ACCA FR Syllabus A. The Conceptual And Regulatory Framework - Recognition and recognition criteria - Past Papers ^{1 / 4}

June 2015

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MC Question 6

The IASB’s Conceptual framework for financial reporting defines recognition as the process of incorporating in the
financial statements an item which meets the definition of an element and satisfies certain criteria.

Which of the following elements should be recognised in the financial statements of an entity in the manner
described?

A	As a non-current liability: a provision for possible hurricane damage to property for a company located in an area which experiences a high incidence of hurricanes
B	In equity: irredeemable preference shares
C	As a trade receivable: an amount of $10,000 due from a customer which has been sold (factored) to a finance company with no recourse to the seller
D	In revenue: the whole of the proceeds from the sale of an item of manufactured plant which has to be maintained by the seller for three years as part of the sale agreement

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December 2014

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MC Question 7

Recognition is the process of including within the financial statements items which meet the definition of an element
according to the IASB’s Conceptual Framework for Financial Reporting.

Which of the following items should be recognised as an asset in the statement of financial position of a company?

A	A skilled and efficient workforce which has been very expensive to train. Some of these staff are still in the employment of the company
B	A highly lucrative contract signed during the year which is due to commence shortly after the year end
C	A government grant relating to the purchase of an item of plant several years ago which has a remaining life of four years
D	A receivable from a customer which has been sold (factored) to a finance company. The finance company has full recourse to the company for any losses

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