Cross-IFRS · Case studies (Step 3 of 5)
Practical case
Norvalec Froid SAS, a fictitious subsidiary of the Merandel group, distributor-integrator of professional refrigeration equipment (display cabinets, refrigerated cabinets and cold rooms for bakeries, restaurants and food shops; 160 employees, single warehouse in Bernaval), IFRS financial statements, year end 31 December, amounts in euros excluding VAT.
L1 · Guided · Year N — year end 31 December N: getting to know the file
You are a financial controller in the finance department of the Merandel group. Before including Norvalec Froid's reporting package in the consolidated financial statements at 31 December N, you review its sales and inventory cycle: Norvalec buys equipment from manufacturers, resells it with or without installation, sells an extended maintenance contract, acts as a business introducer for a cold room manufacturer and resells the display cabinets of its rental fleet. The subsidiary sends you its contract portfolio, its general terms of sale, the inventory and returns statements, its year-end cut-off and its draft notes. As in real life, you get to know the file (level 1), perform the review work and calculations (level 2), propose the adjustments without the standards being announced (level 3), then settle a judgement question, prepare the summary and review the draft notes (level 4). All figures are case data; teaching assumptions and professional judgements are flagged as such, and no method used by Norvalec is presented as required by the standards. Out of scope: VAT (amounts excluding VAT), income taxes (IAS 12), the legal warranty provision (IAS 37) and impairment of receivables (IFRS 9). Teaching assumption: entries are presented in summary form.
Standards involved in the file: IFRS 15 Revenue from Contracts with Customers, IAS 2 Inventories and IAS 16 Property, Plant and Equipment. A sales and inventory cycle is reviewed first through its contracts: who promises what, when control passes, what is inventory, property, plant and equipment or a service. Read the three documents, then answer in order.
Fundamental level: the method, help and references are shown.
Method
File checklist
2 / 6 stages reached
Context · Dated fact of the file
Norvalec Froid SAS, a fictitious subsidiary of the Merandel group, distributor-integrator of professional refrigeration equipment (display cabinets, refrigerated cabinets and cold rooms for bakeries, restaurants and food shops; 160 employees, single warehouse in Bernaval), IFRS financial statements, year end 31 December, amounts in euros excluding VAT.
Initial event · L1·Year N — year end 31 December N: getting to know the file · Current stage
Standards involved in the file: IFRS 15 Revenue from Contracts with Customers, IAS 2 Inventories and IAS 16 Property, Plant and Equipment. A sales and inventory cycle is reviewed first through its contracts: who promises what, when control passes, what is inventory, property, plant and equipment or a service. Read the three documents, then answer in order.
Pieces added
New period · L2·Year N — review work on the evidence (January N+1) · Upcoming: unlocks after the current stage
New period · L3·Year N — adjustments proposed to the subsidiary (end of January N+1) · Upcoming: unlocks after the current stage
New period · L4·Year N — completion of the review before consolidation (February N+1) · Upcoming: unlocks after the current stage
Conclusion · Upcoming: unlocks after the current stage
3 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.
5 parts to answer, marked when you submit the level.
Find the useful facts in the pieces before concluding.
Part 1 · Classification · Recognition
Classify each item in the file according to the standard that governs its treatment in the review.
Old-range VX-40 display cabinets awaiting sale in the warehouse
Rental fleet display cabinets, while they are rented for events
Quiétude 3 pack sold to customers
Polarvex cold rooms: gross revenue or commission?
2-year legal conformity warranty, not sold separately
Right of return of the Partner Installers network
4 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