Specific borrowing inclusion file

Context

Hélios Matériaux SA (fictitious entity) builds in 20X5 two qualifying assets: a kiln, financed by a specific loan of 1,500,000 EUR and by an equipment grant of 300,000 EUR, with an interruption of two months, and a warehouse, financed by the general borrowings. The file takes the two assets through to the financial statements of 20X5 and 20X6 (cumulative effects), with the documents, the judgements, the open points and the review. Teaching simulation: the review trail of the file (preparation, reviewer notes and final sign-off) is simulated for demonstration purposes; it is neither a real review nor a validation of the content.

Assignment

Specific borrowing file

Purpose of the workpaper

For each borrowing (one instance per borrowing), describe the loan and the asset, state whether a qualifying asset exists, enter the principal, the rate for the period (annual effective rate multiplied by the fraction of the period) and the unspent funds temporarily invested, then compute the actual costs, the investment income, the eligible costs and the costs to be expensed. The effective rate is a datum of the file (the effective interest method of IFRS 9 is not covered here).

Questions of the file covered by this workpaper

• Compute the actual borrowing costs of the inclusion period of the kiln.
• Compute the investment income on the temporary investment.
• Compute the eligible borrowing costs of the kiln.
• Record the borrowing costs, the grant, the transfer, the depreciation and the release.

• MemoEngagement letterOpen
• ContractSpecific loan of the kilnOpen
• MinutesSite log of the kilnOpen
• ScheduleExpenditure, grant and recoverable amount of the kilnOpen
• ScheduleGeneral borrowings and expenditure on the warehouseOpen
• ExtractReply from the technical departmentOpen
• MemoInsurance contract of the kilnOpen