Cases
Practical case
Immobilière Orsay SA (fictitious entity) applies the fair value model to all its investment property. At the 31 December 20X5 year-end, it holds three properties: P1 and P2, already held at the opening date, and P3, acquired in 20X5. An independent appraiser provides the closing values.
Your assignment
Determine the amount to carry in assets for P2; compute the fair value change of P1 and P2; identify the missing information; justify the model used for P3; reconcile the carrying amount of the portfolio; record the changes (case data) and present their 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.
Advanced level: no help, the work is grouped by kind.
5 documents: open each one to read it.
Document 1Table
Property P1 (offices): opening carrying amount of 5,000,000 EUR; independent appraisal at 31 December 20X5: 5,480,000 EUR. The entity's accounting policy, applied since inception to all its investment property: fair value model.
The figures of the documents, gathered for your work.
| Item | Value | Found in |
|---|---|---|
| Opening carrying amount of P1 | €5,000,000.00 | |
| Appraisal value of P1 at the closing date | €5,480,000.00 | |
| Opening carrying amount of P2 | €3,200,000.00 | |
| Appraisal value of P2 at the closing date | €3,050,000.00 | |
| Rent-free asset recognised separately (P2) | €50,000.00 | |
| Cost of P3 acquired in 20X5 | €1,000,000.00 | |
| Appraisal value of P3 at the closing date | €1,000,000.00 | |
| Carrying amount of the portfolio at the opening date | €8,200,000.00 | |
| Carrying amount of the portfolio reported at the closing date | €9,480,000.00 | |
| Appraisal fees planned for 20X6 | €18,000.00 |
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.
Property P1
Property P2
Property P3
Portfolio register
Appraisal fees 20X6
9 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
Which model applies and where does the fair value change go?
Task 2Calculation
Compute the amount to carry in assets for P2.
Part 1 · Calculation
Compute the amount to carry in assets for P2.
Task 3Missing information
What information is missing to rely on the appraisal value of P2?
Task 4Calculation
Compute the fair value change of P1 and P2.
Part 1 · Calculation
Compute the fair value change of P1 and P2.
Result: Fair value loss of P2
Task 5Professional judgement
Is the fair value model also appropriate for P3? Justify.
Task 6Calculation
Reconcile the carrying amount of the portfolio.
Part 1 · Calculation
Reconcile the carrying amount of the portfolio.
Result: Reconciliation difference: reported value − rebuilt value
Task 7Journal entries
Record the fair value changes.
Part 1 · Journal entry · Journal entries
Entry 1 of 2
One line = one account and one side. Add a line if the entry needs more; the balance check updates live.
Line 1
Line 2
Part 2 · Journal entry · Journal entries
Entry 2 of 2
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 8Effects on the financial statements
What is their effect 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 9Conclusion
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 / 12).
Document this file
These working papers use the data and results of this case.
Normative references