Cases
Practical case
Aquilon Industries SA (fictitious entity) closes its books on 31 December 20X6. On 30 June 20X6, it classifies its packaging division as held for sale (the criteria are met, case data); the division is sold in two lots before the closing date. The group must be measured, its loss allocated, the disposals recorded and the discontinued operation presented with its comparatives.
Your assignment
Justify that the division is a component and a discontinued operation; deal with the missing information; compute the loss of the group and its allocation (goodwill first); compute the gain and the loss on disposal of the two lots; compute the post-tax result of the period and of the comparative, then the single amount; record the loss and the two disposals (case data); present the effect, the analysis and the comparatives, then 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.
5 documents: open each one to read it.
Document 1Memo
Board note of 30 June 20X6: the packaging division operates its own plants, with separate management and financial information, and its cash flows can be distinguished from the rest of the group; it represents one of the group's three lines of business. The board adopts a single disposal plan, carried out in two lots: lot A (plants) and lot B (brand and customer relationships), sold to two separate buyers. No liability is transferred with the lots.
The figures of the documents, gathered for your work.
| Item | Value | Found in |
|---|---|---|
| Goodwill of the division | €40,000.00 | |
| Property, plant and equipment of the division | €300,000.00 | |
| Intangible assets of the division | €60,000.00 | |
| Net fair value of the group | €336,000.00 | |
| Revenue of the division in 20X6 | €1,200,000.00 | |
| Expenses of the division in 20X6 | €1,050,000.00 | |
| Tax of the division in 20X6 | €45,000.00 | |
| Revenue of the division in 20X5 | €1,500,000.00 | |
| Expenses of the division in 20X5 | €1,380,000.00 | |
| Tax of the division in 20X5 | €36,000.00 | |
| Price of lot A | €300,000.00 | |
| Costs to sell of lot A | €8,000.00 | |
| Net cash received for lot A | €292,000.00 | |
| Price of lot B | €50,000.00 | |
| Costs to sell of lot B | €3,000.00 | |
| Net cash received for lot B | €47,000.00 | |
| Audit fees 20X6 | €90,000.00 |
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.
Board note
Carrying amounts and fair value of the group
Income statement of the division
Deeds of disposal
Audit fees
Organise your work freely: deal with each point, then argue your conclusion.
Task 1Analysis
Is the division a component, and which characteristics distinguish it from the rest of the entity?
Task 2Professional judgement
Is the division a discontinued operation? Justify, without a numerical threshold.
Task 3Missing information
What information is missing to determine the single amount?
Task 4Calculation
Compute the loss of the group, allocate it (goodwill first) and determine the carrying amounts after the loss.
Part 1 · Calculation
Compute the loss of the group, allocate it (goodwill first) and determine the carrying amounts after the loss.
Result: Carrying amount of intangible assets after the loss
Task 5Calculation
Compute the gain and the loss on disposal of the two lots.
Part 1 · Calculation
Compute the gain and the loss on disposal of the two lots.
Result: Net result of the disposal of the two lots
Task 6Calculation
Compute the post-tax result of the division for 20X6 and for 20X5.
Part 1 · Calculation
Compute the post-tax result of the division for 20X6 and for 20X5.
Result: Post-tax result of the division in 20X5
Task 7Calculation
Compute the single amount for 20X6 and that of the 20X5 comparative.
Part 1 · Calculation
Compute the single amount for 20X6 and that of the 20X5 comparative.
Result: Single amount of the restated 20X5 comparative
Task 8Journal entries
Record the loss of the group and the two disposals.
Part 1 · Journal entry · Journal entries
Entry 1 of 3
One line = one account and one side. Add a line if the entry needs more; the balance check updates live.
Line 1
Line 2
Line 3
Part 2 · Journal entry · Journal entries
Entry 2 of 3
One line = one account and one side. Add a line if the entry needs more; the balance check updates live.
Line 1
Line 2
Line 3
Part 3 · Journal entry · Journal entries
Entry 3 of 3
One line = one account and one side. Add a line if the entry needs more; the balance check updates live.
Line 1
Line 2
Line 3
Task 9Effects on the financial statements
What is their 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 10Analysis
How should the single amount, its analysis and the comparatives be presented?
Task 11Conclusion
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 / 15).
Document this file
These working papers use the data and results of this case.
Normative references