Cross-IFRS · Case studies (Step 3 of 5)
Practical case
Corbelis Biométhane SAS, a fictitious company that produces biomethane from farm effluents and injects it into the gas grid (45 employees, single site at Lauzerac), IFRS financial statements, year end 31 December, amounts in euros excluding VAT.
L1 · Guided · Year N — 1 January N (commissioning of the unit)
On 1 January N, Corbelis Biométhane commissions its anaerobic digestion unit at Lauzerac (digesters, storage tanks, gas upgrading) and its grid injection station. Its administrative operating permit requires it to dismantle the digesters and the tanks and to restore the site at the end of operations. You follow the file over three years: the arising and measurement of the dismantling obligation and the cost of the unit at 1 January N; unwinding of the discount and depreciation at 31 December N; a cut in the feed-in tariff, a digestate leak and an impairment test in N+1; depreciation after impairment, a draft decree and the note in N+2. At each step, the central question is the same: which standard does what? All figures are case data; teaching assumptions and professional judgements are flagged as such, and no method, rate or useful life chosen by Corbelis is presented as required by the standards. Teaching assumptions: exact discount factor, present value rounded once to the euro; unwinding for each year equal to the opening provision × 4%, rounded to the euro; no tax effect is studied.
Standards involved: IAS 37 Provisions, Contingent Liabilities and Contingent Assets (recognition and measurement of the obligation) and IAS 16 Property, Plant and Equipment (inclusion of the initial dismantling cost in the cost of the unit). The unit has just been commissioned. Sort management’s commitments, measure the provision, choose the rate, say which standard does what and record the entry at 1 January N.
Fundamental level: the method, help and references are shown.
Method
File checklist
2 / 6 stages reached
Context · Dated fact of the file
Corbelis Biométhane SAS, a fictitious company that produces biomethane from farm effluents and injects it into the gas grid (45 employees, single site at Lauzerac), IFRS financial statements, year end 31 December, amounts in euros excluding VAT.
Initial event · L1·Year N — 1 January N (commissioning of the unit) · Current stage
Standards involved: IAS 37 Provisions, Contingent Liabilities and Contingent Assets (recognition and measurement of the obligation) and IAS 16 Property, Plant and Equipment (inclusion of the initial dismantling cost in the cost of the unit). The unit has just been commissioned. Sort management’s commitments, measure the provision, choose the rate, say which standard does what and record the entry at 1 January N.
Pieces added
New period · L2·Year N — closing at 31 December N · Upcoming: unlocks after the current stage
New period · L3·Year N+1 — closing at 31 December N+1 · Upcoming: unlocks after the current stage
New period · L4·Year N+2 — closing at 31 December N+2 · Upcoming: unlocks after the current stage
Conclusion · Upcoming: unlocks after the current stage
2 documents to work from at this level.
Document 1Supporting document
| Date | Event |
|---|---|
| March N-1 | administrative permit to operate for 10 years from commissioning; at the end of operations, the operator must dismantle the digesters and the tanks, remove the equipment and restore the soil |
| 31 December N-1 | completion of the construction of the digesters, the tanks and the upgrading unit; contractor’s final statement: 6,180,206 |
| 1 January N | commissioning of the unit and of the injection station (cost 900,000); dismantling planned on 31 December N+9 |
| Connection contract | removal of the injection station at the end of operations is the responsibility of the grid operator, at its own expense |
Corbelis has established that the criteria for including the initial estimate of the dismantling cost in the cost of the unit are met (case data). The construction cost of 6,180,206 is taken as given; how it was determined is not studied here.
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
At 1 January N, classify each commitment or plan in documents 1 and 2: a provision to recognise, or no provision.
Drag each item into its category, or tap the category under the item.
Dismantling the digesters and tanks and restoring the soil, required by the permit
Replacing the upgrading membranes in N+5
Upgraded odour treatment, required to continue operating after N+3
Removal of the injection station at the end of operations
Collection of effluents from N to N+9
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