Association of Chartered Certified Accountants (ACCA) Financial Reporting (FR) Syllabus

Financial Reporting (FR) syllabus — full chapter and topic list

Expand any chapter to see its topics and sub-topics. This is the whole examinable outline for Financial Reporting (FR) in Association of Chartered Certified Accountants (ACCA), not a summary of it.

1. 1

   The Conceptual and Regulatory Framework

   3 topics

   • The Conceptual Framework
     • Objective and qualitative characteristics
     • Recognition and measurement of elements
   • The regulatory framework
     • Role of the IASB and standard setting
   • Fair presentation and ethics
     • IAS 1 presentation requirements
2. 2

   Accounting for Tangible and Intangible Assets

   5 topics

   • Property, plant and equipment (IAS 16)
     • Cost, revaluation and depreciation
   • Borrowing costs and government grants
     • IAS 23 capitalisation
     • IAS 20 grant recognition
   • Intangible assets (IAS 38)
     • Recognition criteria and amortisation
   • Impairment of assets (IAS 36)
     • Cash-generating units
     • Recoverable amount
   • Investment property and leases
     • IAS 40 fair value model
     • IFRS 16 lessee accounting
3. 3

   Accounting for Liabilities, Revenue and Tax

   4 topics

   • Provisions and contingencies (IAS 37)
     • Recognition and disclosure
   • Revenue from contracts (IFRS 15)
     • The five-step model
     • Performance obligations over time
   • Income taxes (IAS 12)
     • Current and deferred tax
     • Temporary differences
   • Financial instruments (IFRS 9)
     • Classification and measurement
     • Debt and equity distinction
4. 4

   Group Financial Statements

   3 topics

   • Consolidated statement of financial position
     • Goodwill and fair value adjustments
     • Intra-group balances and unrealised profit
   • Consolidated statement of profit or loss
     • Mid-year acquisitions
     • Non-controlling interest
   • Associates and joint arrangements
     • Equity accounting (IAS 28)
5. 5

   Single Entity and Specialised Statements

   4 topics

   • Preparation of single company statements
     • From trial balance to financial statements
   • Statement of cash flows (IAS 7)
     • Operating, investing and financing activities
   • Earnings per share (IAS 33)
     • Basic and diluted EPS
   • Reporting financial performance
     • Discontinued operations (IFRS 5)
     • Accounting policies and estimates (IAS 8)
6. 6

   Analysis and Interpretation

   3 topics

   • Ratio analysis
     • Profitability, liquidity, efficiency, gearing
   • Interpretation for stakeholders
     • Trend and comparative analysis
   • Limitations and specialised entities
     • Not-for-profit interpretation
     • Limitations of financial statements

Financial Reporting (FR) flashcards for Association of Chartered Certified Accountants (ACCA)

20 of 80 cards from the Financial Reporting (FR) deck — real questions with worked answers.

1. What is the objective of general purpose financial reporting according to the IASB Conceptual Framework?

   To provide financial information about the reporting entity that is useful to existing and potential investors, lenders and other creditors in making decisions about providing resources to the entity (e.g. buying, selling or holding equity and debt, providing loans).

2. Name the two fundamental qualitative characteristics of useful financial information in the Conceptual Framework.

   Relevance (information capable of making a difference to decisions, including materiality) and faithful representation (complete, neutral and free from error).

3. List the four enhancing qualitative characteristics of useful financial information.

   Comparability, verifiability, timeliness and understandability.

4. In the Conceptual Framework, what is the definition of an asset?

   A present economic resource controlled by the entity as a result of past events, where an economic resource is a right that has the potential to produce economic benefits.

5. In the Conceptual Framework, what is the definition of a liability?

   A present obligation of the entity to transfer an economic resource as a result of past events.

6. State the two recognition criteria-related considerations for an asset or liability under the 2018 Conceptual Framework.

   An item is recognised if recognition provides users with relevant information and a faithful representation (subject to cost-benefit). Existence uncertainty, low probability of inflow/outflow and measurement uncertainty may make recognition inappropriate.

7. What is the difference between financial capital maintenance and physical capital maintenance?

   Financial capital maintenance: profit earned only if net assets at period end exceed the opening amount (in money or constant purchasing power) after excluding owner transactions. Physical capital maintenance: profit earned only if the physical productive capacity at period end exceeds that at the start.

8. What does the going concern assumption mean for financial statement preparation?

   Financial statements are prepared on the basis that the entity will continue in operation for the foreseeable future and has neither the intention nor need to liquidate or curtail materially the scale of its operations.

9. Distinguish between principles-based and rules-based accounting standards.

   Principles-based standards (e.g. IFRS) set broad principles requiring professional judgement; rules-based standards (e.g. older US GAAP) give detailed prescriptive rules. Principles reduce loopholes but increase judgement/comparability risk.

10. What is the standard-setting due process of the IASB (key stages)?

    Agenda consultation, research/discussion paper, exposure draft (with public comment), then issue of the IFRS Standard, followed by post-implementation review.

11. What does IAS 1 require for a 'fair presentation' of financial statements?

    Faithful representation of the effects of transactions in accordance with the definitions and recognition criteria for assets, liabilities, income and expenses; compliance with IFRS (with disclosure) is presumed to achieve fair presentation.

12. State the five fundamental principles of the ACCA/IESBA Code of Ethics.

    Integrity, objectivity, professional competence and due care, confidentiality, and professional behaviour.

13. Name the five categories of threats to compliance with the fundamental ethical principles.

    Self-interest, self-review, advocacy, familiarity and intimidation threats.

14. Under IAS 16, what is the cost of an item of property, plant and equipment at initial recognition?

    Purchase price (including import duties and non-refundable taxes, less trade discounts), directly attributable costs of bringing the asset to working condition/location, and the initial estimate of dismantling and site restoration costs.

15. Under IAS 16, what are the two models for measuring PPE after initial recognition?

    The cost model (cost less accumulated depreciation and impairment) and the revaluation model (fair value at revaluation date less subsequent accumulated depreciation and impairment).

16. Under IAS 16, how is a revaluation surplus and a revaluation deficit treated?

    A surplus is credited to other comprehensive income and accumulated in a revaluation surplus reserve (unless reversing a previous loss recognised in P/L). A deficit is charged to P/L unless it reverses a previous surplus on the same asset (then debit OCI/revaluation surplus first).

17. Define depreciation and state the formula for the straight-line method.

    Depreciation is the systematic allocation of the depreciable amount of an asset over its useful life. Straight-line annual charge: $$\text{Depreciation} = \frac{\text{Cost} - \text{Residual value}}{\text{Useful life}}$$

18. What is the reducing balance depreciation formula for a single year's charge?

    $$\text{Depreciation} = \text{Carrying amount at start of year} \times r$$ where $r$ is the fixed depreciation rate; the rate may be derived as $r = 1 - \sqrt[n]{\frac{\text{Residual value}}{\text{Cost}}}$.

19. Under IAS 23, when must borrowing costs be capitalised?

    Borrowing costs directly attributable to the acquisition, construction or production of a qualifying asset (one that necessarily takes a substantial period to get ready for its intended use or sale) must be capitalised as part of the asset's cost.

20. Under IAS 23, how is the capitalisation rate determined for general borrowings?

    Use the weighted average of the borrowing costs applicable to the entity's general borrowings outstanding during the period, applied to expenditure on the qualifying asset. Investment income on temporary investment of specific borrowings is deducted.

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