ICAN Strategic Business Reporting 2026 past questions and answers

1. Aster controls Beacon because it has power over relevant activities, exposure to variable returns and the ability to use its power to affect those returns.
2. Aster cannot control Beacon unless it owns more than 50% of the voting shares.
3. Aster has only significant influence because its ownership is below 50%.
4. Aster controls Beacon only if it receives a fixed return from its investment.

Answer: A. Aster controls Beacon because it has power over relevant activities, exposure to variable returns and the ability to use its power to affect those returns.

Control is based on power, exposure or rights to variable returns, and the ability to use power to affect returns; substantive rights and the dispersed shareholder base support de facto control. A strict majority is not required, and fixed returns are not a prerequisite.

1. A joint venture, because any separate incorporated vehicle creates rights only to net assets.
2. A subsidiary of each venturer, because both parties participate in operating decisions.
3. A joint operation, because the parties have rights to assets and obligations for liabilities.
4. An associate, because neither party owns the whole vehicle.

Answer: C. A joint operation, because the parties have rights to assets and obligations for liabilities.

Classification depends on the parties' rights and obligations, not solely on the separate vehicle's legal structure. Direct rights to assets and obligations for liabilities indicate a joint operation; a joint venture gives rights to the arrangement's net assets.

1. A ₦6,000,000 loss in profit or loss.
2. A ₦6,000,000 gain in profit or loss.
3. A ₦81,000,000 gain in other comprehensive income.
4. No exchange difference until the customer pays.

Answer: B. A ₦6,000,000 gain in profit or loss.

The monetary receivable rises from ₦75m (USD50,000 × ₦1,500) to ₦81m (USD50,000 × ₦1,620), producing a ₦6m exchange gain in profit or loss. A monetary item is retranslated at the closing rate even before settlement.

1. Amortised cost, because the bond's cash flows meet the SPPI test, irrespective of the business model.
2. Fair value through profit or loss, because any sale of a bond automatically fails the SPPI test.
3. Equity instruments at fair value through other comprehensive income.
4. Debt instruments at fair value through other comprehensive income, because the business model is achieved by both collecting cash flows and selling assets and the SPPI test is met.

Answer: D. Debt instruments at fair value through other comprehensive income, because the business model is achieved by both collecting cash flows and selling assets and the SPPI test is met.

The collect-and-sell business model together with SPPI contractual cash flows leads to FVOCI classification for the debt instrument. Amortised cost requires a hold-to-collect business model as well as SPPI.

1. Level 1, because the measurement uses an unadjusted quoted price for an identical asset in an active market.
2. Level 2, because every market-based input is classified as Level 2.
3. Level 3, because management must decide which quoted price to use.
4. Outside the hierarchy, because listed shares are financial instruments.

Answer: A. Level 1, because the measurement uses an unadjusted quoted price for an identical asset in an active market.

An unadjusted quoted price in an active market for an identical asset is a Level 1 input. The hierarchy is based on the lowest-level input significant to the entire measurement, not on the fact that management performs the valuation.