PassSpark

ICAN Financial Reporting 2025 past questions and answers

This 2025 ICAN Financial Reporting set has 20 practice questions. Try these 5 free sample questions, tap a question to reveal the answer and explanation. Then practise the whole 2025 set with instant marking.

Practise the full 2025 setTimed exam mode

Sample ICAN Financial Reporting 2025 questions

1. At 31 December 2025, Kora Ltd discovers a material accounting error that affected its financial position at 1 January 2024, the beginning of the preceding comparative period. Retrospective correction materially changes the information in that opening statement of financial position. What additional presentation does IAS 1 require?
  1. Replace the prior-year comparative figures with current-year figures
  2. Present a third statement of financial position as at 1 January 2024
  3. Recognise the entire correction only in 2025 profit or loss
  4. Omit the comparative statement of financial position

Answer: B. Present a third statement of financial position as at 1 January 2024

A material prior-period error is corrected retrospectively under IAS 8. IAS 1 requires a third statement of financial position at the beginning of the preceding period when retrospective restatement materially affects that statement.

2. A manufacturer buys a machine for ₦1,000,000, pays non-refundable import duties of ₦50,000 and delivery and installation costs of ₦80,000. It also spends ₦20,000 training staff and ₦10,000 on an opening event. What amount is included in the machine's initial cost under IAS 16?
  1. ₦1,080,000
  2. ₦1,150,000
  3. ₦1,130,000
  4. ₦1,160,000

Answer: C. ₦1,130,000

Cost includes the purchase price, non-refundable duties and directly attributable delivery and installation: ₦1,000,000 + ₦50,000 + ₦80,000 = ₦1,130,000. Staff training and the opening event are expensed, not included in the asset's cost.

3. A software company incurs costs while investigating possible uses for a new technology. It later starts building a prototype, but at that date it has not yet demonstrated technical feasibility or secured the resources needed to complete the project. How should the costs incurred up to that date be treated under IAS 38?
  1. Expense the research costs and the development costs incurred before all capitalization criteria are demonstrated
  2. Capitalize all research and development costs because the project may be commercially successful
  3. Capitalize the research costs but expense every development cost
  4. Defer all costs as an intangible asset until the technology is sold

Answer: A. Expense the research costs and the development costs incurred before all capitalization criteria are demonstrated

Research expenditure is expensed as incurred. Development expenditure is capitalized only from the date all IAS 38 criteria, including technical feasibility and the ability and resources to complete the asset, are demonstrated; earlier expenditure cannot later be reinstated as an asset.

4. At year-end, a machine has a carrying amount of ₦900,000 and a tax base of ₦700,000. The enacted tax rate applying when the difference reverses is 30%, and no recognition exception applies. Which deferred tax balance arises under IAS 12?
  1. A deferred tax asset of ₦60,000
  2. A deferred tax asset of ₦200,000
  3. No deferred tax because the difference is temporary
  4. A deferred tax liability of ₦60,000

Answer: D. A deferred tax liability of ₦60,000

The carrying amount exceeds the tax base by ₦200,000, creating a taxable temporary difference. The deferred tax liability is ₦200,000 × 30% = ₦60,000.

5. Before its reporting date, Mena Ltd breaches a contract. At year-end, its lawyers conclude that a present obligation exists, an outflow is probable and the obligation can be reliably estimated at ₦90,000. What is the appropriate IAS 37 treatment?
  1. Disclose a contingent liability only, with no recognised amount
  2. Recognise a provision of ₦90,000
  3. Recognise a contingent asset of ₦90,000
  4. Make no recognition or disclosure because the claim is unresolved

Answer: B. Recognise a provision of ₦90,000

A provision is recognised when a past event creates a present obligation, an outflow is probable and a reliable estimate can be made. All three conditions are met, so the best estimate of ₦90,000 is provided.

More ICAN Financial Reporting years

2026202420232022

All ICAN Financial Reporting years · ICAN subjects

PassSpark questions are original practice questions written to each exam's syllabus and format, in the style of past questions. They are not official past papers and are not affiliated with JAMB, WAEC, NECO, any university or any exam body.