ACCA Applied Knowledge (BT, MA, FA) · Financial Accounting (FA)

Intangible assets, accruals and prepayments

6 practice questions, each with the answer and an explanation.

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Random questions from this topic, one at a time. You see the answer and the explanation straight after each one.

All 6 questions

  1. A company spends £60,000 on research into a new product and a further £90,000 on development costs. Of the development spending, £25,000 was incurred before the IAS 38 recognition criteria were met, a…
  2. A business buys a licence for £36,000 with a useful life of 6 years at the start of the year. What is the amortisation charge for the year and the carrying amount at the end of the year?
  3. A business pays £7,200 on 1 October for a year's insurance cover. Its year end is 31 December. What is the prepayment at the year end?
  4. A business paid rent of £4,500 per quarter in advance during the year, on 1 January, 1 April, 1 July and 1 October. The annual rent increased from £4,500 per quarter to £5,100 per quarter from 1 July.…
  5. Electricity paid during the year was £3,600. At the start of the year there was an accrual of £400 and at the end of the year an invoice of £500 is outstanding for the last quarter. What is the electr…
  6. A business receives £9,000 in advance for 18 months of subscriptions starting on 1 October. The year ends on 31 December. How much deferred income is shown at the year end?

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