IAS 36 · Case studies (Step 3 of 5)
Practical case
Kestrane Mobility SA group, a fictitious electric bicycle manufacturer (480 employees), IFRS consolidated financial statements, year end 31 December.
L1 · Guided · Year N (year of the acquisition)
On 1 January N, Kestrane Mobility acquires 100% of Velorah Cargo SAS, a manufacturer of electric cargo bikes sold to local authorities and urban delivery companies. The business combination gives rise to goodwill of EUR 600,000 in the consolidated financial statements. You follow the "Urban Cargo" cash-generating unit (CGU) over three years: the annual test of year N with no loss, an impairment loss in N+1 after the loss of a major contract, then a partial reversal in N+2 when the business recovers. All figures are case data; teaching assumptions and professional judgements are flagged as such. Measuring the goodwill at the acquisition date is outside the scope of the case: its amount is given.
Standard involved: IAS 36 Impairment of Assets (scope, indications and annual tests, allocation of goodwill to CGUs, recoverable amount, disclosures). For its first year end after the acquisition, Kestrane must organise its impairment tests. Read the three documents, then answer the questions in order: each question prepares the next one.
Fundamental level: the method, help and references are shown.
Method
File checklist
2 / 6 stages reached
Context · Dated fact of the file
Kestrane Mobility SA group, a fictitious electric bicycle manufacturer (480 employees), IFRS consolidated financial statements, year end 31 December.
Initial event · L1·Year N (year of the acquisition) · Current stage
Standard involved: IAS 36 Impairment of Assets (scope, indications and annual tests, allocation of goodwill to CGUs, recoverable amount, disclosures). For its first year end after the acquisition, Kestrane must organise its impairment tests. Read the three documents, then answer the questions in order: each question prepares the next one.
Pieces added
New period · L2·Year N+1 closing · Upcoming: unlocks after the current stage
New period · L3·Year N+1 closing (continued) · Upcoming: unlocks after the current stage
New period · L4·Year N+2 · Upcoming: unlocks after the current stage
Conclusion · Upcoming: unlocks after the current stage
3 documents to work from at this level.
Document 1Supporting document
First level: all the data is in the brief and the pieces of this level.
5 parts to answer, marked when you submit the level.
Find the useful facts in the pieces before concluding.
Part 1 · Classification · Recognition
Classify each item of the consolidated statement of financial position at 31 December N according to the IAS 36 treatment.
Velorah goodwill
KestraneTrack application, not yet available for use
Assembly line
Fleet management software in use
Bicycle inventories
Deferred tax assets
Trade receivables
4 more questions will appear once the current question is complete.
Your working draft for this file: points noted, leads, intermediate calculations.
Saved on this device only; never graded.
Answer every part to submit the level and see the conclusion.
Normative references