ICAN 2026 Financial Reporting | Mixed

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Question 1 View Details
Case Stimulus
The following is the trial balance extracted from the books of Fete Renovations Plc on July 31, 2025, the company is engaged in building, renovation and interior decorations.
Additional Information
(i) N800,000 was raised on July 31, 2025 through the issue of ordinary shares. This was correctly accounted for by crediting N320,000 to ordinary share capital and N480,000 to share premium.
(ii) The loan notes were issued during the year, interest is payable annually in arrears. No interest has been provided for or paid as at July 31, 2025.
(iii) Income tax for the year was estimated at N440,000. The balance in the trial balance is a residual amount following the payment of the income tax for the year ended July 31, 2024 and its offset against the provision made that year.
(iv) The figures for financial assets represent the fair value of equities held at August 1, 2024 plus the costs of equity purchased during the year. As permitted by IFRS 9 “Financial Assets” an election was made at the date of purchase to account for any fair value gains or losses on all these financial assets (equity investments) through ‘other comprehensive income’. Fete Renovations Plc takes such gains and losses to a separate component of equity. The fair value of the financial assets (equity investments) at July 31, 2025 was N500,000.
(v) Investment properties are accounted for under the fair value model of IAS 40 “Investment property”. The figure included in the trial balance above represents the fair value of these properties at August 1, 2024. The fair value of these properties at July 31, 2025 was N2,800,000.
(vi) Plant and equipment is being depreciated through cost of sales at 20% per annum on reducing balance basis. On July 31, 2025 a plant which cost N800,000 on August 1, 2023 was sold for N440,000. The only entries made to record this transaction were to debit cash and credit sales revenue with N440,000.
(vii) Land and building are carried under the revaluation model as permitted under IAS 16“Property, Plant and Equipment”. The most recent valuation took place on July 31, 2023, resulting in the values included in the trial balance above. The revaluation surplus of N480,000 resulted solely from these land and buildings. The buildings were estimated to have a useful economic life of 17 years as at that date and zero residual value. On July 31, 2025, the land was revalued to N400,000 and the buildings to N1,800,000. There was no change to the useful life estimates of the buildings. Depreciation is recognised on straight-line basis through costs of sales and no depreciation has yet been charged for the year ended July 31, 2025.
(viii) Fete Renovations Plc maintains a provision for warranty claims expected to arise in the future for renovation items sold. At the reporting date this provision was carried at N240,000. It has been agreed that this provision should be increased to N350,000.
Requirements
(a)
Statement of profit or loss and other comprehensive income for the year ended July 31, 2025.
(b)
Statement of changes in equity for the year ended July 31, 2025.
(c)
Statement of financial position as at July 31, 2025.
(d)
Calculate the basic earnings per share for the year.
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Question 2 View Details
Requirements
(a)
Describe Contract under IFRS 15 “Revenue from Contract with Customers”.
(b)
Identify THREE criteria under IFRS 15 when entities can recognise contract revenues.
(c)
Explain the following terms under IFRS 15:
(d)
Explain the difference between the cost and revaluation model of valuation of Property, Plant and Equipment (PPE) in accordance with IAS 16.
(e)
IAS 16 on Property, Plant and Equipment (PPE) requires an asset to be recognised at original cost in the statement of financial position of an entity. The table below consists of costs to be treated as capital and revenue expenditures in the financial statements.
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Question 3 View Details
Case Stimulus
The following is an extract from the financial records of Mandela Nigeria Plc who is currently offering on the Nigerian Exchange (NGX), additional ordinary shares of 50 kobo each at N1.50 kobo per share.
Requirements
(a)
Calculate the following ratios for the relevant four years:
(b)
As a financial consultant, advise a potential investor on the viability of the company and whether or not to subscribe to the company’s issue of ordinary shares.
(c)
Some analysts have argued that Earnings Per Share and Return on Capital Employed are the best ratios for analysing financial performance of any entity. State FOUR limitations of each of these ratios as a tool for financial analysis.
(d)
Management may use various forms of creative accounting to manipulate the view given by the financial statements while complying with all applicable accounting standards and regulations. State SIX techniques of creative accounting.
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Question 4 View Details
Case Stimulus
On April 1, 2024, Blessings Plc acquired 80% of Jigawa Limited’s ordinary shares when retained earnings were N20 million. The considerations consist of cash of N45 million paid on April 1, 2024 and an additional cash payment of N22 million payable April 1, 2025. No accounting entries have been made in respect of deferred cash payment. Blessings Limited has a cost of capital of 10%.
Additional Information
(i) Blessings Plc values non-controlling interests (NCI) at fair value at the date of acquisition. The fair value of non-controlling interests of Jigawa Limited on April 1, 2024 was estimated at N15 million.
(ii) The fair value of Jigawa’s Ltd items of non-current assets, liabilities and contingent liabilities at April 1, 2024 were equal to carrying amount with the exception of plant, which have a fair value of N12 million in excess of its carrying amount. The plant had a ten (10) years remaining useful life on April 1, 2024.
(iii) On December 2024, Jigawa Limited sold goods to Blessings Plc for N8.4 million, earning a gross profit mark-up of 20% on the sale. Blessings Plc still hold N5.8 million of those goods in its inventories at March 31, 2025.
(iv) Jigawa Limited still had full value of N8.4million in its trade receivables at March 31, 2025. Blessings Plc’s payable only showed N3.8million as it made a payment of N4.6million which was not recorded by Jigawa Limited until April 3, 2025.
Requirements
(a)
Prepare the consolidated statement of financial position for Blessings group as at March 31, 2025.
(b)
In the context of IFRS 10“Consolidated Financial Statements”, discuss the conditions in which a parent is exempted from preparing consolidated financial statements.
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Question 5 View Details
Case Stimulus
The Financial Reporting Council of Nigeria (FRC) is structured into a series of directorates to allow it to fulfil its many responsibilities.
Requirements
(a)
Discuss FIVE responsibilities of Directorate of Accounting Standard of FRC.
(b)
Companies and Allied Matter Act (CAMA) 2020 as amended states that every company shall cause accounting records to be kept. The accounting records shall be sufficient to show and explain the transactions of the company. Explain what the accounting records must contain.
(c)
Is there alternative to conceptual framework? Discuss the purpose of conceptual framework and explain its alternative.
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Question 6 View Details
Case Stimulus
The International Sustainability Standards Board (ISSB) issued IFRS S1 and S2 to address and provide guidance on general requirements, concepts and disclosures on sustainability compliance in financial statements.
Requirements
(a)
Within the context of these standards, discuss any FIVE of the following sustainability concepts:
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Question 7 View Details
Case Stimulus
Jamolaya Nigeria Ltd is a company that deals with exclusive furniture and fittings. The company has carried out its inventory take at the end of its financial year.
Requirements
(a)
Calculate the value that each of the above items will be included in the company’s year-end inventory.
(b)
You have been the finance director of Jamolaya Nigeria Ltd for ten years and you are finalising the year-end accounts. You have been advised by the warehouse manager of significant level of slow-moving inventories which are more than nine months old and would normally have been written down some months previously. The shareholders of Jamolaya Nigeria Ltd are trying to sell the company. The managing director and majority shareholder, Dr. Jamolaya has told you that it is not necessary to write-down the inventory in the year-end financial statements. You are sure that Dr. Jamoloya wants the financial statements to carry an inflated inventory valuation because he has found a prospective buyer. The managing director (Dr Jamolaya) has indicated to you that, if the proposed deal is successful, all employees will keep their jobs and you will receive a higher remuneration.
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