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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.

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: Orlane — disposal of 1 September 20X7

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
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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
Expert
Estimated time
≈ 80 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

Partial disposal with influence retained, then loss of influence over Orlane

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

  • Partial disposal of 1 March 20X7: compute the other comprehensive income to reclassify to profit or loss.
  • Partial disposal: does significant influence remain? Compute the carrying amount disposed of and the gain on disposal.
  • Record the proportionate reclassification of other comprehensive income.
  • 1 September 20X7: does Valtenis lose significant influence? Determine the carrying amount at that date and the remaining other comprehensive income.
  • Loss of influence: compute the gain before and after reclassification of other comprehensive income.
  • Record the derecognition of the investment and the retained 10 % interest at fair value.
  • Record the reclassification of the remaining other comprehensive income.

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