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Key Facts: ICAN CAP-III Exam

8 Papers

Group I: 4 papers; Group II: 4 papers

ICAN Students' Manual

40% / 50%

Minimum per paper and group aggregate to pass

ICAN Final Exam Criteria

NPR 1,250

Exam fee per paper (plus NPR 200 form fee)

ICAN Final Exam Criteria

12 Months

Maximum articleship remaining when sitting the exam

ICAN Final Exam Criteria

June 2028

First examination of the replacement Advisory level

ICAN Modality of New CA Syllabus

3 Years

Articleship required for membership

ICAN Modality of New CA Syllabus

ICAN CAP-III has eight 100-mark written papers of 3 hours each, in two groups, held in the first week of June and December. A student passes a group with 40% in each paper and 50% in aggregate. The exam fee is NPR 1,250 per paper plus a NPR 200 form fee. Students may sit only when no more than 12 months of their 3-year articleship remain.

Sample ICAN CAP-III Practice Questions

Try these sample questions to review concepts for the ICAN CAP-III exam. Each question includes a detailed explanation. Start the interactive quiz above for the full 100+ question experience with AI tutoring.

1Under NFRS 9, which two conditions must both be met for a financial asset (a debt instrument) to be measured at amortized cost?
A.It passes a hedge effectiveness test and a regulatory liquidity coverage test
B.Held to collect contractual cash flows, which are solely principal and interest
C.It matures within 12 months and its issuer is listed on the Nepal Stock Exchange
D.Its purchase is approved by the board and it carries an investment-grade credit rating
Explanation: NFRS 9 requires both a business model test (held to collect contractual cash flows) and a contractual cash flow characteristics test (cash flows are solely payments of principal and interest on the principal outstanding). Failing either test leads to FVOCI or FVTPL measurement.
2Under the NFRS 9 expected credit loss model, how are the loss allowance and interest revenue measured when a financial asset moves from Stage 1 to Stage 2 because of a significant increase in credit risk?
A.12-month expected credit losses, with interest on the gross carrying amount
B.Lifetime expected credit losses, with interest on the net (amortized cost) carrying amount
C.Lifetime expected credit losses, with interest still on the gross carrying amount
D.The asset is written off in full and no interest is recognized
Explanation: In Stage 2 the allowance increases to lifetime ECL, but interest revenue is still calculated on the gross carrying amount. Only when the asset becomes credit-impaired (Stage 3) is interest calculated on the amortized cost net of the allowance.
3Under NFRS 15, how does an entity acting as an agent, rather than a principal, present revenue?
A.At the gross amount billed to the customer, with the supplier's cost in expenses
B.Directly in equity, without passing through profit or loss
C.Only after 12 months have passed from cash settlement
D.At the net amount of the fee or commission it expects to be entitled to
Explanation: An agent arranges for another party to provide goods or services and does not control them before transfer. It therefore recognizes revenue as the net fee or commission it earns.
4In a sale and leaseback where the transfer qualifies as a sale under NFRS 15, how does the seller-lessee measure the right-of-use asset under NFRS 16?
A.At the share of the old carrying amount relating to the rights retained
B.At the full fair value of the asset on the date the sale is completed
C.At nil, because legal title to the asset has passed to the buyer-lessor
D.At the undiscounted total of the lease payments due over the leaseback term
Explanation: The seller-lessee measures the right-of-use asset at the proportion of the previous carrying amount that relates to the right of use it keeps, and recognizes only the gain or loss relating to the rights transferred to the buyer-lessor.
5Plant has a carrying amount of NPR 5,000,000 and a tax base of NPR 3,800,000. The tax rate is 25%. What deferred tax balance arises under NAS 12?
A.Deferred tax asset of NPR 300,000
B.Deferred tax liability of NPR 1,200,000
C.Deferred tax liability of NPR 300,000
D.Deferred tax asset of NPR 950,000
Explanation: The taxable temporary difference is 5,000,000 - 3,800,000 = NPR 1,200,000. Because the asset's carrying amount exceeds its tax base, future taxable amounts exceed future deductions, giving a deferred tax liability of 1,200,000 x 25% = NPR 300,000.
6Under NAS 19, where are remeasurements of the net defined benefit liability (such as actuarial gains and losses) recognized?
A.In profit or loss as part of the employee benefit expense for the year
B.In OCI, never recycled to profit or loss
C.In profit or loss as a finance cost alongside net interest
D.Capitalized into the cost of inventories produced in the year
Explanation: Remeasurements, which include actuarial gains and losses and the return on plan assets excluding net interest, are recognized immediately in OCI and are never recycled to profit or loss, although they may be transferred within equity.
7In the NFRS 13 fair value hierarchy, what are Level 1 inputs?
A.Observable inputs other than quoted prices, such as yield curves
B.Unadjusted quoted prices in active markets for identical assets or liabilities
C.Unobservable inputs from the entity's own cash flow models
D.Historical cost adjusted for inflation
Explanation: Level 1 inputs are unadjusted quoted prices in active markets for identical items that the entity can access at the measurement date. Level 2 inputs are other observable inputs; Level 3 inputs are unobservable.
8In a business combination achieved in stages, how does the acquirer treat its previously held equity interest in the acquiree on the date it obtains control?
A.Remeasure it to fair value at the acquisition date and recognize the gain or loss
B.Keep it at historical cost and add that cost to goodwill on consolidation
C.Transfer its existing carrying amount straight to goodwill without any remeasurement
D.Deduct its carrying amount from the group's share capital on consolidation
Explanation: Obtaining control is treated as a significant economic event. The previously held interest is remeasured to fair value at the acquisition date and the resulting gain or loss is recognized, which then feeds into the goodwill calculation.
9Under NAS 21, which rates are used to translate a foreign operation's financial statements into Nepalese rupees?
A.All items at the historical exchange rate on the date the operation was incorporated
B.Assets and liabilities at the year's average rate; income and expenses at the closing rate
C.Assets and liabilities at closing rate; income and expenses at transaction (or average) rates
D.All items at the budget exchange rate published by the Ministry of Finance for the year
Explanation: Assets and liabilities are translated at the closing rate, income and expenses at the rates on the transaction dates or an appropriate average, and the resulting exchange differences are recognized in OCI.
10Under NFRS 2, what is the key difference between equity-settled and cash-settled share-based payments?
A.Equity-settled: grant-date fair value, not remeasured; cash-settled: liability remeasured each reporting date
B.Equity-settled awards are remeasured at every reporting date, while cash-settled awards are fixed at the grant date
C.Equity-settled awards are recognized as liabilities, while cash-settled awards are credited directly to equity
D.Equity-settled awards are expensed only on vesting, while cash-settled awards are expensed in full on the grant date
Explanation: Equity-settled awards are measured at grant-date fair value and credited to equity over the vesting period. Cash-settled awards, such as share appreciation rights, create a liability that is remeasured at each reporting date, with changes in profit or loss.

About the ICAN CAP-III Exam

CAP-III is the final examination level of ICAN's Chartered Accountancy course, taken during articleship. Its eight written papers cover advanced financial reporting, advanced financial management, advanced auditing, corporate laws, management information and control systems, advanced taxation, advanced cost and management accounting, and strategic management. ICAN's new Advisory level takes over from June 2028, while CAP-III continues to be examined for carry-over students until 2030 under ICAN's transition rules. This bank is independent practice by OpenExamPrep: English-language multiple-choice questions for study, not a simulation of ICAN's written papers.

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

Assessment

Eight 100-mark written papers of 3 hours each, with 10 minutes' reading time. Group I: Advanced Financial Reporting; Advanced Financial Management; Advanced Auditing; Corporate Laws. Group II: Management Information and Control System; Advanced Taxation; Advanced Cost and Management Accounting; Strategic Management and Decision Making Analysis. A student passes a group with at least 40% in each paper and 50% in the group aggregate.

Time Limit

3 hours per paper (8 papers), plus 10 minutes' reading time

Passing Score

40% per paper and 50% aggregate per group

Exam / Certification Fees

NPR 1,250 per paper (NPR 10,000 for 8 papers) plus NPR 200 form fee

Exam sponsor website

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

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.

13%

Advanced Financial Reporting

Financial instruments and ECL, revenue, leases, deferred tax, employee benefits, fair value, business combinations, foreign operations, share-based payment, segments, associates and NPSAS.

13%

Advanced Financial Management

Swap ratios, FCFF valuation, interest rate parity, options and swaps, exposure and hedging, diversification, Sharpe, Treynor and Jensen measures, APV and APT.

12%

Advanced Auditing

Fundamental principles and threats, KAMs, group audits, fraud presumption, forensic work, engagement quality review, ISAE 3000, ISRS 4400, other information and estimates.

13%

Corporate Laws

NCA Act disciplinary and penalty provisions, Insolvency Act 2063, Companies Act section 105, Industrial Enterprises Act CSR, Insurance Act 2079, Audit Act and Article 241, AML reporting, arbitration and public procurement.

12%

Management Information and Control System

DSS, spiral model, ERD and DFD, e-commerce, CIA triad, COSO ERM, COBIT 2019, general and application controls, RPO, MFA, ITF and SOC reports.

13%

Advanced Taxation

Foreign tax credit, permanent establishment, section 33 transfer pricing, CUP, section 14(2) interest cap, GAAR, treaty collection assistance, source rules, final withholding, review procedure, VAT reverse charge, change in control and CRS.

12%

Advanced Cost and Management Accounting

Life-cycle, kaizen and target costing, throughput, transfer pricing rules, balanced scorecard, value chain, quality costs, backflush costing, EVA, learning curves and ABB.

12%

Strategic Management and Decision Making Analysis

Blue ocean strategy, GE matrix, PERT, levels of strategy, premise control, VRIO, five forces, TOWS, generic strategies, BCG matrix, 7S and maximin.

Preparing for the ICAN CAP-III Exam

What You Need to Know

  • Passing score: 40% per paper and 50% aggregate per group
  • Assessment: Eight 100-mark written papers of 3 hours each, with 10 minutes' reading time. Group I: Advanced Financial Reporting; Advanced Financial Management; Advanced Auditing; Corporate Laws. Group II: Management Information and Control System; Advanced Taxation; Advanced Cost and Management Accounting; Strategic Management and Decision Making Analysis. A student passes a group with at least 40% in each paper and 50% in the group aggregate.
  • Time limit: 3 hours per paper (8 papers), plus 10 minutes' reading time
  • Exam / certification fees: NPR 1,250 per paper (NPR 10,000 for 8 papers) plus NPR 200 form fee Official sources

Using Our Practice Resources

  • Work through all 100 available questions
  • Review every answer and explanation
  • Track weak areas and revisit them
  • Use our AI tutor for tough concepts

ICAN CAP-III: Suggested Study Strategy

1Master NFRS 9 classification and ECL staging, NFRS 15 principal-agent judgments and NFRS 16 sale-and-leaseback with full workings.
2Read the Insolvency Act 2063 order of settlement (section 57) and the Companies Act section 105 restrictions directly from the text.
3Use the current Income Tax Act text, as amended by the latest Finance Act; recent Finance Acts have changed several limits and rates.
4Practise hedging calculations (forward, money market and options) and interest rate parity until the logic is automatic.
5Give MICS and Strategic Management the same weight as the other papers; each is a full 100-mark paper.

Frequently Asked Questions

What is the CAP-III examination structure and passing rule?

CAP-III has eight 100-mark papers in two groups of four. A student passes a group with at least 40% in each paper and 50% in the group's aggregate, and can pass both groups together or at separate sittings.

When can a student sit CAP-III?

After passing CAP-II, a student completes 60 hours of IT training and the pre-articleship programme, registers as an article trainee, then completes a further 40 hours of IT training and the online eligibility test. The exam can be taken when no more than 12 months of the 3-year articleship remain.

What are the CAP-III exam fees?

ICAN's fee schedule lists NPR 1,250 per paper for CAP-III/Advisory level, a NPR 200 form fee and a NPR 500 late fee.

How does the new Advisory level affect CAP-III students?

ICAN's new syllabus introduces the Advisory level, first examined in June 2028. CAP-III continues for existing students for a transition period, and students may opt to switch, with exemptions for papers already passed as set out in ICAN's modality.

In what language is CAP-III set?

ICAN publishes its syllabus, study materials, question papers and suggested answers in English. This bank is an English-language practice resource and not an official ICAN product.

Is this bank a simulation of the CAP-III papers?

No. It is an independent multiple-choice study adaptation by OpenExamPrep. CAP-III papers are written, largely case-based examinations, so practise full written answers with ICAN's study materials and past papers.