IAS 10 · Case studies (Step 3 of 5)
Case study
Version of this content
IAS 10 Events after the Reporting Period — wording before IFRS 18Applicable today
Applies to annual periods beginning before January 1, 2027.
Filatures de Combreval SA (fictitious entity) suffers, after its 20X5 reporting date, a fire at its weaving plant and then decides to discontinue that business. You assess the consequences for the 20X5 statements, with little guidance.
Your assignment
Qualify the events, estimate the effect of the fire, conclude on going concern, deal with the lawyer's letter, state when and how the destruction will be recognised, measure the effect, list the disclosures 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.
Advanced level: no help, the work is grouped by kind.
5 documents: open each one to read it.
Document 1Memo
Filatures de Combreval SA (fictitious entity) runs two businesses: spinning (70% of revenue, profitable) and weaving. On 14 February 20X6, a fire destroys the weaving plant, whose carrying amount at 31 December 20X5 was 1,450,000. The insurer has accepted the claim and offers compensation of 900,000.
The figures of the documents, gathered for your work.
| Item | Value | Found in |
|---|---|---|
| Carrying amount of the weaving plant | €1,450,000.00 | |
| Compensation offered by the insurer | €900,000.00 | |
| Date of the fire | February 14 20X6 | |
| Confirmed credit lines | €2,000,000.00 | |
| Forecast cash needs | €700,000.00 | |
| Forecast horizon | 18 months | |
| Claim by the former employees | €240,000.00 |
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.
Loss report
Minutes of the board meeting of 3 March 20X6
Bank's letter of 8 March 20X6
Lawyer's letter on the employment dispute
Cotton index
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
Are the fire and the decision to discontinue adjusting events for the 20X5 statements?
Task 2Calculation
Estimate the financial effect of the fire to be disclosed.
Part 1 · Calculation
Estimate the financial effect of the fire to be disclosed.
Task 3Professional judgement
Can the 20X5 statements be prepared on a going concern basis?
Part 1 · Calculation
Can the 20X5 statements be prepared on a going concern basis?
Task 4Analysis
What should be done with the lawyer's letter?
Task 5Journal entries
At what date and with which entry will the destruction of the plant be recognised?
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 6Effects on the financial statements
What is the effect of this entry, and on which period?
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 7Analysis
What must be disclosed in the 20X5 statements?
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 / 11).
Document this file
These working papers use the data and results of this case.
Normative references