Financial Reporting (FR) March/June 2026 Examiner’s Report

Every sitting, the ACCA examining team publishes a detailed FR Examiner Report that reviews candidate performance across Section A, B, and C questions. The FR Examiner's Report June 2026 (covering the March/June 2026 sittings) is no different — it walks through specific questions that caused difficulty, explains the correct answers, and highlights the most common mistakes candidates made.

Here, the given details breaks down the entire ACCA FR examiners report, section by section and question by question, using only the data and commentary published in the official report. Whether you're preparing for your next attempt or you're a tutor looking for teaching material, this is your roadmap to the exact pitfalls examiners flagged.

What This Financial Reporting (FR) March/June 2026 Examiner’s Report Covers

The Financial Reporting (FR) exam — sometimes still referred to informally as the ACCA F7 Examiner's Report — is delivered as a computer-based exam (CBE), meaning candidates do not all receive identical question sets. The report should be used alongside the published March/June 2026 sample exam on the ACCA Practice Platform.

The report is structured into three parts:

• Section A – Objective test questions: four specific questions that caused difficulty

• Section B – Objective test case questions: one case scenario (Relicoz Co) that was challenging for candidates

• Section C – Constructed response questions: detailed commentary on two questions, Puget Co and Astroid Co

Let's go through the FR examiners feedback for each.

"Financial Reporting (FR) March/June 2026 Examiner’s report"

Financial Reporting Examiners Feedback Section wise

This FR examiner feedback highlights what each question tested, the correct accounting treatment, and the key mistakes candidates made-helping you focus your revision on both technical knowledge and exam technique. 

Section A: Objective Test Questions

Question One — Consolidated Gross Profit (IFRS 10)

The scenario: Flottay Co acquired 70% of Silpark Co's equity on 1 June 20X5, with a mid-year acquisition and an intragroup sale of goods still held in inventory at year end.

What it tested: SLO D2(b) and IFRS 10 — pro-rating a subsidiary's post-acquisition results and eliminating intragroup unrealised profit.

Correct answer: $1,338,000. This required apportioning six months of Silpark's post-acquisition gross profit and removing $12,000 of unrealised intragroup profit still sitting in inventory.

Where candidates went wrong: Most candidates got this wrong. The most common error was failing to pro-rate the subsidiary's gross profit for the six months of ownership. The second most common error was ignoring the intragroup unrealised profit elimination altogether — some candidates made both mistakes.

Question Two — Financial Instruments and Total Equity (IAS 32)

The scenario: Candidates had to identify which transaction — non-convertible loan notes, convertible loan notes, redeemable preference shares, or a bonus issue — increases total equity.

What it tested: SLO B5(e) and IAS 32.

Correct answer: Convertible loan notes (Option B). As a compound instrument, they split into a liability and an equity component, increasing total equity.

Where candidates went wrong: The most common error was selecting bonus shares, which increase share capital but reduce another equity component by the same amount — net effect on total equity is zero. The next most common error was selecting redeemable preference shares, which are classified as a liability, not equity.

Question Three — Provisions vs Contingent Liabilities/Assets (IAS 37)

The scenario: Four events were presented — an insurance claim, a warranty with a 35% claim probability, a customer returns policy, and a wrongful dismissal lawsuit — and candidates had to select which two give rise to a provision.

What it tested: SLO B7(c) and IAS 37.

Correct answers: C (the returns policy, a constructive obligation) and D (the lawsuit, where it is probable the company will lose).

Where candidates went wrong: Most candidates answered incorrectly. The most common mistake was selecting the insurance compensation claim (A) instead of the returns policy (C) — the insurance claim is actually a contingent asset, not a provision. Many candidates also incorrectly classified the 35% warranty claim (B) as a provision, when it should be treated as a contingent liability since the outflow was not probable.

Question Four — Lease Accounting: Interest and Depreciation (IFRS 16)

The scenario: Toblee Co entered a five-year lease with advance payments of $4.5m, a present value of $19.81m, an implicit interest rate of 6.8%, and an underlying asset useful life of ten years.

What it tested: SLO B6(a) and IFRS 16 — accounting for leases with payments made in advance.

Correct answers: Interest expense of $1.04m (6.8% × ($19.81m − $4.5m)) and depreciation charge of $3.96m (1/5 × $19.81m, depreciated over the shorter of the lease term and useful life).

Where candidates went wrong: Most candidates got this wrong. While most correctly calculated the interest expense, almost half incorrectly selected $1.98m as the depreciation charge — wrongly depreciating over the ten-year useful life instead of the five-year lease term.

Section B: Objective Test Case — Relicoz Co

The examiners selected a case covering IFRS 5 (Non-current Assets Held for Sale and Discontinued Operations), IAS 10 (Events after the Reporting Period), and IFRS 18 (Presentation and Disclosure in Financial Statements).

Question One — Adjusting vs Non-Adjusting Events (True/False)

What it tested: SLO B7(g) and IAS 10 — definitions of adjusting and non-adjusting events.

Correct answers: "For material non-adjusting events, disclosure only" — TRUE. "An entity must adjust for both material and immaterial adjusting events" — FALSE (only material information needs disclosure/adjustment consideration for immaterial items).

Where candidates went wrong: Most identified each statement individually, but only a narrow majority correctly classified both statements together.

Question Two — Adjusting Events (IAS 10)

The scenario: Four post-year-end events — a storm destroying equipment, a customer lawsuit, a customer bankruptcy, and a legislation change scrapping machinery.

Correct answers: B (the lawsuit, since it relates to goods supplied before year end) and C (the bankruptcy, confirming the customer was credit-impaired at year end).

Where candidates went wrong: Most correctly identified B and C, but the most common error was incorrectly treating D (a post-year-end legislation change) as an adjusting event, when it is a non-adjusting event.

Question Three — Held-for-Sale Property (IFRS 5)

The scenario: A property under the revaluation model, reclassified as held for sale on 31 October 20X4.

Correct answer: C, $1,240,000 — comprising $1.04m depreciation plus a $200,000 impairment loss on reclassification (after revaluing to $10m per IAS 16, then applying the lower of carrying amount and fair value less costs to sell).

Where candidates went wrong: This question was poorly attempted. The most popular (incorrect) answer, B, only included the depreciation charge. The next most popular, D, incorrectly included the revaluation surplus in profit or loss instead of other comprehensive income.

Question Four — Held-for-Sale Equipment (IFRS 5)

The scenario: Equipment classified as held for sale partway through the year, with fair value less costs to sell (FVLCTS) falling further by year end.

Correct answer: C, $1.764m — carrying amount after depreciating to the classification date, which was lower than FVLCTS at that point, and not adjusted upward at year end since it wasn't originally measured at FVLCTS.

Where candidates went wrong: This requirement was not well answered. The most common wrong answer, D ($1.860m), reflected a failure to depreciate up to the classification date and a misunderstanding of the "lower of carrying amount or FVLCTS" rule. Many candidates also selected B ($1.568m) by failing to pro-rate depreciation correctly.

Question Five — Held-for-Sale Classification Criteria (IFRS 5)

The scenario: Four assets/scenarios — land pending demolition, an illegal-to-sell brand, overpriced plant, and an actively marketed warehouse.

Correct answer: D — the warehouse, as it was available for immediate sale, on usual terms, with a highly probable sale expected within 30 days.

Where candidates went wrong: Most candidates answered correctly. The most common error was selecting A (the land), which failed the "available for immediate sale in its present condition" criterion since demolition was still required.

Section C: Constructed Response Questions

Puget Co — Group Financial Statements Analysis

This question involved a goodwill calculation for a mid-year acquisition (Seattle Co) followed by analysis and interpretation of group performance and position.

Requirement (a) – Goodwill calculation (5 marks): Generally well answered. Where marks were lost, it was due to unclear workings, incorrect fair value of consideration (forgetting to multiply shares by share price, or not discounting deferred consideration), using the wrong method or share price for non-controlling interest, and confusion over net assets (Equity = Assets − Liabilities).

Requirement (b) – Ratio calculations (4 marks): Most candidates scored full marks. The main error was using cost of sales instead of revenue as the denominator for receivables collection period.

Requirement (c) – Analysis and interpretation (11 marks): This remains a weak area. Key FR examiners feedback points included:

• Candidates gave generic answers not linked to the scenario; no marks are awarded for restating what a ratio measures or simply saying it "increased" or "decreased."

• Many wrongly attributed margin changes purely to the mid-year acquisition timing, rather than linking them to actual scenario details like acquisition costs and redundancy costs.

• There was confusion about financing — the scenario stated investments were sold for $40m cash, but many candidates wrongly assumed bonds were issued or repaid.

• Strong answers connected multiple scenario facts together (e.g., linking the $64m cash paid for the acquisition, the $40m raised from investment disposals, and the resulting cash strain from a large dividend payment).

• A mark is available for a short, clearly labelled conclusion that specifically addresses the impact of the acquisition.

Astroid Co — Individual Financial Statements Preparation

This question required preparing a statement of profit or loss, statement of financial position, and cash flow extracts, with adjustments spanning IFRS 16, IAS 16, IAS 38, IFRS 15, and IAS 12.

Requirement (a) & (b) – SPL and SFP (7 + 15 marks):

• Lease liability/right-of-use asset (IFRS 16): A lease payment was posted incorrectly and needed correcting before interest and depreciation could be calculated. Common errors included misclassifying current vs non-current lease liability (correctly, $4.51m current and $5.39m non-current).

• Owned plant depreciation (IAS 16): A $1.2m component with a separate useful life (four years) needed to be depreciated separately from the remaining $4.8m (12 years). Many calculation errors stemmed from careless reading.

• Intangible asset — brand (IAS 38): The brand should have been expensed as a selling expense rather than capitalised, since it related to business promotion. A common error was deducting the $800,000 adjustment instead of adding it.

• Contract asset (IFRS 15): Poorly attempted. The $1.8m of recoverable costs should have gone to cost of sales, and revenue of $2m should have been recognised based on units completed (4 of 12), creating an accrued income balance of $200,000.

• Rights issue and current tax: The rights issue required no SFP adjustment (already correctly recorded) but was relevant to the cash flow statement; current tax was a straightforward adjustment.

• Retained earnings: Candidates are reminded to allow time to carry the profit for the year through to retained earnings — "own figure" marks are available even with an incorrect profit figure, provided workings are shown.

Requirement (c) – Cash flows from financing activities (3 marks): Many candidates skipped this entirely. Where attempted, most could calculate rights issue proceeds but made errors determining the number of shares issued (the correct approach: working backwards from the 27.5 million year-end shares using the 2-for-9 rights ratio to find a 5 million share issue, generating $9m at $1.80/share). The $5.5m lease repayment was often omitted or confused with the $1.4m interest expense.

Key Takeaways

• Pro-rating errors were the single biggest theme across multiple questions — from consolidated gross profit (Q1, Section A) to lease depreciation (Q4, Section A) to held-for-sale equipment (Q4, Section B).

• Read the scenario carefully and highlight key dates and instructions — several errors stemmed from misreading dates or rounding instructions.

• Interpretation and analysis answers must be scenario-specific. Generic ratio commentary earns no marks; you must link numbers to the facts given.

• Always show full workings, whether using the calculator tool or spreadsheet — "own figure" marks are only available with visible workings.

• Time management matters — many candidates appear to spend too long on financial statements preparation, leaving insufficient time for analysis and interpretation.

• Structure answers with clear headings (e.g., performance, position, conclusion) to ensure all requirements are addressed and marks aren't missed.

The ACCA FR Examiner's Report 2026 makes one thing clear: technical knowledge alone isn't enough. Candidates lost marks not because they didn't understand IFRS 5, IAS 37, or IFRS 16 in isolation, but because they misapplied pro-rating rules, misread scenario details, or wrote generic analysis disconnected from the case facts. The good news is that every one of these pitfalls is avoidable with deliberate practice and careful reading technique.