Skip to main content
IFRS Academy

CERTYNEX IFRS ACADEMY

My account — Professional

Search the Academy

Home
My learning path
Exercises & quizzes
Cases
Workpapers
Exams
My progress

Cases

Practical case

Practical caseIAS 1L3 · Advanced

Profit or loss and other comprehensive income, changes in equity and notes: policies, judgments and estimates

8 documents10 tasks≈ 90 min
0 / 12 items completed
Standards
IAS 1 — Presentation of Financial Statements
Assistance levelNo help · reduced assistance
  • Method: withdrawn
  • Checklist: withdrawn
  • Hints: withdrawn
  • Step-by-step work: shown

Case brief

Situation

Halvier SA (fictitious entity), an industrial trading group, closes its accounts on 31 December 20X6. You prepare the statements of performance and of equity and the plan of the notes: minimum line items, other comprehensive income, changes in equity, accounting policy information, judgments and estimates. 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

Identify the minimum line items of the statement of profit or loss; analyse expenses by function and by nature; compute the subtotal of other comprehensive income that will be reclassified and total comprehensive income; record the reclassification to profit or loss; reconcile closing equity; judge the accounting policy information, then the judgments and estimates to disclose; present the effect of the reclassification 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.

Advanced level: no help, the work is grouped by kind.

Documents

File documents

8 documents: open each one to read it.

Document 1Memo

Group profile and case conventions

Halvier SA (fictitious entity) trades industrial equipment and closes its accounts on 31 December 20X6; its functional currency is the euro. Case conventions: amounts in EUR; other comprehensive income is given net of tax; case convention (pedagogical assumption, not attributed to the standard): expenses are presented by function and analysed by nature in the notes; the entry is illustrative. 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
Revenue€15,000,000.00
Operating expenses by function€12,860,000.00
Finance costs€410,000.00
Share of the result of the associate€130,000.00
Income tax expense€520,000.00
Result of discontinued operations€140,000.00
Profit for the period€1,480,000.00
Revaluation surplus of a building€320,000.00
Remeasurement loss of the defined benefit plan€60,000.00
Net total of the items not reclassified€260,000.00
Hedge gain of the period€125,000.00
Reclassification adjustment to profit or loss€35,000.00
Negative translation difference€40,000.00
Opening equity€9,200,000.00
Share issues€500,000.00
Dividends declared€600,000.00
Closing equity per the accounting records€10,890,000.00
Paragraphs of the proposed note12 units
Paragraphs on choices specific to the entity3 units
Voting rights held in Norvik45%
Carrying amount of the unit€8,000,000.00
Recoverable amount of the unit€8,350,000.00
Recoverable amount with a rate one point higher€7,900,000.00
Total expenses by function€12,860,000.00
Total expenses by nature€12,860,000.00
Audit software quote€14,500.00

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 sort8

  • Group profile and case conventions

  • Profit or loss items of 20X6

  • Other comprehensive income of 20X6

  • Changes in equity of 20X6

  • Proposed note on accounting policies

  • Judgments and estimates of management

  • Expenses of 20X6 by function and by nature

  • Quote for audit software

Relevant to the treatment0

    No effect0

      Questions

      Work programme

      10 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 1Analysis

        Which minimum line items must the statement of profit or loss present and what is profit?

      2. Task 2Analysis

        Reconcile the analysis of expenses by function and by nature.

      3. Task 3Calculation

        Compute the subtotal of other comprehensive income that will be reclassified.

        Calculator

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

        Part 1 · Calculation

        Compute the subtotal of other comprehensive income that will be reclassified.

        1. €

        Checks

        • 0 / 1 step entered
        • Amounts readable

      4. Task 4Calculation

        Compute total comprehensive income.

        Calculator

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

        Part 1 · Calculation

        Compute total comprehensive income.

        1. €

        Checks

        • 0 / 1 step entered
        • Amounts readable

      5. Task 5Journal entries

        Record the reclassification of the hedge gain to profit or loss.

        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

      6. Task 6Calculation

        Reconcile closing equity.

        Calculator

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

        Part 1 · Calculation

        Reconcile closing equity.

        1. €

        Checks

        • 0 / 1 step entered
        • Amounts readable

      7. Task 7Professional judgement

        Which accounting policy information is material?

      8. Task 8Professional judgement

        Which judgments and estimation assumptions must be disclosed?

      9. Task 9Effects on the financial statements

        What is the effect of the reclassification 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. €
        2. €

        Checks

        • 0 / 2 steps entered
        • Amounts readable

        Result: Amount of the effect — Other comprehensive income

      10. Task 10Conclusion

        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 / 12).

      Document this file

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

      Normative references

      • IAS 1 §82
      • IAS 1 §82A
      • IAS 1 §117