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Practical caseIAS 24L4 · Expert

Group file: close family, entities controlled by a manager, post-employment plan, management entity, arm's length, aggregation and public fund

7 documents10 tasks≈ 100 min
0 / 15 items completed
Standards
IAS 24 — Related Party Disclosures
Assistance levelFree workspace · autonomous situation
  • Method: withdrawn
  • Checklist: withdrawn
  • Hints: withdrawn
  • Step-by-step work: withdrawn

Case brief

Situation

Valmora Matériaux SA (fictitious entity) closes its books on 31 December 20X6. Its chief executive, Mr Marc Bastide, controls two companies that work with the entity, Bastide Immobilier SARL (offices leased) and Bastide Transports SARL (transport). His father, Mr Lucien Bastide, is consulted by him on major decisions; the sister of the chief financial officer, Ms Hélène Roux, has no business or financial link with him. The chief financial officer is provided by Conseil Financier Altair SAS. The employees have a post-employment plan, Valmora Prévoyance, and the Regional Fund Valdor, a public fund, sits on the board and has significant influence over the entity. The person in charge of the file must settle several judgements before the note.

Your assignment

Assess whether Mr Lucien Bastide and Ms Roux are close family members to retain; examine the control of Bastide Immobilier SARL and Bastide Transports SARL by the chief executive, the plan, the management entity and the public fund; draw up the map of parties retained and excluded; state the amount incurred with the management entity; compute the total of the transport invoices and record it; assess the arm's length statement on the rent and the aggregation; compute the sales with the fund and its entities and judge the extent of disclosure; present the effect; 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.

  • Organise the work
  • Document each point
  • Argue the conclusion

Documents

File documents

7 documents: open each one to read it.

Document 1Table

Links identified

Links identified: Mr Marc Bastide, chief executive of the entity, controls Bastide Immobilier SARL, which leases the offices of the entity, and Bastide Transports SARL, which provides it with transport services. Valmora Prévoyance is the post-employment benefit plan for the employees of the entity. Conseil Financier Altair SAS provides the entity with the services of its chief financial officer. The Regional Fund Valdor, a public fund, sits on the board and takes part in the financial policy decisions: it has significant influence over the entity (case data).

Data

Key data from the documents

The figures of the documents, gathered for your work.

ItemValueFound in
Annual rent of the offices€96,000.00
Contributions to the post-employment plan€210,000.00
Fees of the management entity€180,000.00
Transport invoice A€28,000.00
Transport invoice B€26,000.00
Total sales of 20X6€1,500,000.00
Proportion made with the fund and its entities (in %)20%
Insurance premium 20X7€2,400.00

Sorting the information

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.

To sort7

  • Links identified

  • Facts about relatives

  • Contracts and plan

  • Invoices of Bastide Transports SARL

  • Sales of 20X6

  • Internal analysis of the rent

  • Insurance premium

Relevant to the treatment0

    No effect0

      Workspace

      Work programme

      Organise your work freely: deal with each point, then argue your conclusion.

      1. Task 1Professional judgement

        Are Mr Lucien Bastide and Ms Roux close family members to retain? Justify each case.

      2. Task 2Professional judgement

        Are Bastide Immobilier SARL, Bastide Transports SARL, the plan, the management entity and the fund related parties? On what substance?

      3. Task 3Analysis

        Draw up the map: number of related parties retained and of parties excluded.

        Calculator

        Click in an answer field to be able to insert the result.

        Part 1 · Calculation

        Draw up the map: number of related parties retained and of parties excluded.

        1. units
        2. units

        Checks

        • 0 / 2 steps entered
        • Amounts readable

        Result: Parties excluded

      4. Task 4Analysis

        What amount to disclose for the management entity services?

        Calculator

        Click in an answer field to be able to insert the result.

        Part 1 · Calculation

        What amount to disclose for the management entity services?

        1. €

        Checks

        • 0 / 1 step entered
        • Amounts readable

      5. Task 5Calculation

        Compute the total of the transport invoices of Bastide Transports SARL.

        Calculator

        Click in an answer field to be able to insert the result.

        Part 1 · Calculation

        Compute the total of the transport invoices of Bastide Transports SARL.

        1. €

        Checks

        • 0 / 1 step entered
        • Amounts readable

      6. Task 6Journal entries

        Record the transport services received.

        Calculator

        Click in an answer field to be able to insert the result.

        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.

        1. Line 1

        2. Line 2

        TotalsDebit0Credit0

      7. Task 7Professional judgement

        Can it be stated that the rent is on arm's length terms, and may the transport invoices and the rent be aggregated?

      8. Task 8Professional judgement

        Compute the sales made with the fund and its entities and judge the extent of disclosure.

        Calculator

        Click in an answer field to be able to insert the result.

        Part 1 · Calculation

        Compute the sales made with the fund and its entities and judge the extent of disclosure.

        1. €

        Checks

        • 0 / 1 step entered
        • Amounts readable

      9. Task 9Effects 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.

        1. Financial position (balance sheet)

        2. Profit or loss

        3. Other comprehensive income

        4. Equity

        Calculator

        Click in an answer field to be able to insert the result.

        Part 2 · Calculation · Analysis

        Quantify the effect on the aggregates concerned.

        1. €
        2. €

        Checks

        • 0 / 2 steps entered
        • Amounts readable

        Result: Amount of the effect — Equity

      10. Task 10Conclusion

        Write the conclusion of the file.

      Your working draft for this file: points noted, leads, intermediate calculations.

      Saved on this device only; never graded.

      Conclusion

      Submission and solution

      Complete every item of the file to submit it (0 / 15).

      Document this file

      These working papers use the data and results of this case.

      Normative references

      • IAS 24 §9
      • IAS 24 §10
      • IAS 24 §17A
      • IAS 24 §27