ICSAN Professional Programme I - Financial Accounting (Nigeria)

According to the IASB Conceptual Framework for Financial Reporting, which qualitative characteristics are classified as fundamental qualitative characteristics?

• ARelevance and Faithful Representation
• BRelevance and Materiality
• CComparability, Verifiability, Timeliness, and Understandability
• DFaithful Representation and Conservatism

Under IAS 1 Presentation of Financial Statements, when preparing financial statements, management must make an assessment of the entity's ability to continue as a going concern. For how long into the future must management look at a minimum?

• ASix months from the end of the reporting period
• BAt least twelve months from the end of the reporting period
• CAt least twelve months from the date the financial statements are authorized for issue
• DTwenty-four months from the end of the reporting period

How does IAS 8 Accounting Policies, Changes in Accounting Estimates and Errors require a change in depreciation method to be treated?

• AAs a change in accounting policy, requiring retrospective application by restating prior…
• BAs a change in accounting estimate, requiring prospective application in current and futu…
• CAs a prior period error, requiring retrospective restatement of opening balances
• DAs a change in accounting policy, requiring prospective application only

A major customer of Zenith Plc filed for bankruptcy on 15 January 2026 due to worsening financial difficulties that began in late 2025. Zenith Plc's reporting period ended on 31 December 2025, and its financial statements are authorized for issue on 28 February 2026. How should this event be treated under IAS 10?

• AAs an adjusting event, write down the trade receivable balance at 31 December 2025 to its…
• BAs a non-adjusting event, disclose the nature and financial effect of the bankruptcy in t…
• CAs an adjusting event, recognize the entire receivable amount as a liability
• DDo nothing, because the event occurred after the reporting period ended

IAS 1 states that an entity must prepare its financial statements, except for cash flow information, using the accrual basis of accounting. What does this require regarding the recognition of elements?

• AElements are recognized when cash is received or paid
• BTransactions and events are recognized when they occur and are recorded in the periods to…
• CRevenue is recognized only when cash is received, but expenses are recognized when incurr…
• DExpenses are recognized only when cash is paid, but revenue is recognized when earned

How is 'materiality' defined under the IASB Conceptual Framework and IAS 1?

• AInformation is material if its omission or misstatement could reasonably be expected to i…
• BInformation is material only if it exceeds 10% of the entity's total assets or 5% of net…
• CInformation is material only if it affects the tax liability of the entity in the current…
• DInformation is material if it changes the entity's status from a profit-making entity to…

Which of the following statements is correct regarding the offsetting of assets and liabilities under IAS 1?

• AAssets and liabilities must be offset whenever they relate to the same transaction partner
• BOffsetting is permitted only when the entity has a legal right of offset and intends to s…
• CAssets and liabilities, and income and expenses, shall not be offset unless required or p…
• DManagement has the discretion to offset assets and liabilities to present a more concise…

Under IAS 24 Related Party Disclosures, which of the following is NOT automatically considered a related party of the reporting entity?

• AA key management personnel member of the entity or its parent
• BA provider of finance (e.g., a bank) in the course of its normal dealings with the entity
• CA person who has control or joint control over the reporting entity
• DAn associate company in which the reporting entity has significant influence

How must a voluntary change in accounting policy be accounted for under IAS 8?

• ARetrospectively, by adjusting the opening balance of each affected component of equity fo…
• BProspectively, by applying the new policy only to transactions occurring after the date o…
• CBy adjusting the profit or loss of the current period with the cumulative effect of the c…
• DAs a direct charge to Retained Earnings in the current year, without adjusting comparativ…

Which of the following events occurring after the reporting period is classified as a non-adjusting event under IAS 10?

• AThe settlement after the reporting period of a court case that confirms that the entity h…
• BThe receipt of information after the reporting period indicating that an asset was impair…
• CA major acquisition of another entity or the destruction of a major production plant by f…
• DThe determination after the reporting period of the cost of assets purchased before the r…

Under the revised IASB Conceptual Framework, how is an 'asset' defined?

• AA resource owned by the entity as a result of past transactions, from which future cash i…
• BA present economic resource controlled by the entity as a result of past events
• CA physical item that has cost the entity money and will be used to generate revenue in fu…
• DAn inflow of economic benefits that has been realized during the current reporting period

According to IAS 1, which of the following is NOT a mandatory component of a complete set of financial statements?

• AA statement of financial position as at the end of the period
• BA statement of profit or loss and other comprehensive income for the period
• CA value added statement and five-year financial summary
• DA statement of cash flows for the period

Which of the following conditions must be met for an entity to recognize a provision under IAS 37?

• AA present obligation (legal or constructive) as a result of a past event, a probable outf…
• BA possible obligation as a result of a past event, a possible outflow of resources, and a…
• CA present obligation, an expected outflow of resources, and a guarantee of the payment am…
• DA constructive obligation arising from a future business plan, a probable outflow of reso…

Under IAS 37, how should an entity treat a contingent asset?

• ARecognize it in the statement of financial position when the inflow of economic benefits…
• BDisclose it in the notes to the financial statements when the inflow of economic benefits…
• CRecognize it as an asset only when the inflow of economic benefits is possible
• DNeither recognize nor disclose it under any circumstances

IAS 34 Interim Financial Reporting outlines the principles for interim financial statements. Which of the following is correct regarding the recognition and measurement principles under IAS 34?

• AAn entity should apply different accounting policies in its interim financial statements…
• BAn entity should apply the same accounting policies in its interim financial statements a…
• CInterim measurements must be made on an 'integral' basis, where the interim period is tre…
• DRevenues received seasonally or cyclically during the year may be anticipated or deferred…

Under the Companies and Allied Matters Act (CAMA) 2020 of Nigeria, which regulatory body is responsible for prescribing the accounting standards to be followed by companies in Nigeria?

• ACorporate Affairs Commission (CAC)
• BFinancial Reporting Council of Nigeria (FRCN)
• CInstitute of Chartered Accountants of Nigeria (ICAN)
• DSecurities and Exchange Commission (SEC) of Nigeria

Under the Conceptual Framework, what is the core difference between the financial capital maintenance concept and the physical capital maintenance concept?

• AFinancial capital maintenance is measured in nominal monetary units, whereas physical cap…
• BFinancial capital maintenance requires assets to be measured at historical cost, whereas…
• CPhysical capital maintenance considers a profit to be earned only if the nominal financia…
• DFinancial capital maintenance focuses on cash balances, whereas physical capital maintena…

A company has a bank loan that is due for repayment on 31 March 2026. The reporting date is 31 December 2025. The company expects to refinance the loan under an existing facility for another 3 years. Under IAS 1, when can the company classify the loan as a non-current liability at 31 December 2025?

• AOnly if the refinancing agreement is signed and completed on or before 31 December 2025,…
• BEven if the agreement is signed in January 2026, as long as it is completed before the fi…
• CUnder no circumstances, because the original maturity date is within 3 months of the repo…
• DIf the company expects to refinance it, regardless of whether a legal agreement exists at…

Which of the following measurement bases are explicitly identified and discussed in the revised IASB Conceptual Framework?

• AHistorical cost and Current value (which includes Fair value, Value in use / Fulfilment v…
• BHistorical cost, Net realizable value, and Present value
• CHistorical cost, Replacement cost, and Liquidation value
• DAmortized cost, Fair value through profit or loss, and Fair value through OCI

How must an entity correct a material prior period error under IAS 8?

• ARetrospectively, by restating the comparative amounts for the prior period(s) presented i…
• BProspectively, by adjusting the depreciation or amortization expense in the current perio…
• CBy recognizing the correction as a separate line item in the current period's profit or l…
• DAs a current period operating expense, labeled as 'Prior Period Correction Expense'

Under IAS 16 Property, Plant and Equipment, when an entity uses the revaluation model and an asset's carrying amount is increased as a result of a revaluation, how should the increase be recognized?

• ARecognized directly in Profit or Loss for the period
• BRecognized in Other Comprehensive Income and accumulated in equity under the heading of R…
• CRecognized as a liability in the statement of financial position
• DRecognized as deferred income in the revenue section

Which of the following is correct regarding the accounting treatment of research and development costs under IAS 38 Intangible Assets?

• AAll research and development costs must be capitalized as intangible assets
• BAll research and development costs must be expensed as incurred in the statement of profi…
• CResearch costs must be expensed as incurred, while development costs must be capitalized…
• DDevelopment costs must be expensed, but research costs can be capitalized if they have co…

Under IAS 36 Impairment of Assets, how is the 'recoverable amount' of an asset or cash-generating unit defined?

• AThe lower of its fair value less costs of disposal and its value in use
• BThe higher of its fair value less costs of disposal and its value in use
• CThe net book value of the asset adjusted for current inflation
• DThe historical cost of the asset less accumulated depreciation

A company owns a commercial building held to earn rentals. The company adopts the Fair Value Model under IAS 40 Investment Property. The fair value of the property increases from N150 million to N180 million during the financial year. How should this N30 million increase be recognized?

• ARecognized in Other Comprehensive Income and credited to Revaluation Surplus in equity
• BRecognized as a gain directly in Profit or Loss for the period
• CRecognized as a liability for deferred tax only
• DNot recognized until the property is sold to a third party

Under IAS 23 Borrowing Costs, which of the following is a key condition for the capitalization of borrowing costs?

• AThe borrowing costs must relate to any asset purchased by the company
• BThe borrowing costs must be directly attributable to the acquisition, construction, or pr…
• CThe company must have borrowed the funds at a fixed interest rate
• DThe asset must be completed and ready for use before capitalization can begin

Omu Plc acquired a machine for N80 million. The machine has a key component (the engine) that costs N30 million and has a useful life of 5 years, while the rest of the machine has a useful life of 10 years. Under IAS 16, how should the machine be depreciated?

• ADepreciated as a single asset over 10 years using the straight-line method
• BDepreciated as a single asset over the average useful life of 7.5 years
• CThe engine must be depreciated separately over 5 years (N6 million per year) and the rest…
• DThe engine should not be depreciated because it is a component, only the main machine bod…

How should an intangible asset with an indefinite useful life be accounted for under IAS 38?

• AAmortized over a default period of 20 years and tested for impairment only if indicators…
• BNot amortized, but tested for impairment annually and whenever there is an indication of…
• CAmortized over the manager's estimated timeline, not exceeding 5 years
• DExpensed immediately in the year of acquisition

Under IAS 36, what is the rule regarding the reversal of an impairment loss previously recognized for goodwill?

• AGoodwill impairment losses can be reversed in subsequent periods if the recoverable amoun…
• BAn impairment loss recognized for goodwill shall not be reversed in a subsequent period
• CGoodwill impairment can be reversed only up to the original cost of the goodwill
• DReversal is permitted only if the increase in recoverable amount is due to an external ec…

Under IFRS 5, which of the following is NOT a requirement for classifying a non-current asset as 'held for sale'?

• AThe asset must be available for immediate sale in its present condition
• BThe sale must be highly probable and expected to qualify for recognition as a completed s…
• CManagement must be committed to a plan to sell the asset and have initiated an active pro…
• DThe entity must have already received a binding written offer from a qualified buyer

A company constructed a new warehouse. Costs incurred were: raw materials N50 million, direct labor N20 million, architect fees N2 million, general administrative overheads N5 million, and staff training costs for operating the new facility N3 million. What is the initial cost of the warehouse to be capitalized under IAS 16?

• AN72 million
• BN77 million
• CN80 million
• DN70 million

A company decides to transfer a building from owner-occupied property (IAS 16) to investment property (IAS 40) to be carried at fair value. At the date of transfer, the fair value of the property exceeds its carrying amount. How should this difference be accounted for?

• ARecognized as a gain directly in Profit or Loss for the period
• BRecognized in Other Comprehensive Income and accumulated in the Revaluation Surplus withi…
• CDeferred in a liability account and amortized over the remaining useful life of the build…
• DSubtracted from the cost of the building as a fair value adjustment

Under IAS 38, which of the following internally generated items can be recognized as an intangible asset?

• AInternally generated brand names and customer lists
• BInternally generated publishing titles and mastheads
• CInternally generated software developed for internal administration that meets developmen…
• DInternally generated goodwill

A cash-generating unit (CGU) has a carrying amount of N10 million, consisting of Goodwill N2 million, Machine A N5 million, and Machine B N3 million. The recoverable amount of the CGU is determined to be N7 million. What is the carrying amount of Machine A after allocating the impairment loss under IAS 36?

• AN3.125 million
• BN4.375 million
• CN4.500 million
• DN3.500 million

According to IAS 23, when must an entity commence the capitalization of borrowing costs as part of the cost of a qualifying asset?

• AAs soon as the entity enters into a loan agreement to fund the project
• BWhen the entity incurs expenditures for the asset, incurs borrowing costs, and undertakes…
• COnly when physical construction of the asset actually starts on site
• DAt the beginning of the financial year in which the asset construction is approved

Once a non-current asset is classified as 'held for sale' under IFRS 5, how should it be measured and treated regarding depreciation?

• AMeasured at carrying amount, and depreciation continues as normal
• BMeasured at the lower of carrying amount and fair value less costs to sell, and depreciat…
• CMeasured at fair value, and depreciation must cease
• DMeasured at cost, and depreciated at double the normal rate

If an item of property, plant, and equipment is acquired in exchange for a non-monetary asset under IAS 16, what is the default measurement basis for the cost of the acquired asset?

• AThe fair value of the asset given up, adjusted for any cash transferred, unless the trans…
• BThe carrying amount of the asset given up
• CThe replacement cost of the asset received
• DThe original historical cost of the asset given up

Which of the following is considered an internal indicator of asset impairment under IAS 36?

• AA significant decline in the asset's market value during the period
• BSignificant adverse changes in the technological, market, economic or legal environment o…
• CEvidence of obsolescence or physical damage of the asset
• DAn increase in market interest rates that will decrease the asset's value in use

Under SIC-32 Intangible Assets - Web Site Costs, when can an entity capitalize web site development costs?

• AWhenever the web site is created for general public relations and promotion of the entity…
• BOnly when the web site is capable of generating purchase orders (e.g. an e-commerce platf…
• CWeb site costs must always be expensed, as digital assets cannot be capitalized
• DAll web site creation costs, including content planning, must be capitalized as goodwill

An entity has a revaluation surplus in equity of N10 million related to a machine. When the machine is sold, how should the revaluation surplus be treated under IAS 16?

• ATransferred to Profit or Loss as part of the gain on disposal of the machine
• BTransferred directly to Retained Earnings without passing through Profit or Loss or OCI
• CKept in the Revaluation Surplus account indefinitely
• DRecognized as other comprehensive income for the current period

Under IAS 36, how is a Cash-Generating Unit (CGU) defined?

• AAny subsidiary company within a consolidated group
• BThe smallest identifiable group of assets that generates cash inflows that are largely in…
• CThe main manufacturing plant of the company
• DThe treasury department of the entity which manages all cash transactions

What is the correct sequence of the five-step model for revenue recognition under IFRS 15 Revenue from Contracts with Customers?

• AIdentify the contract; Identify the performance obligations; Determine the transaction pr…
• BIdentify the contract; Determine the transaction price; Identify the performance obligati…
• CIdentify performance obligations; Identify the contract; Determine the transaction price;…
• DIdentify the contract; Allocate the transaction price; Determine the transaction price; I…

Under IFRS 15, when is a contract modification accounted for as a separate contract?

• AWhenever the scope of the contract increases, regardless of the price adjustment
• BWhen the scope of the contract increases due to the addition of promised goods or service…
• CWhen the modification is agreed upon in writing by both parties, regardless of terms
• DOnly when the original contract is terminated and a completely new agreement is signed

Under IFRS 15 Step 2, a good or service promised to a customer is 'distinct' if which of the following conditions is met?

• AThe customer can benefit from the good or service either on its own or together with othe…
• BThe good or service has a high profit margin and is sold separately by competitors
• CThe good or service is custom-built and cannot be used by any other customer
• DThe good or service is delivered at the very end of the contract period

An entity enters into a contract to build a manufacturing facility for a customer. The contract includes a N10 million bonus if the facility is completed by a certain date. The bonus decreases by N2 million for each week of delay. How should the entity estimate this variable consideration under IFRS 15?

• AThe entity must estimate the variable consideration using either the expected value metho…
• BThe entity must always use the maximum bonus of N10 million and adjust it when delays occ…
• CThe variable consideration must be ignored until the facility is completed and the final…
• DThe entity should record the average of the maximum bonus (N10 million) and minimum bonus…

What is the key rule regarding the 'constraint' on variable consideration under IFRS 15?

• AVariable consideration is recognized only if it is 100% certain that no refund will be is…
• BVariable consideration is included in the transaction price only to the extent that it is…
• CNo variable consideration can be recognized if the contract duration exceeds six months
• DVariable consideration is limited to 10% of the fixed contract price

Under IFRS 15, an entity is NOT required to adjust the promised amount of consideration for the effects of a significant financing component if which of the following practical expedients applies?

• AThe transaction price is less than N5 million
• BThe period between when the entity transfers the promised good or service to the customer…
• CThe customer is a government agency or a public utility
• DThe entity's cost of capital is less than 5% per annum