Cases
Practical case
Aldrane SA (fictitious entity) closes its accounts on 31 December 20X6. You prepare the accounting for the employee benefits due at the closing date: December salaries, unused leave that can be carried forward to the next year, the annual bonus and a departure offer made at the end of the year.
Your assignment
Classify each of the four benefits; compute the accrual for the unused accumulating absences and for the bonus; conclude on the constructive obligation to pay the bonus; compute the total short-term benefit liability; record the three accruals, present the effect on the financial statements and conclude. One document is not useful.
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.
Fundamental level: the method, help and references are shown.
Method
File checklist
6 documents: open each one to read it.
Document 1Memo
Aldrane SA (fictitious entity) manufactures farm equipment; it closes its accounts on 31 December and its functional currency is the euro. Case conventions (pedagogical assumptions): amounts in EUR; all the short-term benefits below are settled within twelve months after the closing date; employer social charges and the tax effect are ignored.
The figures of the documents, gathered for your work.
| Item | Value | Found in |
|---|---|---|
| December salaries still due | €184,000.00 | |
| Days carried forward, workshop | 120 days | |
| Cost per day, workshop | €210.00 | |
| Absences carried forward, workshop | €25,200.00 | |
| Days carried forward, administration | 45 days | |
| Cost per day, administration | €260.00 | |
| Absences carried forward, administration | €11,700.00 | |
| Operating profit before the bonus | €4,250,000.00 | |
| Percentage of the bonus formula | 3% | |
| Canteen invoice | €3,400.00 |
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.
Company profile and case conventions
December 20X6 payroll
Statement of unused leave at 31 December 20X6
Minutes of the board of 15 November 20X6: annual bonus
Management note: voluntary departure offer
Canteen caterer invoice
11 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
In which category of employee benefits does each of the four benefits fall, and is the departure offer a liability at the closing date?
Set out the facts, the question raised, then your analysis.
This answer is not marked automatically: after submitting, you will compare it with the solution.
Task 2Calculation
Compute the accrual for the unused accumulating absences.
Start from the data in the pieces, set the formula, check the unit and the order of magnitude.
Part 1 · Calculation
Compute the accrual for the unused accumulating absences.
Task 3Analysis
Why do the eight days of sick leave expected at the start of 20X7 give rise to no accrual?
Set out the facts, the question raised, then your analysis.
This answer is not marked automatically: after submitting, you will compare it with the solution.
Task 4Professional judgement
Is there a constructive obligation to pay the bonus at the closing date?
Distinguish the case data, the assumption and your judgment.
This answer is not marked automatically: after submitting, you will compare it with the solution.
Task 5Calculation
Compute the bonus to be recognised.
Start from the data in the pieces, set the formula, check the unit and the order of magnitude.
Part 1 · Calculation
Compute the bonus to be recognised.
Task 6Calculation
Compute the total short-term benefit liability.
Start from the data in the pieces, set the formula, check the unit and the order of magnitude.
Part 1 · Calculation
Compute the total short-term benefit liability.
Task 7Journal entries
Record the December salaries still due.
Identify the accounts affected and the direction of each movement; check the balance.
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 8Journal entries
Record the accrual for the accumulating absences.
Identify the accounts affected and the direction of each movement; check the balance.
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 9Journal entries
Record the bonus.
Identify the accounts affected and the direction of each movement; check the balance.
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 10Effects on the financial statements
What is the effect of the three entries on the financial statements?
For each financial statement, state the line affected, the direction and the amount.
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 11Conclusion
Write the conclusion.
Write a conclusion that cites the facts and the treatment chosen.
This answer is not marked automatically: after submitting, you will compare it with the solution.
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