Cases
Practical case
Verrerie d'Aubrecy SA (fictitious entity) finds, through a count at 31 December 20X4, moulds that were scrapped but are still carried as assets, without being able to date the scrapping. You prepare the correction in the 20X5 statements.
Your assignment
Qualify the difference, assess impracticability and the earliest practicable period, estimate the value of the D moulds without hindsight, compute the adjustment and restated equity, post the entries, measure their effect, specify the disclosures and 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.
6 documents: open each one to read it.
Document 1Table
Verrerie d'Aubrecy SA (fictitious entity) carried out a full count of its moulds at 31 December 20X4, when migrating to new software. Moulds on the register but not found, scrapped at an unknown date without derecognition: family A 92,000, family B 61,000, family C 33,000 (carrying amounts at 31 December 20X4). Family D moulds, carrying amount 40,000, held by a subcontractor in difficulty.
The figures of the documents, gathered for your work.
| Item | Value | Found in |
|---|---|---|
| Moulds not found, family A | €92,000.00 | |
| Moulds not found, family B | €61,000.00 | |
| Moulds not found, family C | €33,000.00 | |
| Carrying amount of family D moulds | €40,000.00 | |
| Scenario returned intact (value) | €40,000.00 | |
| Probability returned intact | 50% | |
| Scenario returned damaged (value) | €16,000.00 | |
| Probability returned damaged | 30% | |
| Scenario lost (value) | €0.00 | |
| Probability lost | 20% | |
| Reported retained earnings at 1 January 20X5 | €3,120,000.00 |
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.
Physical count of moulds at 31 December 20X4
Memo on the searches carried out
Subcontractor's statement (February 20X5)
Liquidator's letter (September 20X5)
Published equity and tax
Energy supply contract
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
Qualify the difference and state the correction principle.
Task 2Professional judgement
Is restating 20X4 impracticable? From which date is the error corrected?
Task 3Calculation
Estimate the value of the D moulds at 31 December 20X4 with the information of the time only.
Part 1 · Calculation
Estimate the value of the D moulds at 31 December 20X4 with the information of the time only.
Task 4Calculation
Compute the adjustment at 1 January 20X5.
Part 1 · Calculation
Compute the adjustment at 1 January 20X5.
Result: Adjustment of balances at 1 January 20X5
Task 5Calculation
Determine restated retained earnings at 1 January 20X5.
Part 1 · Calculation
Determine restated retained earnings at 1 January 20X5.
Task 6Journal entries
Post the correction entry and the entry called for by the liquidator's letter.
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 7Effects on the financial statements
What is the effect of these entries?
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 8Analysis
What must be disclosed about impracticability?
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