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CAF-6 Corporate Reporting · Spring 2026

Q1: Multiple-choice questions

10 marksMCQPass rate 78%

Ten one-mark MCQs: functional currency, segment 75% rule, inventory bought in foreign currency, IFRS S1 objective and materiality, Fourth Schedule line items, donation disclosure, two ethics principles and restated EPS.

Areas: (i) Foreign currency (IAS 21) (1) · (ii) Operating segments (IFRS 8) (1) · (iii) Foreign currency (IAS 21) (1) · (iv) Sustainability reporting (IFRS S1) (1) · (v) Companies Act schedules and local requirements (1) · (vi) Ethics in financial reporting (1) · (vii) Sustainability reporting (IFRS S1) (1) · (viii) Companies Act schedules and local requirements (1) · (ix) Ethics in financial reporting (1) · (x) Earnings per share (IAS 33) (1)

Read the question first

We don't reproduce ICAP's question. Open it in the official PDF, attempt it, then use this walkthrough.

Q1 in the official paper (p. 1) Official suggested answer Suggested answers and marking plans sit in ICAP's student area (CRN login required).Examiners' comments on Q1

How to approach it

  1. Most items are recall: know the exact test in each standard (75% external revenue, primary indicators of functional currency, IFRS S1 user focus).
  2. For numerical items, decide monetary vs non-monetary first in foreign currency, and bonus vs error effects in EPS.

Key rules to apply

  • Functional currency: primarily the currency that drives sales prices and the costs of labour and materials; financing and cash retention are secondary indicators.
  • IFRS 8: add reportable segments until those identified make up at least 75% of external revenue.
  • IAS 21: inventory is non-monetary and stays at the historical rate; payables are retranslated at closing rate.
  • IFRS S1: disclose sustainability-related risks and opportunities that could reasonably be expected to affect prospects; materiality is judged by the decisions of primary users of general purpose financial reports.
  • IAS 33: restate prior-year EPS for a bonus issue and for corrections of prior-period errors.

Common mistakes

Drawn from the examiners' comments for this sitting (summarised in our words) and from typical errors on this topic.

  • Picking the currency of costs alone when sales prices are set in another currency.
  • Retranslating inventory at the closing rate.
  • Restating prior EPS for the bonus issue but forgetting the error correction (or the reverse).

Similar question with worked solution

Written by us with our own numbers; it tests the same skills as Q1 without copying it.

Original practice question

Restating prior-year EPS

Last year a company reported EPS of Rs 4.00 (earnings Rs 20m, 5m shares). This year it made a 1-for-4 bonus issue. No errors were found.

Required: What comparative EPS appears in this year's statements?

Worked solution

WorkingValue
Shares adjusted for bonus: 5m × 1.256.25m
Restated EPS: 20 ÷ 6.25Rs 3.20

Answer: Rs 3.20. If a prior-year error had changed last year's earnings, the numerator would be restated too.

Keep practising

Chapter MCQsForeign currency (IAS 21)Chapter MCQsOperating segments (IFRS 8)Chapter MCQsSustainability reporting (IFRS S1)Chapter MCQsCompanies Act schedules and local requirementsChapter MCQsEthics in financial reportingChapter MCQsEarnings per share (IAS 33)Standard summaryForeign currency (IAS 21)Standard summaryEarnings per share (IAS 33)Topical indexCAF-6 topic × sitting matrixSitting analysisCAF-6 Spring 2026

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