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Under IAS 33, basic earnings per share is calculated as:
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2026 Statistics
Key Facts: CPA Canada Core 1 Exam
4 hrs
Module Exam Length
CPA PEP Core Modules
~75
Objective Questions
CPA Core 1 Blueprint
60 min
Integrative Case
CPA Core 1 Blueprint
IFRS + ASPE
Frameworks Tested
CPA Canada Handbook
Financial Reporting
Primary Competency
CPA Competency Map
3
Attempts Per Module
CPA PEP Policy
CPA PEP Core 1: Financial Accounting and Reporting is the first CPA PEP core module. The 4-hour module final examination has approximately 75 objective-format questions (multiple choice, short answer, matching, true/false) plus one 60-minute integrative case. Financial Reporting is the dominant competency, covering IFRS (Part I of the CPA Canada Handbook) and ASPE (Part II), with integrated Assurance, Finance, and Taxation. CPA Canada does not publish a fixed raw passing percentage; responses are graded against assessment opportunities and objective performance. The exam is competency-map based, so topics may appear that are not in the module syllabus.
Sample CPA Canada Core 1 Practice Questions
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1Under IFRS 15, when does an entity recognize revenue for a performance obligation satisfied over time?
A.As the entity transfers control of the good or service over time and can reasonably measure progress
B.Only when cash is received from the customer
C.At the single point when legal title passes
D.Evenly over the contract term regardless of progress
Explanation: IFRS 15 requires revenue to be recognized over time when control transfers continuously and progress toward complete satisfaction can be reasonably measured, using an input or output method. This reflects the transfer of control, the core principle of the standard.
2A Canadian private enterprise reporting under ASPE wants to capitalize development costs. Which condition is NOT required under ASPE Section 3064?
A.The entity demonstrates technical feasibility of completing the intangible asset
B.The entity restates all prior-period comparatives to fair value
C.The entity intends to complete and use or sell the asset
D.The entity can reliably measure the expenditure attributable to the asset
Explanation: ASPE 3064 permits, but does not require, capitalization of development costs that meet six criteria including technical feasibility, intention to complete, ability to use or sell, and reliable measurement. Restating comparatives to fair value is not one of the criteria; ASPE uses historical cost for intangibles.
3Which of the following is a fundamental qualitative characteristic of useful financial information under the IFRS Conceptual Framework?
A.Comparability
B.Timeliness
C.Faithful representation
D.Verifiability
Explanation: The IFRS Conceptual Framework identifies two fundamental qualitative characteristics: relevance and faithful representation. The others listed are enhancing qualitative characteristics that improve usefulness but are secondary.
4Under IFRS 16, how does a lessee initially recognize an operating lease (excluding short-term and low-value exemptions)?
A.As rent expense only, with no asset or liability
B.Off-balance-sheet with note disclosure only
C.As a finance receivable and deferred income
D.As a right-of-use asset and a corresponding lease liability
Explanation: IFRS 16 eliminated the operating/finance lease distinction for lessees, requiring almost all leases to be recognized as a right-of-use asset and a lease liability measured at the present value of lease payments. This brought previously off-balance-sheet leases onto the statement of financial position.
5A company purchased equipment for $500,000 with an estimated residual value of $50,000 and a useful life of 10 years. Using straight-line depreciation, what is the annual depreciation expense?
A.$45,000
B.$50,000
C.$55,000
D.$40,000
Explanation: Straight-line depreciation equals (cost minus residual value) divided by useful life: ($500,000 - $50,000) / 10 = $45,000 per year. The depreciable amount excludes residual value.
6Under IAS 2 Inventories, inventory is measured at:
A.Fair value less costs to sell
B.The lower of cost and net realizable value
C.Replacement cost
D.The higher of cost and market value
Explanation: IAS 2 requires inventories to be measured at the lower of cost and net realizable value (NRV). NRV is the estimated selling price in the ordinary course of business less estimated costs of completion and costs to sell.
7Under IFRS 9, a financial asset is measured at amortized cost only if which condition is met?
A.The asset is held solely to be sold for short-term gains
B.The asset has no fixed maturity date
C.The business model is to hold to collect contractual cash flows and the cash flows are solely payments of principal and interest
D.Management elects amortized cost for any equity investment
Explanation: IFRS 9 classifies a financial asset at amortized cost when both the business model test (hold to collect contractual cash flows) and the SPPI test (cash flows are solely payments of principal and interest) are met. Failing either test moves the asset to FVOCI or FVTPL.
8Which financial statement reconciles opening and closing equity, showing contributions, distributions, and comprehensive income?
A.Statement of cash flows
B.Statement of financial position
C.Statement of profit or loss
D.Statement of changes in equity
Explanation: The statement of changes in equity reconciles the opening and closing balances of each equity component, presenting total comprehensive income, owner contributions, distributions (dividends), and other equity movements. It is a required primary statement under IAS 1.
9Under IAS 37, a provision should be recognized when which of the following conditions is met?
A.There is a present obligation from a past event, an outflow is probable, and the amount can be reliably estimated
B.Management decides it would be prudent to set aside reserves
C.A possible obligation exists that is not yet probable
D.The board approves a future restructuring with no announcement
Explanation: IAS 37 requires a provision only when all three criteria are met: a present obligation (legal or constructive) arising from a past event, a probable outflow of resources, and a reliable estimate of the amount. If any criterion fails, a contingent liability disclosure may be required instead.
10A bond with a face value of $100,000 is issued at $95,000. Under the effective interest method, the discount is:
A.Recognized immediately as interest expense
B.Amortized to interest expense over the life of the bond
C.Recorded as a gain on issuance
D.Ignored until maturity
Explanation: When a bond is issued at a discount, the difference between face value and proceeds is amortized to interest expense over the bond's life using the effective interest method. This increases interest expense above the cash coupon, reflecting the market yield.
About the CPA Canada Core 1 Practice Questions
Verified exam format metadata for CPA PEP Core 1: Financial Accounting and Reporting is pending. The practice questions above remain available while official exam length, timing, passing score, fee, and administrator details are reviewed.