Cases
Practical case
Domaine de Sarvelle SA (fictitious entity) is approving its 20X5 statements. Two batches of wine were sold after the reporting date and listed shares lost value. You determine the adjustments and the disclosures.
Your assignment
Qualify the three events, compute the net realisable values, the value of the batches and the write-down, quantify the fall in the shares, post the entry, measure its effect, draft the disclosure and 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
File checklist
Document 2
Document 2
3 documents: open each one to read it.
Document 1Table
Domaine de Sarvelle SA (fictitious entity, wine growing) held two batches of bottles at 31 December 20X5. Batch A (vintage affected by a cork defect found in November 20X5): cost 210,000, sold on 12 February 20X6 to a wine merchant for 176,000, transport and commission costs 8,800. Batch B: cost 95,000, sold on 3 March 20X6 for 120,000, costs 4,000.
The figures of the documents, gathered for your work.
| Item | Value | Found in |
|---|---|---|
| Cost of batch A | €210,000.00 | |
| Selling price of batch A | €176,000.00 | |
| Costs to sell batch A | €8,800.00 | |
| Cost of batch B | €95,000.00 | |
| Selling price of batch B | €120,000.00 | |
| Costs to sell batch B | €4,000.00 | |
| Fair value of the shares at 31 December 20X5 | €380,000.00 | |
| Fair value of the shares at 9 March 20X6 | €302,000.00 | |
| Date of the embargo announcement | January 20 20X6 | |
| Date of authorisation for issue | March 9 20X6 | |
| Materiality threshold | €50,000.00 |
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.
Wine sales after the reporting date
Statement of the listed securities portfolio
Weather bulletin
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.
Task 1Analysis
Are the sales of batches A and B and the fall in the shares adjusting events?
Task 2Calculation
Compute the net realisable value of each batch.
Part 1 · Calculation
Compute the net realisable value of each batch.
Result: Net realisable value of batch B
Task 3Calculation
Determine the value of each batch at the reporting date and the write-down.
Part 1 · Calculation
Determine the value of each batch at the reporting date and the write-down.
Result: Write-down of batch A
Task 4Calculation
Quantify the fall in the value of the shares after the reporting date.
Part 1 · Calculation
Quantify the fall in the value of the shares after the reporting date.
Task 5Journal entries
Post the adjusting entry at 31 December 20X5.
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.
Line 1
Line 2
Task 6Effects on the financial statements
What is the effect of this entry?
Part 1 · Classification · Analysis
State the direction of the effect on each financial statement aggregate.
Financial position (balance sheet)
Profit or loss
Other comprehensive income
Equity
Part 2 · Calculation · Analysis
Quantify the effect on the aggregates concerned.
Result: Amount of the effect — Equity
Task 7Analysis
Draft the disclosure of the fall in the shares.
Task 8Conclusion
Write the conclusion.
Your working draft for this file: points noted, leads, intermediate calculations.
Saved on this device only; never graded.
Complete every item of the file to submit it (0 / 10).
Document this file
These working papers use the data and results of this case.
Normative references