Free Practice Questions for CA Sri Lanka Corporate Level Exam

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Sample CA Sri Lanka Corporate Level Exam Practice Questions

Try these sample questions to review concepts for the CA Sri Lanka Corporate Level Exam exam. Each question includes a detailed explanation. Start the interactive quiz above for the full 100+ question experience with AI tutoring.

1Under LKAS 1 (Presentation of Financial Statements), how should a long-term borrowing be classified in the statement of financial position if the entity breaches a loan covenant before the end of the reporting period, and the lender agrees after the reporting date but before the authorization of financial statements not to demand immediate repayment?

A.As a current liability, because the entity did not have an unconditional right to defer settlement for at least twelve months at the reporting date

B.As a non-current liability, because the lender waived its right before the financial statements were authorized for issue

C.As a contingent liability disclosed only in the notes, since repayment is subject to future negotiations

D.As a non-current liability, provided the entity has sufficient liquid assets to settle the debt if demanded

Explanation: Under LKAS 1.74, when an entity breaches a provision of a long-term loan agreement on or before the end of the reporting period with the effect that the liability becomes payable on demand, the liability is classified as current, even if the lender agreed after the reporting date and before the authorization of the financial statements not to demand payment as a consequence of the breach. This is because at the reporting date, the entity did not possess the right to defer settlement for at least twelve months.

2Lanka Logistics PLC entered into a 3-year lease for a fleet of distribution trucks on 1 January 2025. Annual lease payments are LKR 1,000,000 payable at the end of each year. The interest rate implicit in the lease is 10% per annum (discount factors: Year 1 = 0.9091, Year 2 = 0.8264, Year 3 = 0.7513; cumulative annuity factor = 2.4868). Lanka Logistics incurred initial direct costs of LKR 150,000 to execute the agreement. What is the initial carrying amount of the right-of-use asset recognized on 1 January 2025 under SLFRS 16?

A.LKR 2,486,800

B.LKR 2,636,800

C.LKR 3,150,000

D.LKR 2,850,000

Explanation: Under SLFRS 16, the lease liability is initially measured at the present value of unpaid lease payments: LKR 1,000,000 * 2.4868 = LKR 2,486,800. The right-of-use (ROU) asset is measured at the initial lease liability plus initial direct costs incurred by the lessee (LKR 2,486,800 + LKR 150,000 = LKR 2,636,800).

3Under SLFRS 15 (Revenue from Contracts with Customers), a company enters into a contract to sell Equipment X and provide one year of Maintenance Y for a total bundled transaction price of LKR 800,000. Stand-alone selling prices are LKR 600,000 for Equipment X and LKR 400,000 for Maintenance Y. What amount of the transaction price should be allocated to Equipment X?

A.LKR 600,000

B.LKR 400,000

C.LKR 480,000

D.LKR 500,000

Explanation: Under SLFRS 15, an entity allocates the transaction price to each performance obligation on a relative stand-alone selling price basis. Total stand-alone price = LKR 600,000 + LKR 400,000 = LKR 1,000,000. Proportion for Equipment X = 600,000 / 1,000,000 = 60%. Allocated transaction price = 60% * LKR 800,000 = LKR 480,000.

4A financial asset is held within a business model whose objective is strictly to collect contractual cash flows, and the contractual terms give rise on specified dates to cash flows that are solely payments of principal and interest (SPPI) on the principal amount outstanding. Under SLFRS 9, how must this financial asset be classified?

A.Fair value through other comprehensive income (FVOCI) with recycling

B.Fair value through profit or loss (FVTPL)

C.Fair value through other comprehensive income (FVOCI) without recycling

D.Amortised cost

Explanation: Under SLFRS 9, a financial asset is classified and measured at amortised cost if both of the following conditions are met: (1) the financial asset is held within a business model whose objective is to hold financial assets in order to collect contractual cash flows, and (2) the contractual terms of the financial asset meet the SPPI test.

5Apex Holdings PLC uses the revaluation model for its factory buildings under LKAS 16. A building originally costing LKR 10,000,000 had a carrying amount of LKR 8,000,000 when revalued upwards to LKR 9,500,000 two years ago, creating a revaluation reserve of LKR 1,500,000 in equity. At the end of the current year, an independent valuation values the building at LKR 7,200,000 (a revaluation decrease of LKR 2,300,000 from its carrying amount of LKR 9,500,000). How should this revaluation decrease be recognized?

A.Debit Revaluation Reserve LKR 1,500,000 in OCI and Debit Profit or Loss LKR 800,000

B.Debit Profit or Loss LKR 2,300,000 in full

C.Debit Revaluation Reserve LKR 2,300,000 in OCI, creating a debit balance in equity

D.Debit Retained Earnings LKR 800,000 and Debit Profit or Loss LKR 1,500,000

Explanation: Under LKAS 16.40, a revaluation decrease should be recognized in other comprehensive income to the extent of any credit balance existing in the revaluation surplus in respect of that asset. Any excess decrease beyond the existing surplus balance must be recognized in profit or loss. Therefore, LKR 1,500,000 offsets the existing revaluation reserve in OCI, and the remaining LKR 800,000 is charged to profit or loss.

6At the reporting date, Colombo Industrial Products holds 500 units of specialized machinery parts with an original production cost of LKR 2,400 each. Due to technological changes, the estimated selling price per unit is LKR 2,500. However, the company must incur rectification costs of LKR 300 per unit and sales commission of LKR 100 per unit to sell them. Under LKAS 2, at what total value should this inventory be presented in the statement of financial position?

A.LKR 1,200,000

B.LKR 1,050,000

C.LKR 1,250,000

D.LKR 1,150,000

Explanation: Under LKAS 2, inventories must be measured at the lower of cost and net realizable value (NRV). Cost per unit = LKR 2,400. NRV = Estimated selling price (LKR 2,500) - Estimated costs of completion (LKR 300) - Estimated selling costs (LKR 100) = LKR 2,100 per unit. Since NRV (LKR 2,100) is lower than cost (LKR 2,400), inventory is valued at LKR 2,100 * 500 units = LKR 1,050,000, requiring a write-down of LKR 150,000.

7Under LKAS 23 (Borrowing Costs), when must an entity cease capitalising borrowing costs as part of the cost of a qualifying asset?

A.When the physical asset is formally handed over to the marketing department for commercial launch

B.Only when all retained retention money is paid to the construction contractors

C.When substantially all the activities necessary to prepare the qualifying asset for its intended use or sale are complete

D.At the financial year-end date following the completion of construction

Explanation: Under LKAS 23.22, an entity shall cease capitalising borrowing costs when substantially all the activities necessary to prepare the qualifying asset for its intended use or sale are complete. An asset is normally ready for its intended use when physical construction is complete, even though minor routine administrative work may still continue.

8Southern Tea Plantations PLC conducts an impairment review of a processing mill carrying a book value of LKR 45,000,000. An appraisal indicates that the mill's fair value less costs of disposal is LKR 38,000,000. The present value of estimated future net cash flows expected to be derived from the continuing operation of the mill (value in use) is LKR 41,000,000. What is the impairment loss to be recognized in profit or loss under LKAS 36?

A.LKR 7,000,000

B.LKR 3,000,000

C.No impairment loss, because value in use exceeds fair value less costs of disposal

D.LKR 4,000,000

Explanation: Under LKAS 36, the recoverable amount of an asset is the higher of its fair value less costs of disposal (LKR 38,000,000) and its value in use (LKR 41,000,000). Thus, the recoverable amount is LKR 41,000,000. An impairment loss exists because the carrying amount (LKR 45,000,000) exceeds the recoverable amount: LKR 45,000,000 - LKR 41,000,000 = LKR 4,000,000.

9On 15 November 2025, the board of directors of Kandy Retail PLC approved a detailed formal plan to restructure its distribution network, closing three regional warehouses. By 20 December 2025, individual redundancy notices were issued to affected employees and termination compensation agreements were finalized with trade unions. The estimated total restructuring cost is LKR 18,000,000, of which LKR 3,000,000 relates to retraining retained staff. Under LKAS 37, what amount should be recognized as a restructuring provision as at 31 December 2025?

A.LKR 15,000,000

B.LKR 18,000,000

C.LKR 0, because the actual closures will take place in 2026

D.LKR 3,000,000

Explanation: Under LKAS 37.72, a constructive obligation to restructure arises when an entity has a detailed formal plan and has raised a valid expectation in those affected (e.g., by issuing redundancy notices before the reporting date). LKAS 37.80 states that a restructuring provision shall include only direct expenditures arising from restructuring; costs relating to ongoing activities, such as retraining retained staff (LKR 3,000,000), must be excluded. Hence, the provision is LKR 18,000,000 - LKR 3,000,000 = LKR 15,000,000.

10As at 31 December 2025, Ceylon Exports PLC has plant and machinery with a carrying amount of LKR 25,000,000 and a tax base of LKR 15,000,000. No deferred tax was recognized at the beginning of the year. The applicable corporate income tax rate in Sri Lanka is 30%. Under LKAS 12 (Income Taxes), what is the deferred tax implication for the year ended 31 December 2025?

A.Deferred tax asset of LKR 3,000,000 recognized in profit or loss

B.Deferred tax liability of LKR 3,000,000 recognized in profit or loss

C.Deferred tax liability of LKR 7,500,000 recognized in other comprehensive income

D.Deferred tax asset of LKR 4,500,000 recognized in equity

Explanation: Under LKAS 12, when the carrying amount of an asset exceeds its tax base, a taxable temporary difference arises: LKR 25,000,000 - LKR 15,000,000 = LKR 10,000,000. The deferred tax liability is calculated as Taxable Temporary Difference * Tax Rate = LKR 10,000,000 * 30% = LKR 3,000,000. Since this originates from operational capital allowances, it is recognized as a deferred tax expense in profit or loss.

About the CA Sri Lanka Corporate Level Exam Exam

The Corporate Level is the intermediate tier of the CA Sri Lanka professional qualification under Curriculum 2025-30, leading upon completion to the Certified Corporate Accountant (CCA) credential. It assesses mid-manager professional competence in corporate financial reporting (LKAS/SLFRS, group consolidation, leases, financial instruments), strategic management accounting, capital budgeting, corporate governance, auditing standards (SLAuSs), and corporate taxation under Sri Lankan law.

Exam sponsor: Institute of Chartered Accountants of Sri Lanka (CA Sri Lanka). The requirements and fees below concern the certification or admission exam, separate from our free practice resources.

Assessment

Four 3-hour paper-based examinations: CL-25-1 Corporate Financial Reporting, CL-25-2 Advanced Management Accounting and Finance, CL-25-3 Risk, Governance & Audit, and CL-25-4 Corporate Law and Taxation. Each paper carries 100 marks with a 50% pass mark. Section A holds five short scenario-based questions of 10 marks each (all compulsory); Section B offers three long scenario-based questions of 25 marks each, of which the candidate answers two. Corporate Level examinations are held in June and December and are conducted in English medium only. Open-book reference material listed by CA Sri Lanka includes Sri Lanka Accounting Standards 2024, SLFRS for SMEs, SLFRS S1 and S2, the Code of Best Practice on Corporate Governance 2023, the Code of Ethics, the Companies Act No. 07 of 2007, the Inland Revenue Act No. 24 of 2017 and the Value Added Tax Act No. 14 of 2002. Candidates also complete the Corporate Capstone (C-CAP), held in June and December.

Time Limit

3 hours per module (12 hours total across 4 modules).

Passing Score

50% for each module and 50% for the Corporate Capstone (C-CAP).

Exam / Certification Fees

LKR 6,200 per examination (physical) / LKR 16,400 (virtual, overseas candidates); C-CAP is LKR 7,200 (physical) / LKR 16,400 (virtual). Payment codes EX02 and EX18.

Exam sponsor website

Fees, eligibility, and exam policies can change. Confirm them with the exam sponsor before applying or paying.

Official sources

Our practice resources: topics covered

We aim to reflect publicly available exam outlines and topic information in our study resources. Coverage, format, and difficulty may differ from the actual exam, and we cannot guarantee that every detail is accurate or current. Confirm exam requirements, fees, and policies with the official exam sponsor.

25%

CL-25-1 Corporate Financial Reporting

Complex LKAS/SLFRS standards, preparation and presentation of group financial statements (subsidiaries and associates), lease accounting (SLFRS 16), revenue recognition (SLFRS 15), financial instruments basics (SLFRS 9), and sustainability reporting foundations (SLFRS S1/S2).

25%

CL-25-2 Advanced Management Accounting & Finance

Activity-Based Costing (ABC) and management, target costing, life-cycle costing, capital budgeting techniques (NPV, IRR, Payback, ARR), working capital optimization, cost of capital (WACC), and financial risk management.

25%

CL-25-3 Risk, Governance & Audit

Code of Best Practice on Corporate Governance 2023, enterprise risk management frameworks, internal audit roles, Sri Lanka Auditing Standards (SLAuSs), substantive testing, CA Sri Lanka Code of Ethics 2023, and auditor reporting under SLAuS 700 series.

25%

CL-25-4 Corporate Law & Taxation

Companies Act No. 07 of 2007 (directors' duties, share capital, meetings, winding up), corporate income tax computation under Inland Revenue Act No. 24 of 2017, Value Added Tax (VAT Act No. 14 of 2002), Social Security Contribution Levy (SSCL Act No. 25 of 2022), and tax dispute resolution procedures.

Preparing for the CA Sri Lanka Corporate Level Exam Exam

What You Need to Know

Passing score: 50% for each module and 50% for the Corporate Capstone (C-CAP).
Assessment: Four 3-hour paper-based examinations: CL-25-1 Corporate Financial Reporting, CL-25-2 Advanced Management Accounting and Finance, CL-25-3 Risk, Governance & Audit, and CL-25-4 Corporate Law and Taxation. Each paper carries 100 marks with a 50% pass mark. Section A holds five short scenario-based questions of 10 marks each (all compulsory); Section B offers three long scenario-based questions of 25 marks each, of which the candidate answers two. Corporate Level examinations are held in June and December and are conducted in English medium only. Open-book reference material listed by CA Sri Lanka includes Sri Lanka Accounting Standards 2024, SLFRS for SMEs, SLFRS S1 and S2, the Code of Best Practice on Corporate Governance 2023, the Code of Ethics, the Companies Act No. 07 of 2007, the Inland Revenue Act No. 24 of 2017 and the Value Added Tax Act No. 14 of 2002. Candidates also complete the Corporate Capstone (C-CAP), held in June and December.
Time limit: 3 hours per module (12 hours total across 4 modules).
Exam / certification fees: LKR 6,200 per examination (physical) / LKR 16,400 (virtual, overseas candidates); C-CAP is LKR 7,200 (physical) / LKR 16,400 (virtual). Payment codes EX02 and EX18. Official sources

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CA Sri Lanka Corporate Level Exam: Suggested Study Strategy

1Practice step-by-step group consolidation mechanics under SLFRS 10, including fair value adjustments, non-controlling interest calculations, and unrealized intra-group profit eliminations.

2Review the specific provisions and formulas of Sri Lankan tax law: compute corporate taxable income by adjusting accounting profit for disallowed expenses, qualifying depreciation allowances, and exempt income under Inland Revenue Act No. 24 of 2017.

3Master the Code of Best Practice on Corporate Governance 2023 recommendations and Sri Lanka Auditing Standards (SLAuSs) reporting rules to swiftly identify governance deficiencies and appropriate audit opinion modifications.

Frequently Asked Questions

What credential is awarded upon completing the CA Sri Lanka Corporate Level?

Completing the four Corporate Level modules (CL-25-1 to CL-25-4), the Corporate Capstone (C-CAP), the Power & Integrity Skills suite, the DESS requirement, and corresponding practical training entitles candidates to the Certified Corporate Accountant (CCA) credential awarded by CA Sri Lanka.

What is the examination format and medium for the Corporate Level?

The official Corporate Level examinations are conducted in English medium only, using a 3-hour paper-based written format per module. Each paper includes Section A (5 short scenario questions of 10 marks each) and Section B (3 scenario-based questions of 25 marks each, answering 2). The pass mark is 50% per module. Examinations are held twice yearly in June and December.

Which reference texts and statutes are permitted in open-book Corporate Level exams?

CA Sri Lanka lists open-book reference material for these modules including Sri Lanka Accounting Standards 2024, SLFRS for SMEs, SLFRS S1 and S2, the Code of Best Practice on Corporate Governance 2023, the Code of Ethics, the Companies Act No. 07 of 2007, the Inland Revenue Act No. 24 of 2017 and the Value Added Tax Act No. 14 of 2002, each with subsequent amendments. Confirm the permitted list in the examination notice for your sitting, because it is reissued for each session.

Is this practice question bank an official CA Sri Lanka examination simulation?

No. While the real CA Sri Lanka Corporate Level consists of 3-hour written scenario and essay questions in English, this question bank is an independent English-language MCQ study adaptation designed by OpenExamPrep to test and consolidate conceptual and quantitative mastery across the four modules.