Cases
Practical case
Mécanor SA (fictitious entity) manufactures industrial equipment and accounts for its presses under the revaluation model. At 31 December 20X5, the fixed assets committee must measure a working hydraulic press located in the Lyon plant at fair value, and hesitates between two used-equipment markets.
Your assignment
Identify the reference market; compute the net amount received in each market and spot the most advantageous market; justify the market retained; compute the fair value of the press, treating transaction and transport costs correctly; record the revaluation and present its 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.
Intermediate level: help remains available, on demand.
Method
File checklist
4 documents: open each one to read it.
Document 1Table
Lyon used-equipment dealers' market: 120 transactions per year for this type of press; the entity has access to it and usually sells its machines there. Price observed for the press: 1,250,000 EUR; intermediary commission: 25,000 EUR; cost of transporting the press to this market: 40,000 EUR.
The figures of the documents, gathered for your work.
| Item | Value | Found in |
|---|---|---|
| Transactions per year in market A | 120 units | |
| Price observed in market A | €1,250,000.00 | |
| Intermediary commission of market A | €25,000.00 | |
| Transport costs to market A | €40,000.00 | |
| Transactions per year in market B | 35 units | |
| Price observed in market B | €1,320,000.00 | |
| Intermediary commission of market B | €30,000.00 | |
| Transport costs to market B | €70,000.00 | |
| Carrying amount before revaluation | €1,120,000.00 | |
| Revaluation difference proposed by the committee | €90,000.00 | |
| Budget 20X6 for maintenance | €85,000.00 |
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.
Lyon market
Rotterdam market
Fixed assets committee
Maintenance budget
8 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 market is the principal market for the press?
Task 2Calculation
Compute the net amount received in each market.
Part 1 · Calculation
Compute the net amount received in each market.
Result: Net amount received in market B
Task 3Calculation
Which market maximises the net amount received?
Part 1 · Calculation
Which market maximises the net amount received?
Task 4Professional judgement
Which market underlies the measurement? Justify.
Task 5Calculation
Compute the fair value of the press.
Part 1 · Calculation
Compute the fair value of the press.
Task 6Journal entries
Record the revaluation.
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 7Effects on the financial statements
What is its 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 8Conclusion
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 / 10).
Document this file
These working papers use the data and results of this case.
Normative references