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IAS 28Workpapers (Step 4 of 5)

Workpaper assignment

Step 4 of 5
Mission · workpaperWorkpaper · IAS 28L3 · Advanced

Documents

Group profile and case conventions

Memo

Group profile and case conventions

Hexor Group SA (fictitious entity) closes its accounts on 31 December 20X6. Case conventions: amounts in EUR; values in use and fair values less costs of disposal are case data, their determination being outside the scope; case convention (pedagogical assumption, not attributed to IAS 28): the loss allowance for expected credit losses on Hexor’s loan to Rovane is nil, the order of application of IFRS 9 and IAS 28 not being detailed; the entries are illustrative.

Losses, impairment and discontinuing the equity method: cap on losses, long-term interests, test of the net investment, loss of influence, partial disposal and associate becoming a subsidiary: Sendral — net investment test

Losses beyond the interest, long-term interests, possible liability, impairment indicators and test of the net investment as a single asset

5 documents9 sections to document
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Guided mode

Section 1 of 9

Objective

In progress
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 28 workpaper
Level
Advanced
Estimated time
≈ 80 min
Progress
0 / 5 steps done (review excluded)

Context

Hexor Group SA (fictitious entity) accounts for Rovane (40 %, deeply loss-making, with a loan from Hexor) and Sendral (35 %, in difficulty) under the equity method and classifies Telmor (25 %) as held for sale. You prepare the 20X6 year-end note on losses, impairment and their disclosures.

Assignment

Rovane losses beyond the interest and impairment of Sendral

Purpose of the workpaper

List the share of losses, the carrying amount of the investment and the long-term interests that form part of the net investment, cap the losses recognised and track the unrecognised losses; test the net investment as a single asset when there is objective evidence; deal with the partial disposal (proportionate reclassification of other comprehensive income) and the loss of influence. Values in use, fair values and consideration are case data; the 2024 and 2026 proposals are not applied.

Questions of the file covered by this workpaper

  • Rovane: is the loan of 250,000 part of the net investment? Compute Hexor’s interest used to cap the losses.
  • Rovane: compute the share of losses to recognise.
  • Rovane: compute the unrecognised losses.
  • Rovane: in which order are the losses charged to the components of the interest, and must Hexor recognise a liability for the unrecognised losses?
  • Sendral: is there objective evidence of impairment of the net investment? Is the test required?
  • Sendral: determine the recoverable amount.
  • Sendral: compute the impairment loss on the net investment.
  • Rovane: record the loss charged to the investment.
  • Rovane: record the loss charged to the long-term interests.
  • Sendral: record the impairment loss.

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