Cases
Practical case
Orlimont Équipements SA (fictitious entity) announced its 20X5 results on 28 February 20X6. Before authorisation for issue on 25 March, three events occur. You deal with them without further guidance.
Your assignment
Define the period, classify the events, quantify the fraud correction, its tax effect and the adjusted profit, estimate the effects to disclose, post the entries, measure their effect, draft the disclosures, spot the missing information 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.
Autonomous professional situation
As on a real engagement: no method, no checklist and no hints. You identify the issues yourself, organise the work and defend your conclusion.
Document 2
Document 4
Document 1
Document 3
Document 2
5 documents: open each one to read it.
Document 1Memo
Orlimont Équipements SA (fictitious entity). On 20 February 20X6, internal audit discovers that a buyer had advances to fictitious suppliers recorded in 20X5 for a total of 186,000, carried as assets at 31 December 20X5; the funds were embezzled and cannot be recovered. No such payment exists before March 20X5.
The figures of the documents, gathered for your work.
| Item | Value | Found in |
|---|---|---|
| Fictitious advances embezzled | €186,000.00 | |
| Date the fraud was discovered | February 20 20X6 | |
| Draft 20X5 profit | €2,050,000.00 | |
| Enacted tax rate | 25% | |
| Net deferred tax liability at 31 December 20X5 | €2,400,000.00 | |
| Reporting date | December 31 20X5 | |
| Date of authorisation for issue | March 25 20X6 | |
| Announced rate | 22% | |
| Date of the announcement | March 10 20X6 | |
| Receivable from Vellaz | €75,000.00 | |
| Credit insurance compensation | €15,000.00 | |
| Date of the flood | January 15 20X6 |
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.
Internal audit report on the fraud
Timetable, draft profit and tax
Government announcement of 10 March 20X6
Credit department note on Vellaz
Invitation to a trade fair
Organise your work freely: deal with each point, then argue your conclusion.
Task 1Analysis
Define the period and classify the three events (fraud, rate, Vellaz).
Task 2Calculation
Compute the tax effect of the fraud correction.
Part 1 · Calculation
Compute the tax effect of the fraud correction.
Result: Correction net of tax
Task 3Calculation
Determine the adjusted 20X5 profit.
Part 1 · Calculation
Determine the adjusted 20X5 profit.
Task 4Calculation
Estimate the effect of the Vellaz default to be disclosed.
Part 1 · Calculation
Estimate the effect of the Vellaz default to be disclosed.
Task 5Professional judgement
Does the announced rate change alter deferred tax at 31 December 20X5? Estimate its effect.
Part 1 · Calculation
Does the announced rate change alter deferred tax at 31 December 20X5? Estimate its effect.
Result: Estimated decrease in the deferred tax liability
Task 6Journal entries
Post the adjusting entries at 31 December 20X5.
Part 1 · Journal entry · Journal entries
Entry 1 of 2
One line = one account and one side. Add a line if the entry needs more; the balance check updates live.
Line 1
Line 2
Part 2 · Journal entry · Journal entries
Entry 2 of 2
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 7Effects on the financial statements
What is the effect of the entries on the 20X5 statements?
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 8Analysis
Draft the disclosures on the non-adjusting events and identify the missing information.
Task 9Conclusion
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 / 13).
Document this file
These working papers use the data and results of this case.
Normative references