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Practical case

Practical caseIAS 1L2 · Intermediate

Materiality, aggregation, offsetting, comparative information and frequency of reporting

7 documents8 tasks≈ 75 min
0 / 11 items completed
Standards
IAS 1 — Presentation of Financial Statements
Assistance levelHelp on demand · assistance on request
  • Method: on request
  • Checklist: on request
  • Hints: withdrawn
  • Step-by-step work: shown

Case brief

Situation

Brenmar SA (fictitious entity), a distribution company, closes its accounts on 31 December 20X6. You prepare the presentation of the financial statements: aggregation of expenses, balances with a customer and with a bank, comparatives of a new line and frequency of publication of a complete set. This standard applies until IFRS 18 applies (annual periods beginning on or after 1 January 2027); the IFRS 18 course presents what changes.

Your assignment

Judge the aggregation of the small expenses and the separate presentation of the restructuring costs; say whether the balances with Valdis can be offset and record the gross presentation entry; compute the net amount presented for Kelmar Bank; assess the presentation of the 20X5 comparatives and the proposal to publish a complete set every 2 years; present the effect of the entry on the financial statements; conclude.

Work on this file as you would in practice: read the situation, open the documents, sort the useful information, then carry out the work requested. The solution is revealed once you submit.

Intermediate level: help remains available, on demand.

Method

  1. Read the brief and the assignment.
  2. Open each document and spot the relevant data.
  3. Carry out the work in the suggested order.
  4. Submit, then read the conclusion and the model answer.

File checklist

  • Open each piece (0 / 7 consulted) · to do
  • Sort the information in the pieces · to do
  • Carry out the work (0 / 11) · to do
  • Submit the file, then assess yourself · to do

Documents

File documents

7 documents: open each one to read it.

Document 1Memo

Company profile and case conventions

Brenmar SA (fictitious entity) distributes equipment products and closes its accounts on 31 December 20X6; its functional currency is the euro. Case conventions: amounts in EUR; case convention (pedagogical assumption, not attributed to the standard): legal counsel has confirmed that the offsetting conditions of the financial instruments standard are met for Kelmar Bank; the entry is illustrative and uses generic accounts. This standard applies until IFRS 18 applies (annual periods beginning on or after 1 January 2027).

Data

Key data from the documents

The figures of the documents, gathered for your work.

ItemValueFound in
Total operating expenses€8,420,000.00
Total of the four small expenses€11,900.00
Restructuring costs€640,000.00
Receivable from Valdis€240,000.00
Payable to Valdis€180,000.00
Net balance in the ledger€60,000.00
Demand deposit€520,000.00
Overdraft€310,000.00
Proposed interval between two complete sets2 years
Other receivables published at 31 December 20X5€910,000.00
Contract assets included in 20X5€330,000.00
Other receivables of 20X5 after separate presentation€580,000.00
Carrier invoice€7,800.00

Sorting the information

Not every document matters: identify those that affect the accounting treatment.

Part 1 · Classification · Analysis

Sort each document: does it affect the accounting treatment?

Drag each item into its category, or tap the category under the item.

To sort7

  • Company profile and case conventions

  • Operating expenses of 20X6

  • Valdis customer and supplier account

  • Kelmar Bank: balances and cash management agreement

  • Board of directors: frequency of publication

  • New line "contract assets" and comparative

  • Invoice of a carrier

Relevant to the treatment0

    No effect0

      Questions

      Work programme

      8 tasks in the order of the file. Calculations, entries and effects on the financial statements are marked; written answers are self-assessed against the solution.

      1. Task 1Professional judgement

        Which expenses to aggregate and which to present separately?

        Calculator

        Click in an answer field to be able to insert the result.

        Part 1 · Calculation

        Which expenses to aggregate and which to present separately?

        1. €

        Checks

        • 0 / 1 step entered
        • Amounts readable

      2. Task 2Professional judgement

        Can the balances with Valdis be offset?

      3. Task 3Calculation

        Kelmar Bank: compute the net amount presented.

        Calculator

        Click in an answer field to be able to insert the result.

        Part 1 · Calculation

        Kelmar Bank: compute the net amount presented.

        1. €

        Checks

        • 0 / 1 step entered
        • Amounts readable

      4. Task 4Journal entries

        Record the gross presentation of the balances with Valdis.

        Calculator

        Click in an answer field to be able to insert the result.

        Part 1 · Journal entry · Journal entries

        Entry 1 of 1

        One line = one account and one side. Add a line if the entry needs more; the balance check updates live.

        1. Line 1

        2. Line 2

        TotalsDebit0Credit0

      5. Task 5Analysis

        How to present contract assets and the 20X5 comparative?

      6. Task 6Analysis

        Is the proposal to publish a complete set every 2 years admissible?

      7. Task 7Effects on the financial statements

        What is the effect of the entry on the financial statements?

        Part 1 · Classification · Analysis

        State the direction of the effect on each financial statement aggregate.

        1. Financial position (balance sheet)

        2. Profit or loss

        3. Other comprehensive income

        4. Equity

        Calculator

        Click in an answer field to be able to insert the result.

        Part 2 · Calculation · Analysis

        Quantify the effect on the aggregates concerned.

        1. €

        Checks

        • 0 / 1 step entered
        • Amounts readable

      8. Task 8Conclusion

        Write the conclusion.

      Workspace

      Your working draft for this file: points noted, leads, intermediate calculations.

      Saved on this device only; never graded.

      Conclusion

      Submission and solution

      Complete every item of the file to submit it (0 / 11).

      Document this file

      These working papers use the data and results of this case.

      Normative references

      • IAS 1 §29
      • IAS 1 §38
      • IAS 1 §45
      • IAS 1 §36