ICAN Strategic Business Reporting 2025 past questions and answers

1. Tera may have control because its large holding and the practical voting pattern give it the current ability to direct relevant activities
2. Tera cannot control Mako unless it owns more than 50% of the voting shares
3. Tera must classify Mako as a joint venture because it owns less than half the shares
4. Tera can recognise only an investment at fair value because the other shares are widely held

Answer: A. Tera may have control because its large holding and the practical voting pattern give it the current ability to direct relevant activities

Control depends on power over relevant activities, exposure to variable returns and the ability to use power to affect returns, not a mechanical 50% threshold. Given the dispersed ownership and voting pattern, Tera may have de facto power, although all facts and substantive rights must be assessed.

1. A joint operation, with direct recognition of 50% of each asset and liability
2. A joint venture, with an investment accounted for using the equity method
3. A subsidiary, consolidated by whichever investor appoints the chief executive
4. A financial asset measured at amortised cost

Answer: B. A joint venture, with an investment accounted for using the equity method

The parties have joint control through unanimous consent, but their rights are to the net assets of a separate vehicle rather than direct rights and obligations. This is a joint venture, normally accounted for using the equity method under IAS 28.

1. Restate monetary assets and liabilities using the general price index, but leave non-monetary items unchanged
2. Translate all balances into the parent's presentation currency before applying the general price index
3. Restate non-monetary items and income and expenses using the general price index, while monetary items are not restated and the net monetary gain or loss is recognised in profit or loss
4. Restate only property, plant and equipment and recognise the adjustment directly in equity

Answer: C. Restate non-monetary items and income and expenses using the general price index, while monetary items are not restated and the net monetary gain or loss is recognised in profit or loss

IAS 29 restates amounts in the measuring unit current at the reporting date, including historical-cost non-monetary items and income and expenses. Monetary items already expressed in current monetary units are not restated; the net monetary gain or loss is recognised in profit or loss.

1. Carrying amounts after discounting at the effective interest rate
2. Expected cash flows after probability-weighting all possible outcomes
3. Only amounts due within twelve months, with longer-term balances omitted
4. Undiscounted contractual cash flows, allocated to the earliest periods in which the entity can be required to pay

Answer: D. Undiscounted contractual cash flows, allocated to the earliest periods in which the entity can be required to pay

IFRS 7 liquidity-risk maturity analysis uses contractual, undiscounted cash flows and places them in the earliest period in which payment can be demanded. A carrying-value analysis would understate the contractual cash outflows.

1. The price that would be received to sell the asset in an orderly transaction between market participants at the measurement date
2. The entity-specific amount it expects to receive after its planned holding period
3. The original transaction price, unless management intends to sell immediately
4. The price in the market with the highest gross proceeds, even if the entity cannot access that market

Answer: A. The price that would be received to sell the asset in an orderly transaction between market participants at the measurement date

Fair value is a market-based exit price in an orderly transaction between market participants at the measurement date. The principal market is used when accessible; an entity-specific forecast or an inaccessible market is not the basis.