PracticeVideosBlogFlashcardsEspañol
All Practice Exams

Free Practice Questions for ICAP CFAP

Exam-style questions and explanations by OpenExamPrep.

✓ No registration✓ No credit card
109+ Questions
100% Free

Loading practice questions...

Same family resources

Explore More ICAP Chartered Accountant Qualifications (Pakistan)

Continue into nearby exams from the same family. Each card keeps practice questions, study guides, flashcards, videos, and articles in one place.

ICAP Certificate in Accounting and Finance (CAF), Pakistan

Practice Questions

ICAP Strategic Case Study (SCS), Pakistan

Practice Questions

ICAP Qualifying Assessment Test (QAT), Pakistan

Practice Questions

Sample ICAP CFAP Practice Questions

Try these sample questions to review concepts for the ICAP CFAP exam. Each question includes a detailed explanation. Start the interactive quiz above for the full 109+ question experience with AI tutoring.

1Al-Meezan Industries acquired a 30% equity interest in Tariq Dynamics on 1 January 2024 for PKR 40 million, accounting for it as an associate under IAS 28. On 1 January 2026, when the carrying value of the associate was PKR 45 million and its fair value was PKR 55 million, Al-Meezan acquired an additional 50% interest for PKR 100 million in cash, achieving control. On that date, the fair value of Tariq Dynamics' identifiable net assets was PKR 160 million, and the fair value of the 20% non-controlling interest was PKR 35 million. Under IFRS 3 (Business Combinations), what is the goodwill recognized at acquisition and the gain or loss recognized in profit or loss on the remeasurement of the previously held interest?
A.Goodwill: PKR 30 million; Remeasurement gain: PKR 10 million in profit or loss
B.Goodwill: PKR 20 million; Remeasurement gain: PKR 15 million in profit or loss
C.Goodwill: PKR 30 million; Remeasurement gain: PKR 10 million in other comprehensive income
D.Goodwill: PKR 15 million; Remeasurement gain: Nil (carrying value carried forward)
Explanation: Under IFRS 3.42, in a business combination achieved in stages, the acquirer remeasures its previously held equity interest at its acquisition-date fair value and recognizes any resulting gain or loss in profit or loss. Here, the remeasurement gain is PKR 55 million − PKR 45 million = PKR 10 million. Total consideration for goodwill comprises: consideration transferred (PKR 100 million) + fair value of previously held interest (PKR 55 million) + fair value of NCI (PKR 35 million) = PKR 190 million. Subtracting identifiable net assets of PKR 160 million yields goodwill of PKR 30 million.
2Apex Holdings holds 42% of the voting rights in Delta Synthetics Limited. The remaining 58% of voting shares are held by more than 4,500 dispersed individual shareholders, none of whom holds more than 0.5%. Over the last four annual general meetings, voter turnout has never exceeded 68% of total voting shares, and no other shareholder has formed a voting pact or organized opposition. Under IFRS 10 (Consolidated Financial Statements), does Apex Holdings have control over Delta Synthetics Limited?
A.Yes, Apex has de facto control because its 42% holding is sufficient to direct the relevant activities given the dispersion and historical voting patterns of other shareholders.
B.No, control strictly requires an absolute majority (exceeding 50%) of total legal voting rights under IFRS 10.
C.No, Apex only has significant influence and must account for Delta Synthetics as an associate under IAS 28 until its holding reaches 50.1%.
D.Yes, but only if Apex enters into a legally binding contractual arrangement with the SECP guaranteeing board majority.
Explanation: Under IFRS 10.B42, an investor with less than a majority of voting rights can have control (de facto control) when the size of its holding relative to the size and dispersion of other holdings, historical attendance at general meetings, and voting patterns demonstrate that it has the practical ability to direct relevant activities unilaterally.
3Pak-Crescent Corp held an 80% subsidiary, Ravi Chemicals, carried at net assets of PKR 120 million (including cash of PKR 10 million). Unimpaired goodwill on Ravi Chemicals was PKR 20 million, and the carrying value of the non-controlling interest was PKR 28 million (measured at proportionate share of net assets at acquisition). On 30 June 2026, Pak-Crescent sold a 60% stake for PKR 135 million cash, retaining a 20% interest with a fair value of PKR 45 million, thereby losing control and retaining significant influence. Under IFRS 10, what is the gain recognized in the consolidated statement of profit or loss on the disposal?
A.PKR 68 million
B.PKR 40 million
C.PKR 48 million
D.PKR 60 million
Explanation: Under IFRS 10.25 and B98, upon loss of control, the parent derecognizes the subsidiary's assets (including goodwill) and liabilities, derecognizes the carrying amount of NCI, recognizes the fair value of consideration received, and remeasures the retained interest at fair value through P&L. Total proceeds/fair value = Consideration (PKR 135m) + Fair value of retained 20% interest (PKR 45m) + Carrying value of NCI derecognized (PKR 28m) = PKR 208 million. Net assets derecognized = Net assets (PKR 120m) + Goodwill (PKR 20m) = PKR 140 million. Gain on disposal = PKR 208m − PKR 140m = PKR 68 million.
4Two Pakistani power producers, Alpha Power and Beta Energy, establish an incorporated separate entity, Indus Wind (Pvt) Limited, under a joint arrangement where each holds 50% of the voting equity and decisions on relevant activities require unanimous consent. However, the contractual agreement specifies that Alpha and Beta have rights to the entire electricity output generated by Indus Wind in proportion to their equity, and Indus Wind is prohibited from selling power to any third party. The parties are also legally obligated to settle all operating liabilities of Indus Wind if its revenues are insufficient. Under IFRS 11 (Joint Arrangements), how should this arrangement be classified?
A.As a joint operation, because 'other facts and circumstances' demonstrate that the parties have rights to substantially all economic benefits of the assets and obligations for liabilities.
B.As a joint venture, because the arrangement is structured through an incorporated separate legal vehicle which always mandates equity accounting.
C.As an associate under IAS 28, because neither party has unilateral control over the corporate vehicle.
D.As a structured entity requiring consolidation by the party with the larger asset base.
Explanation: Under IFRS 11.B31-B32, even when an arrangement is structured through a separate legal vehicle, when other facts and circumstances indicate that the parties have rights to substantially all the economic output of the entity and an obligation to fund its liabilities, the arrangement is classified as a joint operation. Each party recognizes its share of assets, liabilities, revenues, and expenses.
5Kohinoor owns 35% of Chenab, an associate. Chenab sells goods costing PKR 60 million to Kohinoor for PKR 80 million in an upstream transaction. At year-end Kohinoor still holds 40% of those goods. Chenab's PKR 120 million after-tax profit includes the sale; ignore tax effects of the elimination. What share of associate profit does Kohinoor recognize?
A.PKR 39.20 million
B.PKR 42.00 million
C.PKR 34.00 million
D.PKR 40.80 million
Explanation: Under IAS 28.28, gains and losses resulting from downstream and upstream transactions between an investor and an associate are recognized in the investor's financial statements only to the extent of unrelated investors' interests. Total unrealized profit in inventory is (PKR 80m − PKR 60m) × 40% = PKR 8.0 million. Kohinoor's share of unrealized profit to eliminate is PKR 8.0m × 35% = PKR 2.80 million. Kohinoor's share of associate profit before adjustment is PKR 120m × 35% = PKR 42.0 million. Net share of profit recognized = PKR 42.0m − PKR 2.80m = PKR 39.20 million.
6Habib Capital invested PKR 200 million in 5-year corporate bonds issued by a commercial conglomerate. The contractual terms stipulate annual interest at 3-month KIBOR plus 2.5%, but include a clause stating that if the issuer fails to meet its carbon emission reduction target, the coupon rate will increase by 50 basis points. The bond has fixed maturity with full principal repayment on maturity and no conversion features. Under IFRS 9 (Financial Instruments), how should Habib Capital classify this bond?
A.Further SPPI analysis is required; the 50-basis-point ESG adjustment alone does not establish classification, and the business model also matters.
B.Mandatorily at Fair Value through Profit or Loss (FVTPL), because any non-financial ESG-linked adjustment automatically breaches the SPPI test.
C.At fair value through other comprehensive income (FVOCI) without recycling, as an irrevocable equity-type designation.
D.The debt host must be measured at amortized cost and the ESG feature bifurcated as an embedded derivative at FVTPL.
Explanation: The IFRS 9 amendments effective in 2026 do not give all ESG-linked bonds an automatic SPPI exemption. Relevant contingent features require assessment of whether contractual cash flows could differ significantly from an otherwise identical instrument without the feature, considering the possible contractual scenarios. Classification also depends on the business model and any applicable fair-value designation.
7Standard Commercial Bank holds a portfolio of commercial loans with a carrying value of PKR 800 million. At initial recognition, the loans were categorized in Stage 1 with a 12-month expected credit loss (ECL) allowance of PKR 12 million. At the reporting date, due to severe macroeconomic stress in the borrower's export sector, the internal credit rating of the borrower dropped from BBB to B-, and payment arrears reached 45 days past due. The lifetime probability of default increased from 4% to 18%. How should the bank account for this impairment under IFRS 9?
A.Transfer the facility to Stage 2 and recognize lifetime expected credit losses, because there has been a significant increase in credit risk (SICR).
B.Retain the facility in Stage 1 with 12-month ECL, because arrears have not exceeded the 90-day objective default threshold.
C.Transfer immediately to Stage 3 as a credit-impaired non-performing asset and write down the full principal.
D.Suspend interest recognition completely and create a general provision under SBP Prudential Regulations ignoring IFRS 9.
Explanation: Under IFRS 9.5.5.3, if the credit risk on a financial instrument has increased significantly since initial recognition (demonstrated by a rating downgrade, 45 days past due which exceeds the 30-day rebuttable presumption, and a jump in default probability), the entity must transfer the asset to Stage 2 and measure the loss allowance at an amount equal to lifetime expected credit losses.
8Engro Fertilizers entered into a forward contract on 1 September 2025 to hedge the foreign exchange risk of a highly probable forecast purchase of heavy machinery denominated in Euro (EUR 5 million) scheduled for delivery on 31 March 2026. The hedge qualified for cash flow hedge accounting under IFRS 9. By 31 December 2025 (year-end), a cumulative gain of PKR 45 million was recognized in OCI on the derivative. On 31 March 2026, an additional gain of PKR 15 million arose, and the machinery was acquired for EUR 5 million cash. How should the cumulative gain of PKR 60 million in the cash flow hedge reserve be treated under IFRS 9?
A.It must be removed from the cash flow hedge reserve and included directly in the initial carrying amount (cost basis) of the acquired machinery (basis adjustment).
B.It must be reclassified immediately to profit or loss on 31 March 2026 as foreign exchange gain.
C.It must remain indefinitely in OCI and amortized directly to retained earnings over 10 years.
D.It must be recognized as deferred revenue under non-current liabilities.
Explanation: Under IFRS 9.6.5.11(d)(i), when a hedged forecast transaction subsequently results in the recognition of a non-financial asset (such as machinery), the entity must remove that amount from the cash flow hedge reserve and include it directly in the initial cost or other carrying amount of the asset (a basis adjustment). This is not a reclassification adjustment under IAS 1.
9Murree Brewery operates a defined benefit pension plan for its management executives. As of 1 July 2025, the present value of the defined benefit obligation (DBO) was PKR 350 million and the fair value of plan assets was PKR 300 million. During the year ended 30 June 2026, current service cost was PKR 35 million, the market discount rate was 12% per annum, actual return on plan assets was PKR 48 million, and benefits paid were PKR 30 million. At 30 June 2026, an independent actuarial valuation determined the DBO to be PKR 405 million. What total net expense is recognized in profit or loss and what remeasurement is recognized in OCI for the year ended 30 June 2026 under IAS 19?
A.P&L expense: PKR 41 million; OCI net remeasurement gain: PKR 4 million
B.P&L expense: PKR 35 million; OCI net remeasurement gain: PKR 12 million
C.P&L expense: PKR 77 million; OCI remeasurement: Nil
D.P&L expense: PKR 41 million; OCI net remeasurement loss: PKR 8 million
Explanation: Under IAS 19, net interest on the net defined benefit liability is calculated as Net Liability × Discount Rate = (PKR 350m − PKR 300m) × 12% = PKR 6.0 million. P&L expense = Current Service Cost (PKR 35m) + Net Interest (PKR 6m) = PKR 41 million. Expected DBO at year-end = 350 + 35 (service cost) + 42 (interest on DBO: 350×12%) − 30 (benefits) = PKR 397 million. Actual DBO is 405m, creating an actuarial loss on DBO of PKR 8 million. Plan assets: expected = 300 + 36 (interest on assets: 300×12%) − 30 = PKR 306 million. Actual return was 48m, so asset return in excess of interest = 48 − 36 = PKR 12 million gain. Net OCI remeasurement = Asset gain (PKR 12m) − DBO loss (PKR 8m) = PKR 4 million gain.
10Fatima Fertilizer recorded a funded defined benefit plan with plan assets having a fair value of PKR 180 million and a present value of defined benefit obligations of PKR 145 million, yielding an unadjusted net plan surplus of PKR 35 million. Under the scheme trust deed and IFRIC 14 (IAS 19 - The Limit on a Defined Benefit Asset), the present value of future economic benefits available through refunds and reductions in future contributions to the plan is PKR 22 million. What is the net defined benefit asset recognized in the statement of financial position and where is the asset ceiling restriction recognized?
A.Net asset recognized: PKR 22 million; Asset ceiling write-down of PKR 13 million recognized in Other Comprehensive Income (OCI).
B.Net asset recognized: PKR 35 million; Asset ceiling restriction disclosed only in the notes without adjustment.
C.Net asset recognized: PKR 22 million; Asset ceiling write-down of PKR 13 million recognized in operating profit or loss.
D.Net asset recognized: Nil; Surplus on pension funds cannot be recognized under conservative Pakistani accounting standards.
Explanation: Under IAS 19.64 and IFRIC 14, an entity must measure a net defined benefit asset at the lower of the surplus in the defined benefit plan (PKR 35m) and the asset ceiling (PKR 22m). The excess surplus of PKR 13 million is restricted and recognized in Other Comprehensive Income (OCI) as part of remeasurements.

About the ICAP CFAP Exam

Independent CFAP topic practice. This English-language MCQ study adaptation is not an official translation or format simulation and does not replace written analysis, full workings, hands-on assessments or practical training.

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

Assessment

Question count varies by module

Time Limit

CFAP 3 Summer 2026: 3h30; verify other papers

Passing Score

50% per subject

Exam / Certification Fees

PKR 14,400 first paper + PKR 5,700 each additional paper per sitting (2026–27)

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.

Separate paper

CFAP 1: Advanced Corporate Reporting

Advanced IFRS measurement and groups.

Separate paper

CFAP 2: Corporate Laws and Governance

Companies, securities, competition and governance.

Separate paper

CFAP 3: Sustainability Reporting and Assurance

S1/S2, emissions, criteria and assurance evidence.

Separate paper

CFAP 4: Strategic Business Finance

Appraisal, valuation, treasury and risk.

Separate paper

CFAP 5: Tax Practices and Planning

Business tax, groups, cross-border issues and compliance.

Separate paper

CFAP 6: Audit, Assurance and Data

Audit, other assurance, data and quality management.

Preparing for the ICAP CFAP Exam

What You Need to Know

  • Passing score: 50% per subject
  • Assessment: Question count varies by module
  • Time limit: CFAP 3 Summer 2026: 3h30; verify other papers
  • Exam / certification fees: PKR 14,400 first paper + PKR 5,700 each additional paper per sitting (2026–27) Official sources

Using Our Practice Resources

  • Work through all 109 available questions
  • Review every answer and explanation
  • Track weak areas and revisit them
  • Use our AI tutor for tough concepts

ICAP CFAP: Suggested Study Strategy

1Study all six current papers, including sustainability assurance.
2Reconcile calculations before interpreting business implications.
3Distinguish current law, historical tax years and hypothetical assumptions.

Frequently Asked Questions

When are CFAP examinations offered?

Four annual sessions were announced from June 2026: March, June, September and December. Training-stage students may be restricted to two approved sessions; check the applicable notice and route.

Do MCQs complete CFAP preparation?

No. Develop written responses and workings and follow ICAP's current permitted-material and software instructions.