Cases
Practical case
Larzac Énergie SA (fictitious entity) operates with Mervane SA, Ostrel SA and Pelvane SA, by contract and without a company, a gas pipeline whose assets, costs and output the parties share. You prepare the accounting for 20X6 of Larzac, a joint operator.
Your assignment
Qualify the arrangement and the position of Pelvane; compute the share of Larzac in the asset, the expense and the revenue from the sale of output by the joint operation, then its total revenue; set the basis of the revenue from the sale of its own output; deal with the lease liability; compute the share of Pelvane in the expense; state the standard applicable to each item; record the four entries, present their cumulative effect and conclude. One document is not 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.
Advanced level: no help, the work is grouped by kind.
5 documents: open each one to read it.
Document 1Memo
Larzac Énergie SA (fictitious entity) closes its accounts on 31 December 20X6. Case conventions: amounts in EUR; the shares of each item are those of the contract; case convention (pedagogical assumption, not attributed to IFRS 11): the joint liabilities are split on the same shares as the items they finance; the treatment of what the other parties will reimburse to Larzac under the lease is outside the scope; the entries are illustrative.
The figures of the documents, gathered for your work.
| Item | Value | Found in |
|---|---|---|
| Cost of the pipeline held jointly | €6,000,000.00 | |
| Share of Larzac in the pipeline and the output | 40% | |
| Operating expenses incurred jointly | €900,000.00 | |
| Expense key of Larzac | 45% | |
| Expense key of Pelvane | 10% | |
| Entitlement of Larzac to the output (units) | 40,000 units | |
| Units received by Larzac | 43,000 units | |
| Units delivered to the customers of Larzac | 36,000 units | |
| Selling price per unit | €25.00 | |
| Revenue from the sale of own output | €900,000.00 | |
| Direct sales of the joint operation to third parties | €1,200,000.00 | |
| Share of Larzac in these sales | 40% | |
| Compressor lease liability | €300,000.00 | |
| Staff training | €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.
Group profile and case conventions
Sorvane pipeline contract
Output and sales of the period
Compressor lease contract
Staff training invoice
15 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
What is the type of arrangement, who has joint control, and what is the position of Pelvane?
Task 2Calculation
Compute the share of Larzac in the asset held jointly.
Part 1 · Calculation
Compute the share of Larzac in the asset held jointly.
Task 3Calculation
Compute the share of Larzac in the expense incurred jointly.
Part 1 · Calculation
Compute the share of Larzac in the expense incurred jointly.
Task 4Calculation
Compute the share of Larzac in the revenue from the sale of output by the joint operation.
Part 1 · Calculation
Compute the share of Larzac in the revenue from the sale of output by the joint operation.
Task 5Professional judgement
On what basis should the revenue from the sale of Larzac’s own output be recognised: entitlement to output or transfer to customers?
Task 6Calculation
Compute the total revenue of Larzac.
Part 1 · Calculation
Compute the total revenue of Larzac.
Task 7Professional judgement
Who recognises the liability of the compressor lease, and for what amount?
Task 8Calculation
Pelvane: compute its share of the expense incurred jointly.
Part 1 · Calculation
Pelvane: compute its share of the expense incurred jointly.
Task 9Analysis
Which standard applies to each asset, liability, revenue and expense of Larzac?
Task 10Journal entries
Record the share of the asset held jointly.
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 11Journal entries
Record the share of the expense incurred jointly.
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 12Journal entries
Record the revenue from the sale of own output.
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 13Journal entries
Record the share of the revenue from the sale of output by the joint operation.
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 14Effects on the financial statements
What is the cumulative effect of the four entries 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 15Conclusion
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 / 17).
Document this file
These working papers use the data and results of this case.
Normative references