Skip to main content
IFRS Academy

CERTYNEX IFRS ACADEMY

My account — Professional

Search the Academy

Home
My learning path
Exercises & quizzes
Cases
Workpapers
Exams
My progress

Cases

Practical case

Practical caseIFRS 13L1 · Fundamental

Five situations: exit price, market participants and scope exclusions

6 documents5 tasks≈ 45 min
0 / 7 items completed
Standards
IFRS 13 — Fair Value Measurement
Assistance levelFull guidance · strong assistance
  • Method: shown
  • Checklist: shown
  • Hints: shown
  • Step-by-step work: shown

Case brief

Situation

Verdelys SA (fictitious entity) is a food distribution group. At the 31 December 20X5 year-end, its management controller gathers five situations for which colleagues talk about fair value; he asks you to say, for each one, whether IFRS 13 applies and, where relevant, which exit price to use.

Your assignment

For each situation: say whether IFRS 13 applies or whether the situation is excluded or unrelated to fair value; for the situations within scope, determine the exit price to use and the assumptions of market participants; record the change in fair value of the listed shares (case data: in profit or loss) and its effect on the financial statements; 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.

Fundamental level: the method, help and references are shown.

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 / 7) · to do
  • Submit the file, then assess yourself · to do

Documents

File documents

6 documents: open each one to read it.

Document 1Extract

Custodian statement

Custodian statement at 31 December 20X5: 40,000 Norvalis shares, listed on a stock exchange to which the entity has access; closing price 12 EUR; value of the position 480,000 EUR (price multiplied by the quantity, product supplied by the statement); value at the beginning of the period 450,000 EUR; change in the period 30,000 EUR. The standard that applies to these securities requires them to be measured at fair value, with the change in profit or loss (case data).

Data

Key data from the documents

The figures of the documents, gathered for your work.

ItemValueFound in
Number of shares held40,000 units
Closing price€12.00
Value of the position at the end of the period€480,000.00
Value of the position at the beginning of the period€450,000.00
Change in value in the period€30,000.00
Options granted to executives120,000 units
Annual rent€90,000.00
Lease term5 years
Cost of the inventory€210,000.00
Estimated selling price€260,000.00
Estimated costs to make the sale€20,000.00
Net realisable value€240,000.00
Price of comparable vehicles in the used-vehicle dealer market€38,000.00
Internal value in use estimated for the entity€52,000.00
Remaining use planned by the entity5 years
Budget 20X6 for transport costs€310,000.00

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

  • Custodian statement

  • Option plan for executives

  • Lease contract

  • Inventory sheet

  • Truck note

  • Budget 20X6

Relevant to the treatment0

    No effect0

      Questions

      Work programme

      5 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

        For each situation, does IFRS 13 apply, or is the situation excluded or unrelated to fair value?

        Set out the facts, the question raised, then your analysis.

        This answer is not marked automatically: after submitting, you will compare it with the solution.

      2. Task 2Analysis

        For the situations within scope, which exit price should be used and from which market participants?

        Set out the facts, the question raised, then your analysis.

        This answer is not marked automatically: after submitting, you will compare it with the solution.

      3. Task 3Journal entries

        Record the change in fair value of the shares.

        Identify the accounts affected and the direction of each movement; check the balance.

        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

      4. Task 4Effects on the financial statements

        What is its effect on the financial statements?

        For each financial statement, state the line affected, the direction and the amount.

        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

      5. Task 5Conclusion

        Write the conclusion.

        Write a conclusion that cites the facts and the treatment chosen.

        This answer is not marked automatically: after submitting, you will compare it with the solution.

      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 / 7).

      Normative references

      • IFRS 13 §5
      • IFRS 13 §6
      • IFRS 13 §9
      • IFRS 13 §24
      • IFRS 13 §22
      • IFRS 13