cost under IAS 2.

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FA – May 2014 – L1 – SA – Q1a – Accounting for Inventories in Accordance with IAS 2

Definition of inventories

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FR – MAY 2021 – L2 – Q5c – Intangible Assets Accounting

Explain accounting for manufacturing software and training costs as per IAS 38.

Required: In accordance with IAS 38: Intangible Assets, explain how to account for the above transactions for the year to 31 December 2020. (5 marks)

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FA – Nov 2013 – L1 – SA – Q24 – Regulatory Environment of Accounting

Identifying the body responsible for issuing IFRS.

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FA – Nov 2013 – L1 – SA – Q7 – Accounting for Inventories in Accordance with IAS 2

Understanding IAS 2's guidelines on inventory valuation.

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Required:
In accordance with IAS 38: Intangible Assets, explain how to account for the above transactions for the year to 31 December 2020.
(5 marks)