ACCA FR Common Mistakes & Examiner Insights
FR is around 55% numerical, and the examiner's reports return to the same consolidation and standards errors sitting after sitting. Most are technique slips, not knowledge gaps. Here are the ones to watch.
1. Intragroup asset transfers: adjust the gain AND the depreciation
When an asset is transferred within the group at a profit, you must remove both the unrealised gain and the excess depreciation charged on it afterwards. Candidates routinely adjust one and forget the other.
2. Associates: time-apportion and deduct pre-acquisition dividends
Under IAS 28, time-apportion the associate's profit for a mid-year acquisition and deduct pre-acquisition dividends from the cost of investment. Both are commonly missed.
3. Proportionate consolidation scores zero
A subsidiary is consolidated in full with an NCI — never in proportion. This is a fundamental error and the examiner penalises it heavily.
4. Revaluation surplus in consolidation: post-acquisition only
Only the post-acquisition OCI movement, at the group percentage, goes into group reserves — not the full balance. Don't bring in pre-acquisition amounts.
5. Amortised cost: don't ignore the discount
For financial instruments under IFRS 9, use the effective interest method and carry forward the correct year-end balance — the year N closing balance becomes the year N+1 opening balance. Don't ignore the initial discount.
6. IFRS 16: short-term exemption is by class, low-value is by asset
The short-term lease exemption is elected by class of asset; the low-value exemption is made lease by lease. They're not applied the same way.
7. Unrealised profit on intragroup goods: use the markup
When goods are sold intragroup at a markup, use the markup formula on the unsold inventory — not a margin. Mixing the two gives the wrong provision.
8. Deferred consideration: discount it, unwind below operating profit
Deferred consideration must be discounted to present value, and the unwinding of the discount is a finance cost shown below operating profit.
9. Interpretation must use scenario data
Generic ratio commentary scores zero. Every point must reference the specific figures and circumstances in the question.
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