Cases
Practical case
Groupe Solenne SA (fictitious entity) presents consolidated financial statements in euros and accumulates the translation differences of its foreign subsidiaries in a translation reserve. In 20X6 it sells 60 % of the share capital of Vistula Systems Sp. z o.o. (fictitious entity), 80 % held, and loses control while retaining 20 %. It also sells 30 % of the share capital of Caledonia Packaging Ltd (fictitious entity), 100 % held, without losing control. Finally, the functional currency of Zandia Retail SA (fictitious entity) became that of a hyperinflationary economy during the year. The consolidation team must deal with the translation reserve of each subsidiary.
Your assignment
Characterise each of the three situations as regards disposal; compute the share of the cumulative difference of Vistula belonging to non-controlling interests and the amount reclassified to profit or loss, then record the allocation, the reclassification and the derecognition of the non-controlling interests share; assess the scope of the partial disposal of Caledonia, compute the proportionate share reattributed and record it; state what happens to the cumulative differences of Zandia; check the roll-forward of the reserve; present the effect on the financial statements; conclude, dealing with the missing information through a documented assumption.
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 1Table
Schedule of cumulative translation differences at the time of the transactions (EUR): Vistula 200,000, credit, at 100 %; non-controlling interests of Vistula: 20 %; Caledonia 90,000, credit; Zandia 30,000, credit, accumulated before its functional currency became hyperinflationary.
The figures of the documents, gathered for your work.
| Item | Value | Found in |
|---|---|---|
| Cumulative difference of Vistula | €200,000.00 | |
| Non-controlling interests of Vistula (in %) | 20% | |
| Cumulative difference of Caledonia | €90,000.00 | |
| Cumulative difference of Zandia | €30,000.00 | |
| Percentage of Caledonia sold (in %) | 30% | |
| Opening translation reserve | €500,000.00 | |
| Translation difference of the year | €50,000.00 | |
| Translation reserve expected (check) | €323,000.00 | |
| Training budget | €8,000.00 |
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.
Schedule of cumulative differences
Vistula disposal agreement
Caledonia partial disposal agreement
Note on Zandia
Roll-forward of the translation reserve
Training budget
Organise your work freely: deal with each point, then argue your conclusion.
Task 1Analysis
For Vistula, Caledonia and Zandia, is the situation a disposal, a partial disposal or neither?
Task 2Calculation
Compute the share of the cumulative difference of Vistula belonging to non-controlling interests.
Part 1 · Calculation
Compute the share of the cumulative difference of Vistula belonging to non-controlling interests.
Task 3Journal entries
Record the allocation of that share.
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
Compute the amount reclassified to profit or loss on loss of control.
Part 1 · Calculation
Compute the amount reclassified to profit or loss on loss of control.
Task 5Journal entries
Record the reclassification.
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 6Journal entries
Record the derecognition of the non-controlling interests share.
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 7Professional judgement
Is the sale of 30 % of Caledonia a partial disposal? And what happens to the cumulative differences of Zandia? Justify.
Task 8Calculation
Compute the share of the cumulative difference of Caledonia to reattribute.
Part 1 · Calculation
Compute the share of the cumulative difference of Caledonia to reattribute.
Task 9Journal entries
Record the reattribution.
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 10Calculation
Check the roll-forward of the translation reserve.
Part 1 · Calculation
Check the roll-forward of the translation reserve.
Task 11Effects on the financial statements
What is the effect of the entries of the case on the consolidated financial statements, only the derecognition of the non-controlling interests share being illustrated and the rest of the deconsolidation being out of scope?
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 12Conclusion
Write the conclusion, documented assumption included.
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 / 14).
Document this file
These working papers use the data and results of this case.
Normative references