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ICAN CAP-II study materials
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ICAN CAP-II: Financial Accounting and Reporting: IFRS Application and Corporate Reporting

ICAN CAP-II · Work through your exam, one topic at a time.

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Financial Accounting and Reporting: IFRS Application and Corporate Reporting

Financial Accounting and Reporting at CAP-II tests your ability to apply IFRS as adopted in Nigeria to the preparation, analysis and interpretation of corporate financial statements. Expect consolidation, revenue, leases, financial instruments, deferred tax, impairments, provisions, earnings per share and cash flows, with attention to disclosure and ethical presentation.

Core application rules

  • Apply IAS 1 presentation and the IFRS 15 five-step revenue model; identify performance obligations and allocate the transaction price on relative standalone selling prices.
  • Under IFRS 16, a lessee recognises a right-of-use asset and lease liability at the present value of lease payments, using the incremental borrowing rate where the implicit rate is unavailable.
  • Consolidate under IFRS 10 when control exists; measure goodwill under IFRS 3 and test it annually for impairment under IAS 36.
  • Use IAS 12 to recognise deferred tax on temporary differences, including those arising from right-of-use assets and lease liabilities.
  • IFRS 9 requires expected credit loss impairment, not only incurred losses.

Worked example

A contract price is NGN 100m for equipment, installation and two years of service. Standalone prices are NGN 70m, NGN 20m and NGN 30m, total NGN 120m. Allocate the NGN 20m discount proportionately:

  • Equipment: 70/120 x 100 = NGN 58.33m
  • Installation: 20/120 x 100 = NGN 16.67m
  • Service: 30/120 x 100 = NGN 25.00m Recognise equipment when control passes, installation over the installation period, and service over two years. The discount is not recognised immediately; it follows the performance obligations.

Marks-losing traps

Treating gross versus net revenue incorrectly when the entity is an agent; ignoring optional lease extension periods that are reasonably certain; measuring deferred tax on the whole right-of-use asset; allocating impairment against all assets before goodwill; classifying interest paid inconsistently with the cash-flow policy; and omitting IFRS 15 disclosure of remaining performance obligations.