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IAS 32Workpapers (Step 4 of 5)

Workpaper assignment

Step 4 of 5
Mission · workpaperWorkpaper · IAS 32L2 · Intermediate

Documents

Company profile and case conventions

Memo

Company profile and case conventions

Calvire SA (fictitious entity) closes its accounts on 31 December 20X6; its functional currency is the euro. Case conventions: amounts in EUR unless otherwise stated; the terms are those of the contracts; case convention (pedagogical assumption, not attributed to IAS 32): the dollar warrants are offered to a single investor and not to all the shareholders pro rata; the contingent clause of the security is genuine; the two exchange rates are scenarios; for the entry, the euro warrants are issued without a premium and all are exercised.

Classification of an issued instrument: financial liability, equity instrument or compound instrument: Euro warrants

Instruments settled in own shares: fixed-for-fixed condition, settlement options, contingent clause and option plan within IFRS 2

6 documents7 sections to document
0 / 4 sections completed
Guided mode

Section 1 of 7

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 32 workpaper
Level
Intermediate
Estimated time
≈ 60 min
Progress
0 / 3 steps done (review excluded)

Context

Calvire SA (fictitious entity), whose functional currency is the euro, entered into several contracts on its own shares in 20X6. You prepare the classification note for these contracts at the closing date of 31 December 20X6.

Assignment

Classification of the contracts on own shares of Calvire

Purpose of the workpaper

Record the contractual terms of the instrument, the settlement clauses, the contingent events, the currency of the exercise price and, where relevant, the redemption rights of the holder. The classification rests on these terms, not on the intention of the parties or the name of the instrument; amounts and terms are case data and the classification remains a supported judgment.

Questions of the file covered by this workpaper

  • Compute the fixed amount payable on exercise of the euro warrants.
  • Compute the difference in the euro counter-value of the exercise price of the dollar warrants between the two scenarios.
  • Compute the number of shares to be delivered at the first price.
  • Compute the number of shares to be delivered at the second price.
  • Classify each of the five contracts within IAS 32 as an equity instrument or a financial liability or asset.

Documents in the file

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