Cases
Practical case
The Altavia group (fictitious entities) comprises three subsidiaries: Altavia Métaux, a copper commodity broker-trader; Domaine Altavia, a vineyard that makes wine from its harvest; Altavia Machines, which builds packaging machines to order and sells standard spare parts. As head of consolidation, you are reviewing the group's inventories at 31 December 20X4 and preparing the note on inventories.
Your assignment
Classify the items reported by the subsidiaries with regard to the scope of IAS 2, assess the cost methods of Altavia Machines, record the correcting entry for the parts used for the new assembly line, calculate the amount of inventories recognised as an expense, measure the impact and prepare the content of the note. One document is not useful and one piece of information is missing.
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.
6 documents: open each one to read it.
Document 1Memo
Altavia Métaux memo: the subsidiary buys and sells copper on its own account in order to generate a profit from short-term price fluctuations; its copper inventories are measured at fair value less costs to sell, 1,200,000 at 31 December 20X4, with changes recognised in profit or loss. It also holds cash-settled forward contracts to buy copper, accounted for as derivatives under IFRS 9 (case data).
The figures of the documents, gathered for your work.
| Item | Value | Found in |
|---|---|---|
| Copper inventories at fair value less costs to sell | €1,200,000.00 | |
| 20X4 harvest measured at the point of harvest under IAS 41 | €150,000.00 | |
| Work in progress on the Lenoir order | €420,000.00 | |
| Parts fitted on the new assembly line | €85,000.00 | |
| Opening inventories | €2,400,000.00 | |
| Costs capitalised in inventories during the year | €9,600,000.00 | |
| Closing inventories per the trial balance | €2,785,000.00 | |
| Materials and supplies per the trial balance | €985,000.00 | |
| Work in progress | €650,000.00 | |
| Finished goods | €1,150,000.00 | |
| Unallocated production overheads | €120,000.00 | |
| Abnormal production costs | €35,000.00 | |
| Amount recognised as an expense per the trial balance | €9,370,000.00 | |
| Inventories pledged as security | €300,000.00 | |
| Value of the vineyard land | €2,500,000.00 |
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.
Altavia Métaux memo
Domaine Altavia memo
Altavia Machines memo
Consolidated inventory data
Bank loan agreement
Land valuation report
Organise your work freely: deal with each point, then argue your conclusion.
Task 1Analysis
How do you classify each item with regard to the scope of IAS 2?
Part 1 · Calculation
How do you classify each item with regard to the scope of IAS 2?
Task 2Professional judgement
Are the cost methods of Altavia Machines appropriate?
Task 3Journal entries
Which entry do you record for the parts fitted on the assembly line?
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 4Calculation
Calculate the corrected closing inventories, the cost of inventories sold and the amount of inventories recognised as an expense.
Part 1 · Calculation
Calculate the corrected closing inventories, the cost of inventories sold and the amount of inventories recognised as an expense.
Result: Amount of inventories measured at cost recognised as an expense (excluding Altavia Métaux copper)
Task 5Effects on the financial statements
What is the impact of the entry on the financial 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
Notes
Task 6Analysis
Which information do you present in the note on inventories?
Part 1 · Calculation
Which information do you present in the note on inventories?
Task 7Missing information
Which information is missing to finalise the note?
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 / 11).
Document this file
These working papers use the data and results of this case.
Normative references