Cases
Practical case
Sorelvia Énergie SA (fictitious entity) closes its books on 31 December 20X6. Its key management personnel comprises three salaried managers (chief executive, chief financial officer, chief operating officer). The investment director is made available to it by Gestion Altimar SAS, a separate advisory company that invoices its services to the entity. A loan was granted to the chief financial officer. The accounting department prepares the note on key management compensation.
Your assignment
Identify the key management personnel and the relationship with Gestion Altimar SAS; compute the total compensation by category; assess the treatment of the services of the management entity and state the amount to present; identify the loan to the chief financial officer as another transaction with key management; record the short-term expense payable; present the effect on the financial statements; 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.
Advanced level: no help, the work is grouped by kind.
5 documents: open each one to read it.
Document 1Minutes
List approved by the board at 31 December 20X6: the chief executive, the chief financial officer and the chief operating officer are employees of the entity; they have the authority and responsibility for planning, directing and controlling its activities. The investment director has the same authority; he is an employee of Gestion Altimar SAS, which makes him available to the entity.
The figures of the documents, gathered for your work.
| Item | Value | Found in |
|---|---|---|
| Short-term benefits | €640,000.00 | |
| Post-employment benefits | €85,000.00 | |
| Other long-term benefits | €30,000.00 | |
| Termination benefits | €45,000.00 | |
| Share-based payment | €120,000.00 | |
| Amount invoiced for the investment director services | €150,000.00 | |
| Closing balance of the loan | €60,000.00 | |
| Insurance premium 20X7 | €2,400.00 |
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.
List of managers
Compensation of the three employed managers
Contract with Gestion Altimar SAS
Loan to the chief financial officer
Insurance premium
7 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
Who is a member of the key management personnel and what is the relationship with Gestion Altimar SAS?
Task 2Calculation
Compute the total compensation of the three employed managers as the sum of the five categories.
Part 1 · Calculation
Compute the total compensation of the three employed managers as the sum of the five categories.
Task 3Professional judgement
How should the 150,000 EUR invoiced by the management entity be treated and what must be disclosed?
Task 4Analysis
Is the loan to the chief financial officer to be disclosed and what must be said about it?
Part 1 · Calculation
Is the loan to the chief financial officer to be disclosed and what must be said about it?
Task 5Journal entries
Record the short-term compensation expense payable.
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 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
Part 2 · Calculation · Analysis
Quantify the effect on the aggregates concerned.
Result: Amount of the effect — Equity
Task 7Conclusion
Write the conclusion: content of the note.
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