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Practical caseIAS 38L4 · Expert

Transferable fishing quotas revalued, then sold

4 documents9 tasks≈ 60 min
0 / 11 items completed
Standards
IAS 38 — Intangible Assets
Assistance levelFree workspace · autonomous situation
  • Method: withdrawn
  • Checklist: withdrawn
  • Hints: withdrawn
  • Step-by-step work: withdrawn

Case brief

Situation

Armement Kerlann (a fictitious fishing company) closes its accounts on 31 December. Its fishing rights form a class of intangible assets for which it has elected the revaluation model. It acquired a lot of transferable quotas, traded every week on a regional exchange, then sold it in 20X3. It also holds a non-transferable coastal fishing right. You are reviewing the entries from 20X1 to 20X3 before the 20X3 financial statements are approved.

Your assignment

Using the board decision, the table of values and the sale contract, determine how each right is measured, the revaluation changes of 20X1 and 20X2, the 20X3 gain on disposal, the entries and their impact. Not all the documents are 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.

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

4 documents: open each one to read it.

Document 1Minutes

Board decision on measuring fishing rights

Board decision: the class of fishing rights is measured using the revaluation model, based on prices on the regional quota exchange, where transactions take place every week in significant volumes. The class also includes a non-transferable coastal fishing right, acquired for 70,000, for which no market exists. Management concluded, in a separate file, that the quotas have an indefinite useful life; that point is not the subject of this case.

Data

Key data from the documents

The figures of the documents, gathered for your work.

ItemValueFound in
Cost of the non-transferable coastal fishing right€70,000.00
Acquisition cost of the quotas€300,000.00
Exchange price at 31 December 20X1€380,000.00
Exchange price at 31 December 20X2€300,000.00
Date of saleMarch 31 20X3
Selling price€345,000.00
Broker's commission€5,000.00
Rise in fuel prices8%

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 sort4

  • Board decision on measuring fishing rights

  • Table of values of the quota lot

  • Quota sale contract

  • Note on fuel prices

Relevant to the treatment0

    No effect0

      Workspace

      Work programme

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

      1. Task 1Analysis

        How is each fishing right measured after initial recognition?

      2. Task 2Calculation

        Calculate the revaluation change at 31 December 20X1 and its split between profit or loss and other comprehensive income.

        Calculator

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

        Part 1 · Calculation

        Calculate the revaluation change at 31 December 20X1 and its split between profit or loss and other comprehensive income.

        1. €

        Checks

        • 0 / 1 step entered
        • Amounts readable

      3. Task 3Calculation

        Calculate the decrease in value at 31 December 20X2 and its split between profit or loss and other comprehensive income.

        Calculator

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

        Part 1 · Calculation

        Calculate the decrease in value at 31 December 20X2 and its split between profit or loss and other comprehensive income.

        1. €

        Checks

        • 0 / 1 step entered
        • Amounts readable

      4. Task 4Calculation

        Calculate the net proceeds and the gain or loss on the sale of 31 March 20X3.

        Calculator

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

        Part 1 · Calculation

        Calculate the net proceeds and the gain or loss on the sale of 31 March 20X3.

        1. €
        2. €

        Checks

        • 0 / 2 steps entered
        • Amounts readable

        Result: Gain on disposal

      5. Task 5Journal entries

        Which entry do you record at 31 December 20X1?

        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

      6. Task 6Journal entries

        Which entry do you record at 31 December 20X2?

        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 7Journal entries

        Which entry do you record on 31 March 20X3?

        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

        3. Line 3

        TotalsDebit0Credit0

      8. Task 8Effects on the financial statements

        What is the impact of the sale on the 20X3 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. €
        3. €

        Checks

        • 0 / 3 steps entered
        • Amounts readable

        Result: Amount of the effect — Equity

      9. Task 9Conclusion

        Write the conclusion of the review.

      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 / 11).

      Document this file

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

      Normative references

      • IAS 38 §72
      • IAS 38 §75
      • IFRS 13
      • IAS 38 §81
      • IAS 38 §85
      • IAS 38 §86
      • IAS 38 §112
      • IAS 38 §113