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IAS 34Workpapers (Step 4 of 5)

Workpaper assignment

Step 4 of 5
Mission · workpaperWorkpaper · IAS 34L3 · Advanced

Documents

Company profile and case conventions

Memo

Company profile and case conventions

Norvane SA (fictitious entity) makes household appliances; it closes its accounts on 31 December and publishes reports for the first three quarters; its functional currency is the euro. Case conventions: amounts in EUR; results are pre-tax results; case convention (pedagogical assumption, not attributed to the standard): management uses an internal threshold of 4% of the pre-tax profit of the period to judge that an effect is significant; the entry is illustrative and uses a generic provision expense account and a generic provision account; whether the change in policy is voluntary belongs to the IAS 8 course.

Bridge between year-to-date and period: seasonal revenues, uneven costs, change in accounting policy and change in estimate in the final interim period: Spare parts

Change in accounting policy and change in estimate: restatement of interim periods, significance and information in the annual notes

7 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 34 workpaper
Level
Advanced
Estimated time
≈ 75 min
Progress
0 / 3 steps done (review excluded)

Context

Norvane SA (fictitious entity), a maker of household appliances, closes its accounts on 31 December and publishes reports for the first, second and third quarters, with no separate report for the fourth. On 1 September 20X6, it decides to change the cost formula of its finished goods inventories. You prepare the third-quarter report, which restates the two previous quarters, then the annual closing, in which an estimate of a warranty provision changes significantly in the fourth quarter.

Assignment

Restatement of the change in policy and effect of the change in estimate

Purpose of the workpaper

Record the year-to-date amounts and the published amounts of the previous periods, the seasonal or uneven nature of the revenues and costs, the effect of a change in accounting policy and the feasibility of restating it, then the revised annual amount of an estimate. Reconcile the year-to-date amount and the period, assess the treatment of uneven revenues and costs (neither anticipated nor deferred unless the same treatment would be appropriate at the annual closing), compute the restated amount or judge prospective application, and prepare the information for the annual notes. The facts are case data; each conclusion remains a supported judgment.

Questions of the file covered by this workpaper

  • Is the change in cost formula restated for finished goods and for spare parts?
  • Compute the restated result of the first quarter.
  • Compute the restated result of the second quarter.
  • Compute the effect of the change in estimate of the provision in the fourth quarter.

Documents in the file

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