ACCA F7 2016 Dec

Aug 29, 2026

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Practice questions covering key ACCA F7 (Financial Reporting) themes, including IAS/IFRS interpretation duties, subsidiary determination after acquisitions, treatment of government grants linked to property, plant and equipment, and accounting for mining environmental restoration provisions. The material also tests consolidation concepts using cost of sales and inventory balances across group transactions, plus the classification of changes between accounting policy and accounting estimates, requiring appropriate prospective or retrospective application.

LanguageEnglish

CategoryExam

FormatPDF

Pages25

Reading Time1 h 3 min

AccessFree to download

Multiple choice questions

Government grants and accounting entries

Provisions and environmental restoration

Consolidation and cost of sales

Accounting policy vs accounting estimate

􀀌un􀀙􀀖m􀀚nt􀀖 s 􀀎􀀚v􀀚 – 􀀓􀀞􀀝 s 􀀏o􀀙u 􀀚 􀀌􀀝n􀀖n􀀘􀀝􀀖 􀀒􀀚port􀀝n􀀛 􀀔u􀀚s􀀙􀀖y 􀀆 􀀓􀀚pt􀀚m􀀗􀀚r 􀀄􀀂􀀃􀀆 􀀈􀀐􀀒􀀍 􀀉􀀑􀀑􀀔􀀜􀀍􀀌􀀂 􀀂 􀀅􀀉􀀍􀀊􀀋 􀀁􀀃 􀀇􀀆􀀈􀀍􀀌􀀄􀀋 􀀔􀀜􀀝s qu􀀚st􀀝on p􀀖p􀀚r 􀀝s 􀀙􀀝v􀀝􀀙􀀚􀀙 􀀝nto t􀀜r􀀚􀀚 s􀀚􀀘t􀀝ons􀀈 􀀓􀀚􀀘t􀀝on 􀀉 – 􀀉􀀎􀀎 􀀃􀀅 qu􀀚st􀀝ons 􀀖r􀀚 􀀘ompu sory 􀀖n􀀙 􀀏􀀕􀀓􀀔 􀀗􀀚 􀀖tt􀀚mpt􀀚􀀙􀀓􀀚􀀘t􀀝on 􀀊 – 􀀉􀀎􀀎 􀀃􀀅 qu􀀚st􀀝ons 􀀖r􀀚 􀀘ompu sory 􀀖n􀀙 􀀏􀀕􀀓􀀔 􀀗􀀚 􀀖tt􀀚mpt􀀚􀀙􀀓􀀚􀀘t􀀝on 􀀋 – 􀀊􀀐􀀔􀀍 qu􀀚st􀀝ons 􀀖r􀀚 􀀘ompu sory 􀀖n􀀙 􀀏􀀕􀀓􀀔 􀀗􀀚 􀀖tt􀀚mpt􀀚􀀙 􀀅􀀔 􀀆􀀇􀀈 􀀔􀀕􀀍􀀓 􀀙􀀏􀀐􀀘 􀀖􀀚􀀍􀀘􀀙􀀐􀀔􀀓 􀀕􀀉􀀕􀀍􀀗 􀀚􀀓􀀙􀀐􀀑 􀀐􀀓􀀘􀀙􀀗􀀚􀀋􀀙􀀍􀀌 􀀊􀀞 􀀙􀀏􀀍 􀀘􀀚􀀕􀀍􀀗􀀛􀀐􀀘􀀔􀀗􀀁􀀅􀀔 􀀆􀀇􀀈 􀀗􀀍􀀋􀀔􀀗􀀌 􀀉􀀓􀀞 􀀔􀀎 􀀞􀀔􀀚􀀗 􀀉􀀓􀀘􀀜􀀍􀀗􀀘 􀀔􀀓 􀀙􀀏􀀍 􀀖􀀚􀀍􀀘􀀙􀀐􀀔􀀓 􀀕􀀉􀀕􀀍􀀗􀀁 􀀈􀀏􀀐􀀘 􀀖􀀚􀀍􀀘􀀙􀀐􀀔􀀓 􀀕􀀉􀀕􀀍􀀗 􀀒􀀚􀀘􀀙 􀀓􀀔􀀙 􀀊􀀍 􀀗􀀍􀀒􀀔􀀛􀀍􀀌 􀀎􀀗􀀔􀀒 􀀙􀀏􀀍 􀀍􀀝􀀉􀀒􀀐􀀓􀀉􀀙􀀐􀀔􀀓 􀀏􀀉􀀑􀀑􀀁 􀀑 􀀖 p 􀀚 r 􀀌􀀇 􀀈􀀏􀀍 􀀃􀀘􀀘􀀔􀀋􀀐􀀉􀀙􀀐􀀔􀀓 􀀔􀀎􀀄􀀏􀀉􀀗􀀙􀀍􀀗􀀍􀀌 􀀄􀀍􀀗􀀙􀀐􀀎􀀐􀀍􀀌􀀃􀀋􀀋􀀔􀀚􀀓􀀙􀀉􀀓􀀙􀀘 Section 􀀔 – 􀀔􀀝􀀝 􀀉􀀍 questions are compulsory and 􀀞UST be attempted 􀀛lease use the grid provided on page two of the 􀀒andidate 􀀐nswer 􀀑ooklet to record your answers to each multiple choice question􀀇 􀀓o not write out the answers to the 􀀘􀀒􀀜s on the lined pages of the answer booklet􀀇 􀀔ach question is worth 􀀊 marks􀀇 􀀉 Which of the following is OT a duty of the 􀀜􀀙RS 􀀜nterpretations 􀀖ommittee􀀓 􀀔 To interpret the application of International 􀀝inancial Reporting Standards 􀀕 To work directly with national standard setters to bring about convergence with I􀀝RS 􀀖 To provide guidance on financial reporting issues not specifically addressed in I􀀝RSs 􀀗 To publish draft interpretations for public comment 􀀊 Which of the following will be treated as a subsidiary of Poulgo 􀀖o as at 􀀋􀀉 􀀗ecember 􀀊􀀈X􀀏􀀓 􀀅􀀌􀀆 The acquisition of 􀀑􀀋􀀃 of Zakron 􀀚o􀀄s equity share capital on 􀀌 March 􀀍􀀋X􀀒􀀉 Zakron 􀀚o􀀄s activities are significantly different from the rest of the Poulgo group of companies 􀀅􀀍􀀆 The offer to acquire 􀀒􀀋􀀃 of Unto 􀀚o􀀄s equity share capital on 􀀌 November 􀀍􀀋X􀀒􀀉 The negotiations were finally signed off during January 􀀍􀀋X􀀓 􀀅􀀎􀀆 The acquisition of 􀀏􀀐􀀃 of Speeth 􀀚o􀀄s equity share capital on 􀀎􀀌 􀀛ecember 􀀍􀀋X􀀒􀀉 Poulgo 􀀚o is able to appoint three of the ten members of Speeth 􀀚o􀀄s board 􀀔 􀀌 only 􀀕 􀀍 and 􀀎 􀀖 􀀎 only 􀀗 􀀌 and 􀀍 􀀋 On 􀀌 January 􀀍􀀋X􀀑􀀇 􀀞ardenbugs 􀀚o received a 􀀂􀀎􀀋􀀇􀀋􀀋􀀋 government grant relating to equipment which cost 􀀂􀀔􀀋􀀇􀀋􀀋􀀋 and had a useful life of six years􀀉 The grant was netted off against the cost of the equipment􀀉 On 􀀌 January 􀀍􀀋X􀀒􀀇 when the equipment had a carrying amount of 􀀂􀀐􀀋􀀇􀀋􀀋􀀋􀀇 its use was changed so that it was no longer being used in accordance with the grant􀀉 This meant that the grant needed to be repaid in full but by 􀀎􀀌 􀀛ecember 􀀍􀀋X􀀒􀀇 this had not yet been done􀀉 Which journal entry is required to reflect the correct accounting treatment of the government grant and the equipment in the financial statements of 􀀚ardenbugs 􀀖o for the year ended 􀀋􀀉 􀀗ecember 􀀊􀀈X􀀏􀀓 􀀔 􀀛r Property􀀇 plant and equipment 􀀂􀀌􀀋􀀇􀀋􀀋􀀋 􀀛r 􀀛epreciation expense 􀀂􀀍􀀋􀀇􀀋􀀋􀀋 􀀚r Liability 􀀂􀀎􀀋􀀇􀀋􀀋􀀋 􀀕 􀀛r Property􀀇 plant and equipment 􀀂􀀌􀀐􀀇􀀋􀀋􀀋 􀀛r 􀀛epreciation expense 􀀂􀀌􀀐􀀇􀀋􀀋􀀋 􀀚r Liability 􀀂􀀎􀀋􀀇􀀋􀀋􀀋 􀀖 􀀛r Property􀀇 plant and equipment 􀀂􀀌􀀋􀀇􀀋􀀋􀀋 􀀛r 􀀛epreciation expense 􀀂􀀌􀀐􀀇􀀋􀀋􀀋 􀀛r Retained earnings 􀀂􀀐􀀇􀀋􀀋􀀋 􀀚r Liability 􀀂􀀎􀀋􀀇􀀋􀀋􀀋 􀀗 􀀛r Property􀀇 plant and equipment 􀀂􀀍􀀋􀀇􀀋􀀋􀀋 􀀛r 􀀛epreciation expense 􀀂􀀌􀀋􀀇􀀋􀀋􀀋 􀀚r Liability 􀀂􀀎􀀋􀀇􀀋􀀋􀀋 􀀍 􀀌 The following two issues relate to Spiko 􀀚o􀀄s mining activities􀀕 Issue 􀀌􀀕 Spiko 􀀚o began operating a new mine in January 􀀍􀀋X􀀎 under a five􀀈year government licence which required Spiko 􀀚o to landscape the area after mining ceased at an estimated cost of 􀀂􀀌􀀋􀀋􀀇􀀋􀀋􀀋􀀉 Issue 􀀍􀀕 􀀛uring 􀀍􀀋X􀀏􀀇 Spiko 􀀚o􀀄s mining activities caused environmental pollution on an adjoining piece of government land􀀉 There is no legislation which requires Spiko 􀀚o to rectify this damage􀀇 however􀀇 Spiko 􀀚o does have a published environmental policy which includes assurances that it will do so􀀉 The estimated cost of the rectification is 􀀂􀀌􀀇􀀋􀀋􀀋􀀇􀀋􀀋􀀋􀀉 􀀜n accordance with 􀀜􀀔S 􀀋􀀏 􀀇􀀙􀀖􀀝􀀒􀀚􀀒􀀖􀀕􀀚􀀁 􀀃􀀖􀀕􀀛􀀒􀀕􀀐􀀎􀀕􀀛 􀀆􀀒􀀊􀀋􀀒􀀓􀀒􀀛􀀒􀀎􀀚 􀀊􀀕􀀍 􀀃􀀖􀀕􀀛􀀒􀀕􀀐􀀎􀀕􀀛 􀀂􀀚􀀚􀀎􀀛􀀚 􀀅 which of the following statements is correct in respect of Spiko 􀀖o􀀂s financial statements for the year ended 􀀋􀀉 􀀗ecember 􀀊􀀈X􀀌􀀓 􀀔 􀀘 provision is required for the cost of both issues 􀀌 and 􀀍 􀀕 􀀙o

FAQs

What interpretation-related duties are tested in the questions?

The questions include interpreting the application of IFRS, working with national standard setters for convergence, providing guidance not specifically addressed, and publishing draft interpretations for public comment.

How are government grants related to equipment expected to be accounted for?

The questions require reflecting the correct treatment when the grant is netted against equipment cost and later repayment becomes necessary due to a change in the use of the equipment.

Which concepts are assessed for group accounting in these questions?

The material includes consolidated cost of sales determination based on consistent sales and inventory amounts held at year end, as well as identifying appropriate accounting treatment across group extracts.

Aug 29, 2026

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