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Practical caseIFRS 12L2 · Intermediate

Subsidiary with material non-controlling interests: disclosures per subsidiary, basis of the summarised information, restrictions, materiality and information on associates

6 documents10 tasks≈ 75 min
0 / 13 items completed
Standards
IFRS 12 — Disclosure of Interests in Other Entities
Assistance levelHelp on demand · assistance on request
  • Method: on request
  • Checklist: on request
  • Hints: withdrawn
  • Step-by-step work: shown

Case brief

Situation

Argane Group SA (fictitious entity) holds 60 % of Brevane SA; third parties hold 40 %. It also holds 52 % of the voting rights of Cantal Holding, 30 % of an associate, 50 % of a joint venture and several small subsidiaries. You prepare the notes on subsidiaries for 20X6.

Your assignment

Decide whether the non-controlling interests of Brevane are material; compute the profit allocated to them and their accumulated balance; determine the revenue to present in the summarised information; assess the restrictions; state the effect of holding 52 % of Cantal; specify the disclosure on the associate and the joint venture; record the dividend to third parties, present its 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.

Intermediate level: help remains available, on demand.

Method

  1. Read the brief and the assignment.
  2. Open each document and spot the relevant data.
  3. Carry out the work in the suggested order.
  4. Submit, then read the conclusion and the model answer.

File checklist

  • Open each piece (0 / 6 consulted) · to do
  • Sort the information in the pieces · to do
  • Carry out the work (0 / 13) · to do
  • Submit the file, then assess yourself · to do

Documents

File documents

6 documents: open each one to read it.

Document 1Memo

Group profile and case conventions

Argane Group SA (fictitious entity) closes its consolidated accounts on 31 December 20X6. Case conventions: amounts in EUR; case convention (pedagogical assumption, not attributed to IFRS 12): the profit of Brevane is presented before eliminations, the share of third parties follows the percentage held and no other comprehensive income is to be allocated; the non-controlling interests of Brevane are significant for Argane's consolidated statements (case assumption: the consolidated totals are not given); the dividend is paid in cash; the entry is illustrative.

Data

Key data from the documents

The figures of the documents, gathered for your work.

ItemValueFound in
Profit of Brevane€900,000.00
Share of third parties in Brevane40%
Opening balance of the non-controlling interests€2,100,000.00
Dividends declared by Brevane€500,000.00
Dividends paid to third parties€200,000.00
Closing balance reported€2,260,000.00
Revenue with parties outside the group€3,000,000.00
Revenue with the other group entities€1,200,000.00
Voting rights of Argane in Cantal52%
Share of Argane in Hesper30%
Share of Argane in Idalis50%
Agency fees€85,000.00

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 sort6

  • Group profile and case conventions

  • Brevane SA: accounts and non-controlling interests

  • Loan agreement of Brevane

  • Cantal Holding, Hesper and Idalis

  • Management note on the level of detail

  • Note on the sale of an office building

Relevant to the treatment0

    No effect0

      Questions

      Work programme

      10 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.

      1. Task 1Analysis

        Are the non-controlling interests of Brevane material, and on what basis should this be assessed?

      2. Task 2Calculation

        Compute the profit allocated to the non-controlling interests of Brevane.

        Calculator

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

        Part 1 · Calculation

        Compute the profit allocated to the non-controlling interests of Brevane.

        1. €

        Checks

        • 0 / 1 step entered
        • Amounts readable

      3. Task 3Calculation

        Compute the accumulated closing balance of the non-controlling interests.

        Calculator

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

        Part 1 · Calculation

        Compute the accumulated closing balance of the non-controlling interests.

        1. €

        Checks

        • 0 / 1 step entered
        • Amounts readable

      4. Task 4Analysis

        Which revenue should be presented in the summarised information of Brevane, and before or after intragroup eliminations?

        Calculator

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

        Part 1 · Calculation

        Which revenue should be presented in the summarised information of Brevane, and before or after intragroup eliminations?

        1. €

        Checks

        • 0 / 1 step entered
        • Amounts readable

      5. Task 5Professional judgement

        Is the loan clause of Brevane a significant restriction to describe, and what should be said about it?

      6. Task 6Professional judgement

        Cantal Holding: what conclusion on control with 52 % of the voting rights, and must it be explained?

      7. Task 7Analysis

        Hesper and Idalis: how should the summarised information be provided, and does a local constraint relieve from the individual information?

      8. Task 8Journal entries

        Record the dividend paid to the non-controlling interests of Brevane.

        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

      9. Task 9Effects on the financial statements

        What is the effect of the entry on the consolidated 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.

      Workspace

      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 / 13).

      Document this file

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

      Normative references

      • IFRS 12 §4
      • IFRS 12 §9
      • IFRS 12 §12
      • IFRS 12 §B10
      • IFRS 12 §B11
      • IFRS 12 §13
      • IFRS 12 §B12
      • IFRS 12 §21