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IAS 28Workpapers (Step 4 of 5)

Workpaper assignment

Step 4 of 5
Mission · workpaperWorkpaper · IAS 28L4 · Expert

Documents

Group profile and case conventions

Memo

Group profile and case conventions

Valtenis Group SA (fictitious entity) closes its accounts on 31 December. Case conventions: amounts in EUR; fair values are those of independent valuations (case data); case convention (pedagogical assumption, not attributed to IAS 28): the gain on the 20X6 loss of control is recognised under IFRS 10 and the retained interest was first reclassified to the investment in associate caption at its consolidated carrying amount, that entry not being requested; the associate’s adjusted profit is a case datum; the profit of January and February 20X7 is ignored (the carrying amount at 1 March 20X7 is that of the 20X6 closing); no selling costs; no tax; the entries are illustrative.

Equity method: cost, goodwill or bargain income, fair value adjustment, uniform policies, share of profit and of other comprehensive income, dividends and closing carrying amount

Loss of control with a retained associate (IFRS 10 + IAS 28 interaction): cost at fair value, equity method, partial disposal, loss of influence, associate becoming a subsidiary and proposals

6 documents9 sections to document
0 / 6 sections completed
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
Expert
Estimated time
≈ 75 min
Progress
0 / 5 steps done (review excluded)

Context

Valtenis Group SA (fictitious entity) lost control of Orlane SA on 1 July 20X6 keeping 40 %, accounted for Orlane under the equity method, then sold 10 points on 1 March 20X7 and 20 points on 1 September 20X7. You prepare the accounting note on the equity method, the reclassification of other comprehensive income and the exit.

Assignment

Orlane’s retained interest at fair value and equity method for the second half of 20X6

Purpose of the workpaper

List the cost, the share of the fair value of net assets at acquisition, the adjusted profit (uniform policies, extra depreciation of the fair value excess), other comprehensive income and dividends, then reconcile the opening carrying amount with the closing one. Percentages, fair values and lives are case data; the adjusted profit of the associate is computed by hand (no multi-line schedule is modelled).

Questions of the file covered by this workpaper

  • Orlane, 1 July 20X6: how is the retained 40 % interest treated after the loss of control? What is its cost and what part of the gain relates to remeasurement?
  • Record the retained interest brought to fair value as the cost of the associate.
  • Orlane, second half of 20X6: compute the share of profit and of other comprehensive income and the closing carrying amount.

Documents in the file

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