Accounting Standards – Page 4

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 – May 2016 – L2 – Q3d – Role of the IASB and Standard-Setting Process

Discuss the standard-setting process adopted by the IASB.

Question

As a newly qualified accountant with The Institute of Chartered Accountants (Ghana) (ICAG), you are asked to make a short presentation to the rest of the staff in the accounting and finance department of your employer who are themselves yet to join ICAG as students about the standard-setting process adopted by the International Accounting Standards Board (IASB).

Required:
Discuss the standard-setting process as adopted by the IASB to these junior staff.

Answer

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Tags: Accounting Standards, IASB, IFRS, Standard-setting process
Level: Level 2

Topic: Role of the IASB and Standard-Setting Process
Series: MAY 2016

FR – Nov 2018 – L2 – Q5b – Professional and Ethical Issues in Financial Reporting

Explanation of the importance of 'Substance Over Form' and features indicating that the economic substance of a transaction may differ from its legal form.

Question

Under the IASB’s Conceptual Framework for Financial Reporting, certain qualitative characteristics of useful financial information are identified. These are subdivided into characteristics considered fundamental and those considered to be enhancing. The two fundamental characteristics identified by the framework are ‘relevance’ and ‘faithful representation’. In order for financial transactions to be represented faithfully in the financial statements, the principle of ‘substance over form’ should be applied. This means that wherever there is a difference between the legal form of a transaction and its economic substance, the financial statements should reflect the economic substance.

Required:
i. Discuss the importance of the concept of ‘substance over form’.
(4 marks)

ii. Describe FOUR (4) features of a transaction that suggest that its economic substance may differ from its legal form.
(6 marks)

Answer

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Tags: Accounting Standards, Economic Substance, Professional Ethics, Substance Over Form
Level: Level 2

Topic: Professional and Ethical Issues in Financial Reporting
Series: NOV 2018

CR – Nov 2018 – L3 – Q5c – Regulatory framework and ethics

Evaluate the finance director's suggestion to early adopt a revised accounting standard for Navrongo Ltd’s 2018 financial statements.

Question

You are the financial controller of Navrongo Ltd (Navrongo), a company that experienced a relatively difficult trading during the year ended 30 September 2018. Reporting deadlines for the 2018 financial statements are rapidly approaching, and you have a number of matters to finalize. The finance director made the following suggestion in an email:

“A revised accounting standard that is relevant to Navrongo is expected to be issued by the IASB during the 2019 calendar year. Based on the content of the corresponding exposure draft, the revisions to the accounting standard would be beneficial to Navrongo in the year of adoption. The 2018 Navrongo financial statements should be prepared using the proposed new accounting standard on the basis of voluntary early adoption of the new standard.”

Required:
Explain to the finance director, justifying whether you agree or disagree with the suggestion above

Answer

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Tags: Accounting Standards, Early Adoption, Exposure Draft, Financial Reporting, IASB
Level: Level 3

Topic: Regulatory Framework and Ethics
Series: NOV 2018

CR – Nov 2023 – L3 – Q4b – Business combinations and consolidation

Outline factors to consider in determining the acquirer in a business combination according to IFRS 3.

Question

b) Mmebusem Plc has been negotiating with Anansesem Plc for several months, and agreements have finally been reached for the two companies to combine. In considering the accounting for the combined entities, management realises that, in applying IFRS 3, an acquirer must be identified. However, there is a debate among the accounting staff as to which entity is the acquirer.

Required:

In accordance with IFRS 3: Business Combinations, outline FOUR (4) factors that should be considered in determining which entity is the acquirer. (5 marks)

Answer

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Tags: Accounting Standards, Acquirer Identification, Business Combinations, IFRS 3
Level: Level 3

Topic: Business combinations and consolidation
Series: NOV 2023

PSAF – March 2024 – L2 – Q1 – Accrual Basis Challenges and Measurement Objectives

Discuss the challenges in adopting accrual basis accounting and the objectives and bases of measurement in public sector financial reporting.

Question

a) Changing from cash accounting to accrual accounting is necessary to improve financial reporting and transparency in the public sector. However, it is not going to be without systemic and structural challenges.

Required:
i) Explain FIVE (5) challenges involved in adopting Accrual Basis Accounting. (5 marks)
ii) Explain FIVE (5) measures Ghana can put in place to successfully implement Accrual Basis Accounting. (5 marks)

b) Measurement of assets is a very important aspect of financial reporting. Preparers of financial statements should always consider the objective of measurement to ensure that the financial statements provide information that is useful to users for accountability and decision-making purposes.

Required:
i) Explain the objectives of measurement in financial reporting of public sector entities. (4 marks)
ii) Explain FOUR (4) bases of measurement of assets and provide in each situation where it is applied in financial reporting. (6 marks)

Answer

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Tags: Accounting Standards, Accrual Basis Accounting, Financial Reporting, Measurement of Assets, Public Financial Management
Level: Level 2

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.

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

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

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

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

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.

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.

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

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

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

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

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

Describe ethical codes and their purpose for professional accountants.

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

Identifying the function of the Financial Reporting Council of Nigeria.

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

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

FR – May 2016 – L2 – Q3d – Role of the IASB and Standard-Setting Process

Discuss the standard-setting process adopted by the IASB.

FR – Nov 2018 – L2 – Q5b – Professional and Ethical Issues in Financial Reporting

Explanation of the importance of 'Substance Over Form' and features indicating that the economic substance of a transaction may differ from its legal form.

CR – Nov 2018 – L3 – Q5c – Regulatory framework and ethics

Evaluate the finance director's suggestion to early adopt a revised accounting standard for Navrongo Ltd’s 2018 financial statements.

CR – Nov 2023 – L3 – Q4b – Business combinations and consolidation

Outline factors to consider in determining the acquirer in a business combination according to IFRS 3.

PSAF – March 2024 – L2 – Q1 – Accrual Basis Challenges and Measurement Objectives

Discuss the challenges in adopting accrual basis accounting and the objectives and bases of measurement in public sector financial reporting.

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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 – May 2016 – L2 – Q3d – Role of the IASB and Standard-Setting Process

Discuss the standard-setting process adopted by the IASB.

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FR – Nov 2018 – L2 – Q5b – Professional and Ethical Issues in Financial Reporting

Explanation of the importance of 'Substance Over Form' and features indicating that the economic substance of a transaction may differ from its legal form.

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CR – Nov 2018 – L3 – Q5c – Regulatory framework and ethics

Evaluate the finance director's suggestion to early adopt a revised accounting standard for Navrongo Ltd’s 2018 financial statements.

You're reporting an error for "CR – Nov 2018 – L3 – Q5c – Regulatory framework and ethics"

CR – Nov 2023 – L3 – Q4b – Business combinations and consolidation

Outline factors to consider in determining the acquirer in a business combination according to IFRS 3.

You're reporting an error for "CR – Nov 2023 – L3 – Q4b – Business combinations and consolidation"

PSAF – March 2024 – L2 – Q1 – Accrual Basis Challenges and Measurement Objectives

Discuss the challenges in adopting accrual basis accounting and the objectives and bases of measurement in public sector financial reporting.

You're reporting an error for "PSAF – March 2024 – L2 – Q1 – Accrual Basis Challenges and Measurement Objectives"

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