Cases
Practical case
Ardenne Industries SA (fictitious entity), a maker of industrial pumps, prepares its 20X7 statement of profit or loss under IFRS 18, which replaces IAS 1 for annual periods beginning on or after 1 January 2027. You classify the income and expenses of the ledger into the five categories, correct a classification and compute operating profit.
Your assignment
Say what IFRS 18 replaces and from when; classify the 9 items of income and expense of the ledger into one of the five categories and support it; record the reclassification of the unwinding of discount; compute operating profit; present the effect of the reclassification 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
File checklist
6 documents: open each one to read it.
Document 1Memo
Ardenne Industries SA (fictitious entity) makes industrial pumps and closes its accounts on 31 December 20X7; its functional currency is the euro; it has no specified main business activity. Case conventions: amounts in EUR; case convention (pedagogical assumption, not attributed to the standard): the ledger amounts are reliable and the entry is illustrative.
The figures of the documents, gathered for your work.
| Item | Value | Found in |
|---|---|---|
| Revenue | €18,400,000.00 | |
| Cost of sales | €11,200,000.00 | |
| Overheads recorded | €3,100,000.00 | |
| Gain on disposal of a machine | €75,000.00 | |
| Interest on bank deposits | €90,000.00 | |
| Share of the associate | €160,000.00 | |
| Interest on the bank loan | €210,000.00 | |
| Income tax expense | €520,000.00 | |
| Result of the discontinued operation | €120,000.00 | |
| Unwinding of the decommissioning provision | €35,000.00 | |
| Machine quote | €48,000.00 |
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.
Entity profile and case conventions
Income and expenses in the 20X7 ledger
Detail of the overheads
Note on the applicable standard
Summary of the expected classification
Quote of a supplier
6 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 does IFRS 18 replace and from when does it apply?
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.
Task 2Professional judgement
Classify each of the 9 items of income and expense of the ledger into one of the five categories.
Distinguish the case data, the assumption and your judgment.
Part 1 · Calculation
Classify each of the 9 items of income and expense of the ledger into one of the five categories.
This answer is not marked automatically: after submitting, you will compare it with the solution.
Task 3Journal entries
Record the reclassification of the unwinding of the provision.
Identify the accounts affected and the direction of each movement; check the balance.
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 4Calculation
Compute operating profit after correction of the classification.
Start from the data in the pieces, set the formula, check the unit and the order of magnitude.
Part 1 · Calculation
Compute operating profit after correction of the classification.
Task 5Effects on the financial statements
What is the effect of the reclassification 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.
Financial position (balance sheet)
Profit or loss
Other comprehensive income
Equity
Task 6Conclusion
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.
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 / 8).
Document this file
These working papers use the data and results of this case.