Cross-IFRS · Case studies (Step 3 of 5)
Practical case
Velquier Agroéquipements SA, a fictitious medium-sized company (480 employees) that designs, manufactures and sells solar irrigation pumps and provides their remote monitoring, IFRS financial statements, year end 31 December, amounts in euros excluding VAT unless stated otherwise.
L1 · Guided · Year N — year end at 31 December N
You join the finance department of Velquier Agroéquipements as the person in charge of the closing file. In N, the company launches a new business: a production line for PS-20 solar pumps, an internally developed remote monitoring software tool (Irriscope) and a warehouse leased for the business. Each level is a year end, with several events of different kinds that you must identify, link to the applicable standard, quantify and record: year end N (level 1), year end N+1 (level 2), events of N+2 (level 3), then the impairment test, the review of the notes and the judgement memo for the N+2 year end (level 4). The effects of one year carry over to the next: carrying amounts, depreciation and amortisation, write-downs and reversals, contract balances, lease liability. Six standards are involved: IAS 16, IAS 38, IAS 36, IFRS 16, IAS 2 and IFRS 15; they are only announced at level 1. All figures are case data; teaching assumptions and professional judgements are flagged as such, and no method chosen by Velquier is presented as required by a standard. Teaching assumption: amounts rounded to the euro, summary entries, tax effects ignored.
Standards involved: IAS 16 Property, Plant and Equipment, IAS 2 Inventories, IAS 38 Intangible Assets, IAS 36 Impairment of Assets, IFRS 16 Leases and IFRS 15 Revenue from Contracts with Customers. For this first year end, each event is described in the documents: link it to its standard, then quantify it. The amounts obtained will be used in the following year ends.
Fundamental level: the method, help and references are shown.
Method
File checklist
2 / 6 stages reached
Context · Dated fact of the file
Velquier Agroéquipements SA, a fictitious medium-sized company (480 employees) that designs, manufactures and sells solar irrigation pumps and provides their remote monitoring, IFRS financial statements, year end 31 December, amounts in euros excluding VAT unless stated otherwise.
Initial event · L1·Year N — year end at 31 December N · Current stage
Standards involved: IAS 16 Property, Plant and Equipment, IAS 2 Inventories, IAS 38 Intangible Assets, IAS 36 Impairment of Assets, IFRS 16 Leases and IFRS 15 Revenue from Contracts with Customers. For this first year end, each event is described in the documents: link it to its standard, then quantify it. The amounts obtained will be used in the following year ends.
Pieces added
New period · L2·Year N+1 — year end at 31 December N+1 · Upcoming: unlocks after the current stage
New period · L3·Year N+2 — events of the year (before the impairment test) · Upcoming: unlocks after the current stage
New period · L4·Year N+2 — impairment test, notes and judgement memo at 31 December N+2 · Upcoming: unlocks after the current stage
Conclusion · Upcoming: unlocks after the current stage
2 documents to work from at this level.
Document 1Supporting document
First level: all the data is in the brief and the pieces of this level.
7 parts to answer, marked when you submit the level.
Find the useful facts in the pieces before concluding.
Part 1 · Classification · Recognition
Link each event of year N to the standard that governs it.
Initial cost of the PS line
Unit cost of the pumps produced and unallocated fixed overheads
Expenditure on the Irriscope project
Annual test of Irriscope, not yet brought into use
Warehouse leased for 5 years
Deliveries of pumps to distributors
Collection of the Talmonde order before delivery
6 more questions will appear once the current question is complete.
Your working draft for this file: points noted, leads, intermediate calculations.
Saved on this device only; never graded.
Answer every part to submit the level and see the conclusion.
Normative references