IAS 23 · Workpapers (Step 4 of 5)
Workpaper assignment
- Course
- Exercises
- Case studies
- Workpapers
- Exams
File of an asset financed by a specific borrowing and an asset grant: Kiln — grant as deferred income
File of a capitalised project: capitalisation of borrowing costs, suspension, placing in service and interaction with an asset grant
Section 1 of 9
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 23 workpaper
- Level
- Expert
- Estimated time
- ≈ 70 min
- Progress
- 0 / 5 steps done (review excluded)
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
File of the asset financed with a grant
Purpose of the workpaper
For the asset (one instance per presentation of the grant, then a comparison instance), enter the expenditure, the grant received, the actual borrowing costs and the investment income, then compute the eligible expenditure net of the grant, the cost of the asset, the annual depreciation and the difference in net effect on profit or loss between the two presentations. Compare the carrying amount with the recoverable amount and prepare the entries. The presentation method of the grant is a choice of the entity; no amount imposes it.
Questions of the file covered by this workpaper
- Compute the eligible expenditure of the kiln, net of the grant.
- Compute the cost of the kiln under each presentation of the grant.
- Compute the annual depreciation of the kiln under each presentation.
- Compute the difference in net effect on profit or loss between the two presentations.
- Compare the carrying amount of the kiln with its recoverable amount.
- Which presentation should be adopted for the grant of the kiln? Justify.
- Record the borrowing costs, the grant, the transfer, the depreciation and the release.
Documents in the file
Open the documents to pick out the relevant information.