IAS 24 · Case studies (Step 3 of 5)
Case study
Cobaltex Industrie SA (fictitious entity) closes its books on 31 December 20X5. It is controlled by Cobaltex Holding SA, holds the whole capital of Cobaltex Services SAS and has significant influence over Brisaval SA. Ms Irène Lavoie is a director and the chief executive of the entity; her spouse, Mr Paul Lavoie, is an independent consultant. Ms Lavoie also sits on the board of Ateliers Morin SARL, which has no control relationship with the entity, and the entity has bought for several years most of its materials from Metalor SA. The accounting department draws up the map of related parties before preparing the notes.
Your assignment
Identify the related parties among the entities (parent, subsidiary, associate) and then among the persons (key manager and spouse); examine the two relationships set aside (common director, dependent supplier); draw up the map (parties retained and parties excluded); record the sale of the year to the associate; present the effect on the financial statements; conclude.
Work on this file as you would in practice: read the situation, open the documents, sort the useful information, then carry out the work requested. The solution is revealed once you submit.
Fundamental level: the method, help and references are shown.
Method
File checklist
5 documents: open each one to read it.
Document 1Table
Organisation chart at 31 December 20X5: Cobaltex Holding SA controls Cobaltex Industrie SA, the entity. The entity holds the whole capital of Cobaltex Services SAS, which it controls. The entity sits on the board of Brisaval SA and takes part in its financial policy decisions: it has significant influence over it (case data, established by the facts).
The figures of the documents, gathered for your work.
| Item | Value | Found in |
|---|---|---|
| Purchases from Metalor SA in 20X5 | €400,000.00 | |
| Sale to the associate | €18,000.00 | |
| Insurance premium 20X6 | €2,400.00 |
Not every document matters: identify those that affect the accounting treatment.
Part 1 · Classification · Analysis
Sort each document: does it affect the accounting treatment?
Drag each item into its category, or tap the category under the item.
Organisation chart and holdings
Register of key managers and their relatives
Statement of other links
Sales invoice to Brisaval SA
Insurance premium
7 tasks in the order of the file. Calculations, entries and effects on the financial statements are marked; written answers are self-assessed against the solution.
Task 1Analysis
Among the parent, the subsidiary and the associate, which are related parties of the entity and why?
Set out the facts, the question raised, then your analysis.
This answer is not marked automatically: after submitting, you will compare it with the solution.
Task 2Analysis
Are Ms Lavoie and Mr Lavoie related parties? On what basis?
Set out the facts, the question raised, then your analysis.
This answer is not marked automatically: after submitting, you will compare it with the solution.
Task 3Analysis
Are Ateliers Morin SARL and Metalor SA related parties? Justify.
Set out the facts, the question raised, then your analysis.
This answer is not marked automatically: after submitting, you will compare it with the solution.
Task 4Analysis
Draw up the map: number of related parties retained and number of parties excluded.
Set out the facts, the question raised, then your analysis.
Part 1 · Calculation
Draw up the map: number of related parties retained and number of parties excluded.
Result: Parties excluded
This answer is not marked automatically: after submitting, you will compare it with the solution.
Task 5Journal entries
Record the sale of the year to the associate (illustrative entry).
Identify the accounts affected and the direction of each movement; check the balance.
Part 1 · Journal entry · Journal entries
Entry 1 of 1
One line = one account and one side. Add a line if the entry needs more; the balance check updates live.
Line 1
Line 2
Task 6Effects on the financial statements
What is the effect of the entry on the financial statements?
For each financial statement, state the line affected, the direction and the amount.
Part 1 · Classification · Analysis
State the direction of the effect on each financial statement aggregate.
Financial position (balance sheet)
Profit or loss
Other comprehensive income
Equity
Part 2 · Calculation · Analysis
Quantify the effect on the aggregates concerned.
Result: Amount of the effect — Equity
Task 7Conclusion
Write the conclusion.
Write a conclusion that cites the facts and the treatment chosen.
This answer is not marked automatically: after submitting, you will compare it with the solution.
Your working draft for this file: points noted, leads, intermediate calculations.
Saved on this device only; never graded.
Complete every item of the file to submit it (0 / 10).
Document this file
These working papers use the data and results of this case.
Normative references