CA Final Integrated Business Solutions MCQs

Case study MCQs for Paper 6: one company per case, questions from every subject.

4 full-length tests. Each has 20 questions for 40 marks in 60 minutes. MCQ 1 is free.

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Try 3 questions from MCQ 1

They follow the law as at AY 2026-27 (Finance Act 2025); GST and Customs as at 30.04.2025. Work each one out, then open the answer to see why every option is right or wrong.

Konkan Cold Chain Private Limited

Konkan Cold Chain Private Limited (KCCPL) is an unlisted private company at Ratnagiri, Maharashtra. It set up and began operating a cold chain facility on 1 September 2025. The facility is new; nothing has been transferred to it from any existing business.

CAPITAL EXPENDITURE

Capital expenditure on the facility during the year was Rs. 14.50 crore, made up of land Rs. 3.00 crore, the cold store building Rs. 6.50 crore, refrigeration and handling plant Rs. 4.60 crore, and Rs. 0.40 crore paid for the goodwill attached to a distribution route acquired from a retiring operator. Included in the cost of the refrigeration plant is Rs. 12 lakh paid to a contractor in cash in a single day. The company has not opted for section 115BAA and pays tax under the regular provisions.

STORAGE SERVICES

The facility stores goods for four classes of customer. It stores fresh fruits and vegetables for farmer producer organisations. It stores frozen ready-to-eat vegetarian meals for a packaged foods brand. It stores green tea leaves brought in directly from an estate in the Nilgiris before they go for processing. It stores processed and retail-packed tea for a national tea retailer. The company charges a monthly storage fee in each case and wants to know on which of them GST is payable.

LEASES

The company leases twelve reefer trucks for a fixed term of ten months with no option to purchase, and expects to renew them each year. It leases a fleet of tablet computers for its loading supervisors. It leases eight delivery cars for its area managers. It has also taken a warehouse at Panvel on a nine-year lease, half of which it has sublet to a third party for the whole of the lease term. The finance controller wishes to apply the recognition exemptions in Ind AS 116 wherever they are available.

AUDIT

The turnover of the company for the financial year 2025-26 is Rs. 46 crore. Its aggregate borrowings from banks and financial institutions touched Rs. 31 crore in November 2025, though they stood at Rs. 18 crore on 31 March 2026. It is neither a one person company nor a small company. The statutory auditor is settling the form of the auditor's report.

COMPETITIVE POSITION

The board is divided on strategy. One group wants to compete on price, running the largest and cheapest cold store on the Konkan coast. Another wants to build a validated pharmaceutical-grade cold chain for a small number of customers who will pay a premium for unbroken temperature records. A third suggests doing a little of both.

Question 1, 2 marks

Must the auditor of Konkan Cold Chain Private Limited report on the adequacy and operating effectiveness of internal financial controls with reference to financial statements?

  1. Yes. The exemption needs turnover below Rs. 50 crore and borrowings below Rs. 25 crore at any point in the year, and borrowings touched Rs. 31 crore in November 2025.

    Correct answer

    Correct - the auditor must report.

  2. No. The borrowings stood at Rs. 18 crore on 31 March 2026, which is below Rs. 25 crore, and the position as at the end of the reporting period is what the exemption is tested against.

    Wrong. The test is the position at any point during the financial year.

  3. Yes, but only because the company is neither a one person company nor a small company, the turnover and borrowing tests being available only to those two descriptions of company.

    Wrong. The turnover and borrowing route is a separate limb of the exemption.

  4. No. The turnover of Rs. 46 crore is below Rs. 50 crore, and a private company that is under the turnover limit is outside the requirement whatever its borrowings may have been during the year.

    Wrong. The turnover and borrowing conditions are cumulative, not alternative.

Show answer
Why

The auditor's report must state whether the company has adequate internal financial controls with reference to financial statements in place and the operating effectiveness of such controls. That clause does not apply to a private company which is a one person company or a small company, or which has turnover of less than Rs. 50 crore as per the latest audited financial statement and which has aggregate borrowings from banks or financial institutions or any body corporate of less than Rs. 25 crore at any point of time during the financial year. Both limbs of the second description must be satisfied. The turnover test is met, but borrowings reached Rs. 31 crore during the year, and the test is applied to the highest point in the year and not to the closing figure, so the exemption is lost and the auditor must report.

Reference: Section 143(3)(i) of the Companies Act, 2013 and the proviso thereto; Auditing Study Material Module 1, Chapter 7.

Question 2, 2 marks

What deduction is available to Konkan Cold Chain Private Limited under section 35AD for the assessment year 2026-27?

  1. Rs. 14.50 crore, the whole of the capital expenditure incurred during the year on setting up and operating the cold chain facility being allowable in the year in which operations commence.

    Wrong. Land, goodwill and the cash payment are all excluded.

  2. Rs. 11.10 crore, the cost of the land and the amount paid for goodwill being outside the section, the payment made in cash to the contractor remaining part of the cost of the plant.

    Wrong. The Rs. 12 lakh paid in cash in a single day is not eligible.

  3. Rs. 7.50 crore, only the building and the land on which the cold store stands qualifying, plant and machinery being left to the ordinary provisions governing depreciation on a block of assets.

    Wrong. Plant qualifies and land does not; the position is the other way about.

  4. Rs. 10.98 crore, the cost of the land, the amount paid for goodwill and the Rs. 12 lakh paid to the contractor in cash all being excluded from the qualifying capital expenditure.

    Correct answer

    Correct - Rs. 10.98 crore.

Show answer
Why

A deduction of 100% of the capital expenditure incurred wholly and exclusively for a specified business is allowed, and setting up and operating a cold chain facility is a specified business where operations commence on or after 1 April 2009. Expenditure on the acquisition of land, goodwill or a financial instrument is not eligible, so Rs. 3.00 crore and Rs. 0.40 crore fall out. Any expenditure for which payment or the aggregate of payments made to a person in a day exceeds Rs. 10,000 otherwise than by account payee cheque or draft or a prescribed electronic mode is also not eligible, so the Rs. 12 lakh paid in cash falls out. What remains is Rs. 6.50 crore plus Rs. 4.60 crore less Rs. 0.12 crore, that is Rs. 10.98 crore. Had the company opted for section 115BAA the deduction would not have been available at all.

Reference: Section 35AD of the Income-tax Act, 1961; Direct Tax Study Material Module 1, Chapter 3.

Question 3, 2 marks

Consider the following statements about the recognition exemptions the finance controller wishes to apply.
(i) The ten-month lease of the reefer trucks is a short-term lease, there being no purchase option, and if the exemption is taken it must be taken for the whole class of underlying asset.
(ii) The election for leases of low-value assets is made lease by lease and is assessed on an absolute basis, irrespective of whether those leases are material to the company.
(iii) The eight delivery cars qualify as leases of low-value assets because each car, taken by itself, is immaterial to a company of this size.
(iv) The head lease of the Panvel warehouse cannot be treated as a lease of a low-value asset because the company has sublet part of it.
Which of these are correct?

  1. (i), (ii) and (iii)

    Wrong. Statement (iii) is included; a new car is typically not of low value.

  2. (ii), (iii) and (iv)

    Wrong. Statement (iii) is included, and it omits the short-term lease in statement (i).

  3. (i), (ii) and (iv)

    Correct answer

    Correct - (i), (ii) and (iv).

  4. (i), (iii) and (iv)

    Wrong. Statement (iii) is included, and it omits the low-value election in statement (ii).

Show answer
Why

A short-term lease is one that at the commencement date has a lease term of twelve months or less and contains no option to purchase the underlying asset; the election is made by class of underlying asset, so it must be applied to all leases of that class. The low-value election is made on a lease-by-lease basis, is assessed on an absolute basis by reference to the value of the asset when new, and is unaffected by the size, nature or circumstances of the lessee, so it applies whether or not the leases are material. A lease of cars does not qualify, because a new car is typically not of low value; that is why statement (iii) fails. Where a lessee subleases, or expects to sublease, an asset, the head lease does not qualify as a lease of a low-value asset.

Reference: Ind AS 116, Leases; Financial Reporting Study Material Module 2, Chapter 5 Unit 8.

That is the review you get on every question after a full test, with your marks broken down by topic, weakest first, so you know what to revise next.

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What the IBS tests cover

Paper 6 gives you five case studies and asks you to answer four. Each carries five MCQs worth 2 marks, so a candidate attempts 40 marks of MCQs, and the questions under one case can come from any subject in the course. These tests reproduce that: four case studies, twenty questions, sixty minutes.

The hard part of IBS is not any one subject. It is reading one company's story and seeing that it raises a deduction, an audit reporting duty and an Ind AS election all at once. Each case here is written so that its questions are ones a person advising that company would actually have to answer.

Questions use the styles the paper uses: computations, statements (i) to (iv) where you pick the correct combination, and single best answers. They draw on direct and indirect tax, auditing, financial reporting, financial management and strategy.

The questions are new, written from the Acts, the Standards and the study material, and are not reprints of ICAI papers.

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