ICAN Financial Reporting 2026 past questions and answers

1. As a current liability
2. As a non-current liability because refinancing was agreed before the financial statements were authorised
3. Split equally between current and non-current liabilities
4. As equity because repayment terms have changed

Answer: A. As a current liability

It is current because, at the reporting date, the entity lacked a right to defer settlement for at least 12 months. The refinancing agreement signed after year end is a non-adjusting event and does not change the year-end classification.

1. Management expects the project to be useful, even though costs cannot be measured reliably
2. The entity can demonstrate technical feasibility, intention and ability to complete and use or sell the product, probable future benefits, adequate resources, and reliable measurement of costs
3. All expenditure becomes an intangible asset once the research phase ends
4. Development expenditure is capitalised only after the product has generated revenue

Answer: B. The entity can demonstrate technical feasibility, intention and ability to complete and use or sell the product, probable future benefits, adequate resources, and reliable measurement of costs

IAS 38 permits development-cost recognition only when all specified recognition criteria are demonstrated, including feasibility, probable benefits, resources and reliable measurement. Research expenditure is expensed, and revenue generation is not a prerequisite.

1. A lease expense of 2,000,000 naira and no liability
2. A right-of-use asset of 2,000,000 naira and no lease liability
3. A right-of-use asset and lease liability, each of 2,000,000 naira
4. A lease liability of 2,000,000 naira and no right-of-use asset

Answer: C. A right-of-use asset and lease liability, each of 2,000,000 naira

At commencement, the lessee generally recognises both a right-of-use asset and a lease liability, initially measured at the present value of lease payments in this scenario. The short-term and low-value exemptions are not indicated.

1. A deferred tax asset of 36,000 naira
2. A deferred tax liability of 120,000 naira
3. A deferred tax asset of 120,000 naira
4. A deferred tax liability of 36,000 naira

Answer: D. A deferred tax liability of 36,000 naira

The carrying amount exceeds the tax base by 120,000 naira, creating a taxable temporary difference. The deferred tax liability is 120,000 × 30% = 36,000 naira.

1. Power over the investee, exposure or rights to variable returns, and the ability to use power to affect those returns
2. Ownership of more than half the investee's ordinary shares in every case
3. Exposure to variable returns, even if the investor has no power over the investee
4. The right to appoint one director, regardless of other rights or returns

Answer: A. Power over the investee, exposure or rights to variable returns, and the ability to use power to affect those returns

IFRS 10 requires all three elements: power, exposure or rights to variable returns, and the ability to use power to affect those returns. A majority shareholding can be evidence of power but is not the only way control can arise.