IAS 16 · Workpapers (Step 4 of 5)
Workpaper assignment
- Course
- Exercises
- Case studies
- Workpapers
- Exams
Useful life and residual value
Printing press: revision of estimates
Section 1 of 8
Objective
Section brief
- What to document
- The engagement, its scope and the working mode chosen.
- Why
- A workpaper answers one precise question: framing it avoids off-topic work.
- How
- Read the objective and the assignment, then choose the mode (guided, semi-guided, professional).
- Expected result
- You know which question the workpaper must settle, and for which reporting date.
- Your role
- Preparer of the IAS 16 workpaper
- Level
- Advanced
- Estimated time
- ≈ 40 min
- Progress
- 0 / 4 steps done (review excluded)
Context
Imprimerie Lumen (a fictitious company) operates an offset press acquired on 1 January 20X1 for 900,000, depreciated on a straight-line basis over 10 years with a residual value of 50,000. It applies the cost model and its reporting date is 31 December. At the start of 20X4, the arrival of more efficient digital presses leads management to review its estimates. The financial controller passes you the file with several proposals.
Assignment
'Useful life and residual value' workpaper: annual review, assumptions and judgement documented.
Purpose of the workpaper
Review the useful life and residual value at year-end: document the factors considered, conclude on each estimate and, if revised, calculate the revised charge prospectively from the carrying amount at the date of the change. No entry is recorded here: the charge is recorded in the depreciation workpaper.
Questions of the file covered by this workpaper
- What is the nature of the revision of useful life and residual value? How is it applied?
- What information is missing to estimate the residual value, and what assumption do you make?
- Calculate the revised 20X4 charge and the effect of the change in estimate on the period.
- Assess the financial controller's four proposals, including the change in depreciation method.
Documents in the file
Open the documents to pick out the relevant information.