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Practical caseIFRS 18L4 · Expert

Transition to IFRS 18: restated comparative, reconciliation, cash flow statement, earnings per share and IAS 8

8 documents12 tasks≈ 150 min
0 / 13 items completed
Standards
IFRS 18 — Presentation and Disclosure in Financial Statements
Assistance levelFree workspace · autonomous situation
  • Method: withdrawn
  • Checklist: withdrawn
  • Hints: withdrawn
  • Step-by-step work: withdrawn

Case brief

Situation

Lorvane SA (fictitious entity), an industrial group, applies IFRS 18 for the first time to its period beginning on 1 January 2027 and restates the 2026 comparative period, presented under IAS 1. You prepare the transition note: date and European adoption, restated comparative, difference in operating profit, reconciliation, starting point of the cash flow statement, classification of interest and dividends paid, per-share amounts and links with IAS 8.

Your assignment

State the application date of IFRS 18, early application and European adoption; say how the comparative is restated; state which statements change in structure; record the reclassification of the unwinding in the restated comparative and compute the difference in operating profit; describe the reconciliation; compute the operating cash flow from operating profit and compare it with the old method; say where to classify interest and dividends paid; describe the link with IAS 33 and IAS 8 without duplicating; present the effect of the entry and 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.

Autonomous professional situation

As on a real engagement: no method, no checklist and no hints. You identify the issues yourself, organise the work and defend your conclusion.

  • Organise the work
  • Document each point
  • Argue the conclusion

Documents

File documents

8 documents: open each one to read it.

Document 1Memo

Group profile and case conventions

Lorvane SA (fictitious entity) makes industrial components; its 2027 period begins on 1 January 2027 and its comparative period is 2026, presented under IAS 1; 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 unwinding is the only difference in classification of the comparative; the entry is illustrative. The content of IAS 7, IAS 33 and IAS 8 is not duplicated.

Data

Key data from the documents

The figures of the documents, gathered for your work.

ItemValueFound in
Operating result presented under IAS 1€4,820,000.00
Finance income€60,000.00
Finance costs€640,000.00
Profit before income taxes€4,240,000.00
Profit for 2026€3,310,000.00
Unwinding included in other expenses€150,000.00
Restated operating profit€4,970,000.00
Restated financing expenses€790,000.00
Depreciation€980,000.00
Increase in working capital€410,000.00
Operating cash flow under the old method€5,540,000.00
Interest paid€640,000.00
Dividends paid€700,000.00
Renovation invoice€64,000.00

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 sort8

  • Group profile and case conventions

  • Transition note: date, adoption and application

  • 2026 statement of profit or loss under IAS 1

  • Restated 2026 comparative under IFRS 18

  • 2026 cash flow statement data

  • Management request: supplementary per-share amount

  • IAS 1 requirements transferred to IAS 8

  • Invoice for office renovation

Relevant to the treatment0

    No effect0

      Workspace

      Work programme

      Organise your work freely: deal with each point, then argue your conclusion.

      1. Task 1Analysis

        From when does IFRS 18 apply, is early application permitted and what about European adoption?

      2. Task 2Analysis

        How is the 2026 comparative treated on first application?

      3. Task 3Analysis

        Which statements change in structure?

      4. Task 4Journal entries

        Record the reclassification of the unwinding in the restated comparative.

        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

      5. Task 5Calculation

        Compute the transition difference of operating profit.

        Calculator

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

        Part 1 · Calculation

        Compute the transition difference of operating profit.

        1. €

        Checks

        • 0 / 1 step entered
        • Amounts readable

      6. Task 6Analysis

        Describe the reconciliation of the comparative.

      7. Task 7Calculation

        Compute the operating cash flow from operating profit.

        Calculator

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

        Part 1 · Calculation

        Compute the operating cash flow from operating profit.

        1. €

        Checks

        • 0 / 1 step entered
        • Amounts readable

      8. Task 8Analysis

        Where to classify interest and dividends paid in the cash flow statement?

      9. Task 9Analysis

        Where to find the detail of the calculation of the supplementary per-share amount requested by management?

      10. Task 10Analysis

        Where do the IAS 1 requirements on fair presentation, going concern, accrual basis and accounting policies go?

      11. Task 11Effects on the financial statements

        What is the effect of the reclassification on the 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

      12. Task 12Conclusion

        Write the conclusion.

      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.