CA Final Financial Reporting MCQs 2026: Practice Questions with Answers

CA Final Financial Reporting MCQs 2026 were included in Paper 1: Financial Reporting of the CA Final May 2026 examination. The paper was conducted on 2 May 2026 and had both MCQ and descriptive sections. The MCQ section carried 30 marks and included case-based questions covering different areas of Ind AS.

The questions tested concepts from impairment of assets, fair value measurement, disposal of subsidiaries, financial instruments, associates, business combinations, revenue recognition, earnings per share, and other areas of Financial Reporting.

The CA Final Financial Reporting May 2026 paper can be useful for understanding the type of practical situations asked in the examination. Students can use these questions to revise concepts and practise selecting the appropriate accounting treatment.

CA Final Financial Reporting MCQs 2026 Highlights

Paper 1: Financial Reporting was divided into Part I and Part II. Part I consisted of multiple-choice questions, while Part II consisted of descriptive questions.

The MCQs were presented through case scenarios as well as individual questions. The paper tested the application of Ind AS provisions to practical accounting situations.

Candidates were required to mark the answers to the MCQs on the OMR answer sheet. The instructions also stated that answers written inside the descriptive answer book would not be evaluated.

CA Final Financial Reporting MCQs Based on Case Scenarios

The May 2026 Financial Reporting paper included several case scenarios. These questions required students to identify the applicable Ind AS and apply the relevant accounting principles.

The major areas covered in the MCQ section included:

• Impairment of assets

• Investment property

• Fair value measurement

• Disposal of a subsidiary

• Financial liabilities and transaction costs

• Convertible preference shares

• Associates and equity method

• Impairment of investment in associates

• Business combinations

• Non-current assets held for sale

• Prior-period errors

• Revenue recognition

• Earnings per share

• First-time adoption of Ind AS

• Professional ethics

CA Final Financial Reporting Practice Questions PDF

Students preparing for the upcoming CA Final attempts can use the May 2026 Paper 1 question paper as a practice set. The paper contains 15 MCQs with four options each.

The questions are based on practical situations. Some require calculations, while others test the correct interpretation of Ind AS provisions.

The official answer key provided with the question paper gives the correct option for each MCQ.

Download CA Final FR Practice Questions PDF

CA Final Financial Reporting MCQs 2026 With Answers

The following questions are based on the MCQ section of the May 2026 Financial Reporting examination.

Q1. What is the correct treatment of impairment loss in respect of Aakash Ltd.'s CGUs?

A. ₹20 lakhs for CGU 1 and ₹40 lakhs for CGU 2
B. ₹24 lakhs for CGU 2
C. Assets in CGU 1 ₹4 lakhs and Corporate Office Building ₹20 lakhs
D. Assets in CGU 1 ₹20 lakhs and Corporate Office Building ₹4 lakhs

Answer: D

The case involved two cash-generating units and a corporate office building. The impairment assessment required allocation of the corporate asset to the CGUs before determining the impairment loss.

Q2. On what basis should the vacant land of Aakash Ltd. be fair valued under Ind AS 113?

A. Quoted price
B. Cost approach
C. Highest and Best Use
D. Income approach

Answer: C

The land was located in a prime commercial area and could legally be converted for commercial use. The question therefore tested the highest and best use principle under Ind AS 113.

Q3. What is the amount of Aakash Ltd.'s gain on disposal of its investment in Oil Ltd.?

A. ₹2,970 lakhs
B. ₹1,770 lakhs
C. ₹2,500 lakhs
D. ₹770 lakhs

Answer: A

The calculation considered the consideration received, net assets, non-controlling interest and the related foreign currency translation reserve.

Q4. What is the treatment of the prepayment premium and processing fee on the new loan as per Ind AS 109?

A. Both are treated as transaction costs of the new loan and included in calculating the effective interest rate.

B. The prepayment premium is recognised as part of the gain or loss on extinguishment of the old loan, while the processing fee is treated as a transaction cost of the new loan and included in the effective interest rate.

C. Both are recognised as part of the gain or loss on extinguishment of the old loan and charged to the Statement of Profit and Loss.

D. The prepayment premium is treated as a transaction cost of the new loan, while the processing fee is charged to the Statement of Profit and Loss.

Answer: B

The question tested the accounting treatment of costs associated with the extinguishment of an old financial liability and the recognition of transaction costs related to a new financial liability.

Q5. How will the convertible preference shares be classified in the financial statements of Hawk Ltd.?

A. Financial assets
B. Equity
C. Non-current liability
D. Financial liability

Answer: B

The question required assessment of the terms of the convertible preference shares and their classification under the relevant financial instrument requirements.

CA Final FR MCQs From Associates and Business Combinations

The second case scenario in the paper was based on Zest Ltd. and its investments in Sun Ltd., Large Ltd. and Sour Ltd.

The case tested the equity method, impairment of investments and the determination of consideration in a business combination.

Q6. What is the carrying value of Zest Ltd.'s investment in Sun Ltd. as on 31 March 2026?

A. ₹10,80,000
B. ₹23,75,000
C. ₹57,20,000
D. ₹60,80,000

Answer: C

Zest Ltd. acquired a 45% stake in Sun Ltd. and had significant influence over the company. The investment was measured using the equity method. The calculation considered the investor's share of profit and the relevant change in the associate's net assets.

Q7. What will be the impairment loss from Zest Ltd.'s investment in Large Ltd. for the year ended 31 March 2026?

A. ₹46,00,000
B. ₹24,94,000
C. ₹28,94,000
D. ₹49,90,000

Answer: B

The question required comparison of the carrying amount of the investment with its recoverable amount after considering the relevant accounting adjustments.

Q8. Determine the amount of consideration for the business combination involving Sour Ltd.

A. ₹192.40 lakhs
B. ₹187.60 lakhs
C. ₹200 lakhs
D. ₹194 lakhs

Answer: B

The calculation required separating amounts that form part of consideration from payments that relate to other arrangements, including transaction costs and employee-related payments.

CA Final FR Questions on Assets Held for Sale and Revenue

The third case scenario was based on ABC Ltd. It covered the proposed disposal of a fertilizer division and other accounting matters.

The questions tested Ind AS 105, Ind AS 8 and Ind AS 115.

Q9. What is the value of the Fertilizer division's goodwill after remeasurement at the date of classification?

A. ₹14.6 million
B. ₹20 million
C. Nil
D. ₹16 million

Answer: C

The question required the application of the measurement rules for a disposal group classified as held for sale. The carrying amounts of the assets and the fair value less costs to sell were relevant to the calculation.

Q10. Calculate the closing balance of the Fertilizer division's Property, Plant and Equipment at the period end.

A. ₹42 million
B. ₹34.72 million
C. ₹12 million
D. ₹30 million

Answer: D

The calculation required consideration of the classification and measurement of the disposal group under the applicable Ind AS provisions.

Q11. How should the inventory valuation error discovered on 30 April 2026 be corrected?

A. Adjust the opening balance of retained earnings for the current year and restate the comparative figures for the previous year.

B. Recognise the ₹10 lakh loss in the current year's Statement of Profit and Loss as an exceptional item.

C. Treat it as a change in accounting estimate and adjust the current year's profit.

D. No adjustment is needed because the previous year's books are already closed.

Answer: A

The error related to the previous financial year and was identified before the financial statements were approved. It therefore required treatment in accordance with the requirements for prior-period errors.

Q12. What amount of cumulative catch-up adjustment is required in the revenue of ABC Ltd.?

A. ₹2,000
B. ₹28,000
C. ₹30,000
D. ₹70,000

Answer: A

The question tested revenue recognition for a contract involving customised software and a change in the estimated hours required to complete the work.

CA Final Financial Reporting Practice Questions on EPS and Ind AS

The remaining questions covered diluted earnings per share, first-time adoption of Ind AS and professional ethics.

Q13. What is the diluted Earnings Per Share of Life Line Ltd.?

A. ₹2.325
B. ₹2.25
C. ₹2.50
D. ₹2.35

Answer: B

The calculation involved the company's profit after tax, convertible bonds and the additional ordinary shares that would arise on conversion. The applicable tax effect on interest also had to be considered while calculating diluted EPS.

Q14. XYZ Ltd. is a first-time adopter of Ind AS. How should the lawsuit settlement information be reflected in its opening Ind AS Balance Sheet?

A. Adjust the provision to ₹15 lakhs in the opening Ind AS Balance Sheet.

B. Keep the provision at ₹10 lakhs in the opening Ind AS Balance Sheet.

C. Adjust the difference of ₹5 lakhs in retained earnings.

D. Reverse the provision and recognise the actual liability of ₹15 lakhs.

Answer: B

The question considered the information available on the transition date and the subsequent settlement of the lawsuit. The correct treatment depends on whether the settlement information was available at the transition date.

Q15. Which of the following is not an example of circumstances that might create a self-interest threat for a chartered accountant?

A. The accountant does not have a motive and opportunity to manipulate price-sensitive information to gain financially.

B. The accountant holds a direct or indirect financial interest in the employing organisation that may be affected by decisions made by the accountant.

C. The accountant is eligible for a profit-related bonus that may be directly affected by decisions made by the accountant.

D. The accountant holds deferred bonus shares, rights or share options in the employing organisation whose value may be affected by decisions made by the accountant.

Answer: A

The question tested the circumstances that can create a self-interest threat. The absence of a motive and opportunity to manipulate price-sensitive information does not itself represent such a threat.

Topics Covered in CA Final FR Questions 2026

The May 2026 MCQ section covered a wide range of Financial Reporting concepts. Students preparing for the next attempt should revise both conceptual provisions and their practical application.

Important areas included:

• Ind AS 32 – Financial Instruments

• Ind AS 33 – Earnings Per Share

• Ind AS 34 – Interim Financial Reporting

• Ind AS 36 – Impairment of Assets

• Ind AS 38 – Intangible Assets

• Ind AS 103 – Business Combinations

• Ind AS 105 – Non-current Assets Held for Sale

• Ind AS 107 – Financial Instruments: Disclosures

• Ind AS 109 – Financial Instruments

• Ind AS 110 – Consolidated Financial Statements

• Ind AS 113 – Fair Value Measurement

• Ind AS 115 – Revenue from Contracts with Customers

• First-time adoption of Ind AS

• Professional ethics

Preparation Resources:

• CA Final Financial Reporting Syllabus

• CA Final Financial Reporting Concepts