ICAEW CORPORATE REPORTING (CR)
2025-2026 ULTIMATE ADVANCED LEVEL
EXAM Q&AS WITH RATIONALES
Master the highly technical Advanced Level Corporate Reporting exam
with this premium, crowd-sourced multiple-choice question bank
explicitly optimized for the 2025 and 2026 sittings. Each rigorous
question replicates ACA-level exam complexity, translating tricky IFRS
standards, audit risk scenarios, and ethical dilemmas into clear,
actionable practice material. Every entry includes italicized correct
answers and detailed bold-italic rationales, making this the perfect tool
for active revision or to print out as structured open-book exam
templates.
1. IFRS 15 Revenue from Contracts with
Customers
An entity enters into a contract with a customer to
build a customized asset. The contract specifies
that if the entity terminates the contract for
reasons other than the customer’s failure to
perform, the customer wins full ownership of the
partly completed asset but the entity has no
enforceable right to payment for performance
completed to date. How should revenue be
recognized?
A) Over time, because the asset is highly
customized.
B) Over time, using an input method to measure
progress.
,C) At a point in time, when control of the finished
asset transfers.
D) At a point in time, when the contract is signed.
Answer: C
Rationale: Under IFRS 15, for revenue to be
recognized over time, one of three criteria
must be met. If the asset does not have an
alternative use, the entity must also have an
enforceable right to payment for performance
completed to date. Since there is no
enforceable right to payment here, revenue
must be recognized at a point in time when
control transfers.
2. IFRS 16 Leases
On 1 January 2025, Lesco enters into a 5-year
lease of property. Payments are £100,000
annually in arrears. The implicit rate is 6%. Lesco
incurs £10,000 of initial direct costs and receives a
£5,000 lease incentive from the lessor prior to
commencement. The present value of the lease
payments is £421,236. What is the initial value of
the Right-of-Use (ROU) asset?
A) £421,236
B) £431,236
C) £426,236
,D) £416,236
Answer: C
Rationale: Under IFRS 16, the ROU asset is
initially measured as: Lease Liability (£421,236)
+ Initial Direct Costs (£10,000) - Lease
Incentives Received (£5,000) = £426,236.
3. IAS 36 Impairment of Assets
A Cash Generating Unit (CGU) has the following
carrying values: Goodwill (£40,000), Property
(£120,000), Plant & Equipment (£80,000).
Following an impairment review, the recoverable
amount of the CGU is determined to be £190,000.
Property has a fair value less costs of disposal of
£115,000. How much impairment loss is allocated
to the Plant & Equipment?
A) £16,667
B) £5,000
C) £10,000
D) £15,000
Answer: B
Rationale: Total impairment loss is (£40,000 +
£120,000 + £80,000) - £190,000 = £50,000. First,
Goodwill is written off entirely (£40,000),
leaving £10,000 to allocate pro-rata to Property
and Plant. Property can only be written down
, to its individual recoverable amount
(£115,000), absorbing £5,000 of the loss. The
remaining £5,000 must be allocated entirely to
Plant & Equipment.
4. IFRS 9 Financial Instruments
An entity purchases a debt instrument at a
premium on 1 January 2025. The business model
is to hold the asset to collect contractual cash
flows, which consist solely of payments of principal
and interest. How should this financial asset be
classified and subsequently measured?
A) Fair Value Through Profit or Loss (FVTPL); Fair
Value.
B) Amortized Cost; Effective Interest Method
adjusting for premium amortization.
C) Fair Value Through Other Comprehensive
Income (FVTOCI); Fair Value with recycling.
D) Amortized Cost; Straight-line amortization of
the premium.
Answer: B
Rationale: The asset meets the Solely
Payments of Principal and Interest (SPPI) test
and the business model is "hold to collect."
Therefore, under IFRS 9, it must be classified
2025-2026 ULTIMATE ADVANCED LEVEL
EXAM Q&AS WITH RATIONALES
Master the highly technical Advanced Level Corporate Reporting exam
with this premium, crowd-sourced multiple-choice question bank
explicitly optimized for the 2025 and 2026 sittings. Each rigorous
question replicates ACA-level exam complexity, translating tricky IFRS
standards, audit risk scenarios, and ethical dilemmas into clear,
actionable practice material. Every entry includes italicized correct
answers and detailed bold-italic rationales, making this the perfect tool
for active revision or to print out as structured open-book exam
templates.
1. IFRS 15 Revenue from Contracts with
Customers
An entity enters into a contract with a customer to
build a customized asset. The contract specifies
that if the entity terminates the contract for
reasons other than the customer’s failure to
perform, the customer wins full ownership of the
partly completed asset but the entity has no
enforceable right to payment for performance
completed to date. How should revenue be
recognized?
A) Over time, because the asset is highly
customized.
B) Over time, using an input method to measure
progress.
,C) At a point in time, when control of the finished
asset transfers.
D) At a point in time, when the contract is signed.
Answer: C
Rationale: Under IFRS 15, for revenue to be
recognized over time, one of three criteria
must be met. If the asset does not have an
alternative use, the entity must also have an
enforceable right to payment for performance
completed to date. Since there is no
enforceable right to payment here, revenue
must be recognized at a point in time when
control transfers.
2. IFRS 16 Leases
On 1 January 2025, Lesco enters into a 5-year
lease of property. Payments are £100,000
annually in arrears. The implicit rate is 6%. Lesco
incurs £10,000 of initial direct costs and receives a
£5,000 lease incentive from the lessor prior to
commencement. The present value of the lease
payments is £421,236. What is the initial value of
the Right-of-Use (ROU) asset?
A) £421,236
B) £431,236
C) £426,236
,D) £416,236
Answer: C
Rationale: Under IFRS 16, the ROU asset is
initially measured as: Lease Liability (£421,236)
+ Initial Direct Costs (£10,000) - Lease
Incentives Received (£5,000) = £426,236.
3. IAS 36 Impairment of Assets
A Cash Generating Unit (CGU) has the following
carrying values: Goodwill (£40,000), Property
(£120,000), Plant & Equipment (£80,000).
Following an impairment review, the recoverable
amount of the CGU is determined to be £190,000.
Property has a fair value less costs of disposal of
£115,000. How much impairment loss is allocated
to the Plant & Equipment?
A) £16,667
B) £5,000
C) £10,000
D) £15,000
Answer: B
Rationale: Total impairment loss is (£40,000 +
£120,000 + £80,000) - £190,000 = £50,000. First,
Goodwill is written off entirely (£40,000),
leaving £10,000 to allocate pro-rata to Property
and Plant. Property can only be written down
, to its individual recoverable amount
(£115,000), absorbing £5,000 of the loss. The
remaining £5,000 must be allocated entirely to
Plant & Equipment.
4. IFRS 9 Financial Instruments
An entity purchases a debt instrument at a
premium on 1 January 2025. The business model
is to hold the asset to collect contractual cash
flows, which consist solely of payments of principal
and interest. How should this financial asset be
classified and subsequently measured?
A) Fair Value Through Profit or Loss (FVTPL); Fair
Value.
B) Amortized Cost; Effective Interest Method
adjusting for premium amortization.
C) Fair Value Through Other Comprehensive
Income (FVTOCI); Fair Value with recycling.
D) Amortized Cost; Straight-line amortization of
the premium.
Answer: B
Rationale: The asset meets the Solely
Payments of Principal and Interest (SPPI) test
and the business model is "hold to collect."
Therefore, under IFRS 9, it must be classified
