1|Page
CFI FMVA FINAL EXAM 2026 | 100% VERIFIED
SOLUTIONS | FINANCIAL MODELING & VALUATION
MASTER
On March 1st, Mr. Smithe signed up for a fitness program at Fit Co. and paid $960 for the
entire program upfront. The program includes a total of 12 sessions and two sessions are
delivered each month. How much revenue from Mr. Smithe should Fit Co. recognize at the
end of March?
160
Which of the following characteristics does not enhance the usefulness of financial
information?
Relevance
Identify the statement that is most accurate.
Financial information that has confirmatory value provides feedback that either confirms or
changes previous evaluations.
Which of the following is not a correct description of how an operating lease is recognized
on the financial statements?
The amortization expense of the right-of-use asset is calculated using the straight-line
depreciation method over the lease term.
Company Inc. enters into a 10-year finance lease at the beginning of 2021 for a total of
$250,000. The annual lease payment is $25,000 (payable at the end of each year) and the
rate implicit in the lease is 5%. No initial direct costs are incurred. How much interest
expense should be recognized in 2021?
9,652
Which of the following statements about income taxes is not correct?
,2|Page
Deductible temporary differences give rise to deferred tax liabilities, meaning that more tax is
payable in the future.
10.
Deductible Temporary differences
Generally arise when the tax base of the assets is greater than the carrying amount
Generally arise when there are differences that result in current accounting income being greater
than taxable income
Give rise to deferred tax assets
Taxable Temporary Diffferences
Arise when the tax base of the liabilities is greater than the carrying amount
Arise when the carrying amount of the liabilities is greater than the tax base
Taxable Temporary Differences
Calculate the deferred tax liability given the following items incurred in 2020 by Company
B. Bonuses are tax deductible only in the year in which they are paid.
372
Company Co. has 1,000 employees and it decides to grant each of the employees 200 share
options as part of its new rewards plan. The options are exercisable over 5 years and
subject only to the condition that the company's stock price must be at least 30% higher
than its original issue price. Company Co.'s share-based payments are subject to:
Non-vesting condition
Company A has 800 employees, and it decides to grant each of the employees 50 share
options as part of its new rewards plan. The options are exercisable over 5 years and
subject to a 3-year service condition. The fair value of each option at the grant date is $16.
The company estimates that 80% of its employees will meet the service condition required
for receiving the options. Calculate the total share-based payment expense for Company A
assuming that 80% of the employees actually meet the service condition.
512,000
,3|Page
Which of the following is not a required criterion for a transaction to be considered a
business combination?
Presence of outputs
Which of the following statements regarding the accounting for business combinations is
false?
Goodwill is the difference between the consideration transferred by the acquirer to the acquiree
and the fair value of identifiable assets acquired.
Debt issuance costs are:
Amortized over the term of the related debt liability
Scenario and Sensitivity Analysis
If you want to test how an increase in percentage of cost of good sold affects the
contribution margin, you would use ________.
Sensitivity Analysis
When performing a scenario analysis, which of the following tools/functions in Excel is
used to create a dropdown list where we can select the live case?
Data Validation
You should perform sensitivity analysis when:
You need to determine which assumptions matter the most
The formula contained in the yellow highlighted cell (I39) is = ( , I9,I24). This formula can
be copied over to the entire live scenario section without any manual modification. (Hint:
do not forget to use absolute references.)
Choose, $I$4
What is the share price when the discount rate is 13% and revenue growth is 15%?
36.70
What is the share price when COGS increases by 5%?
, 4|Page
29.29
The formula contained in the YELLOW cell (G179) is ___________ Hint: do not forget the
$ when using absolute references. Use absolute reference so this formula can be copied over
to other cells in this section without any manual modification.
=SMALL($F$177:$F$180,E179)
The formula contained in the ORANGE cell (H178) is = ($A$177:$G$180,
( ,$F$177:$F$180,0),MATCH($A$177,$A$177: $F$177,0))
Hint: do not forget the $ when using absolute references.
Index, match, A177
What type of chart did we use to build a tornado chart?
Stacked bar chart
Assumption Drivers in order
Financial Analysis Fundamentals
Which of the following items are not included when determining income from operations?
Taxes
Which ratio would you use to determine the profitability of the goods sold by a company?
Gross Profit
When performing a vertical analysis which income statement item do you use to determine
the cost contribution for each expense category? (What is the denominator?)
Sales
Horizontal analysis allows us to analyze performance over:
Time
When calculating the quick ratio or "acid test" which current asset or liability is omitted?
Inventory
CFI FMVA FINAL EXAM 2026 | 100% VERIFIED
SOLUTIONS | FINANCIAL MODELING & VALUATION
MASTER
On March 1st, Mr. Smithe signed up for a fitness program at Fit Co. and paid $960 for the
entire program upfront. The program includes a total of 12 sessions and two sessions are
delivered each month. How much revenue from Mr. Smithe should Fit Co. recognize at the
end of March?
160
Which of the following characteristics does not enhance the usefulness of financial
information?
Relevance
Identify the statement that is most accurate.
Financial information that has confirmatory value provides feedback that either confirms or
changes previous evaluations.
Which of the following is not a correct description of how an operating lease is recognized
on the financial statements?
The amortization expense of the right-of-use asset is calculated using the straight-line
depreciation method over the lease term.
Company Inc. enters into a 10-year finance lease at the beginning of 2021 for a total of
$250,000. The annual lease payment is $25,000 (payable at the end of each year) and the
rate implicit in the lease is 5%. No initial direct costs are incurred. How much interest
expense should be recognized in 2021?
9,652
Which of the following statements about income taxes is not correct?
,2|Page
Deductible temporary differences give rise to deferred tax liabilities, meaning that more tax is
payable in the future.
10.
Deductible Temporary differences
Generally arise when the tax base of the assets is greater than the carrying amount
Generally arise when there are differences that result in current accounting income being greater
than taxable income
Give rise to deferred tax assets
Taxable Temporary Diffferences
Arise when the tax base of the liabilities is greater than the carrying amount
Arise when the carrying amount of the liabilities is greater than the tax base
Taxable Temporary Differences
Calculate the deferred tax liability given the following items incurred in 2020 by Company
B. Bonuses are tax deductible only in the year in which they are paid.
372
Company Co. has 1,000 employees and it decides to grant each of the employees 200 share
options as part of its new rewards plan. The options are exercisable over 5 years and
subject only to the condition that the company's stock price must be at least 30% higher
than its original issue price. Company Co.'s share-based payments are subject to:
Non-vesting condition
Company A has 800 employees, and it decides to grant each of the employees 50 share
options as part of its new rewards plan. The options are exercisable over 5 years and
subject to a 3-year service condition. The fair value of each option at the grant date is $16.
The company estimates that 80% of its employees will meet the service condition required
for receiving the options. Calculate the total share-based payment expense for Company A
assuming that 80% of the employees actually meet the service condition.
512,000
,3|Page
Which of the following is not a required criterion for a transaction to be considered a
business combination?
Presence of outputs
Which of the following statements regarding the accounting for business combinations is
false?
Goodwill is the difference between the consideration transferred by the acquirer to the acquiree
and the fair value of identifiable assets acquired.
Debt issuance costs are:
Amortized over the term of the related debt liability
Scenario and Sensitivity Analysis
If you want to test how an increase in percentage of cost of good sold affects the
contribution margin, you would use ________.
Sensitivity Analysis
When performing a scenario analysis, which of the following tools/functions in Excel is
used to create a dropdown list where we can select the live case?
Data Validation
You should perform sensitivity analysis when:
You need to determine which assumptions matter the most
The formula contained in the yellow highlighted cell (I39) is = ( , I9,I24). This formula can
be copied over to the entire live scenario section without any manual modification. (Hint:
do not forget to use absolute references.)
Choose, $I$4
What is the share price when the discount rate is 13% and revenue growth is 15%?
36.70
What is the share price when COGS increases by 5%?
, 4|Page
29.29
The formula contained in the YELLOW cell (G179) is ___________ Hint: do not forget the
$ when using absolute references. Use absolute reference so this formula can be copied over
to other cells in this section without any manual modification.
=SMALL($F$177:$F$180,E179)
The formula contained in the ORANGE cell (H178) is = ($A$177:$G$180,
( ,$F$177:$F$180,0),MATCH($A$177,$A$177: $F$177,0))
Hint: do not forget the $ when using absolute references.
Index, match, A177
What type of chart did we use to build a tornado chart?
Stacked bar chart
Assumption Drivers in order
Financial Analysis Fundamentals
Which of the following items are not included when determining income from operations?
Taxes
Which ratio would you use to determine the profitability of the goods sold by a company?
Gross Profit
When performing a vertical analysis which income statement item do you use to determine
the cost contribution for each expense category? (What is the denominator?)
Sales
Horizontal analysis allows us to analyze performance over:
Time
When calculating the quick ratio or "acid test" which current asset or liability is omitted?
Inventory
