Note: provisions and contingencies: Morvessan patent claim

Context

The Quentaro group (fictitious entities) manufactures and installs fuel storage equipment. You are in charge of reviewing provisions and contingencies at 31 December 20X4, before the financial statements are authorised on 25 February 20X5. The additions and utilisations of the year and the unwinding of the discount have been recognised during the year; the closing adjustments and the note remain to be finalised.

Assignment

Note on provisions and contingencies workpaper (group note and two contingencies).

Purpose of the workpaper

Starting from the classification grid (“Recognition analysis of provisions and contingencies”) and the roll-forwards (“Provisions roll-forward”), define the classes, check the status of contingencies at the reporting date, assess the extent of the disclosure (impracticability, serious prejudice) and draft the note on provisions, contingent liabilities and contingent assets.

Questions of the file covered by this workpaper

• Prepare the movement schedule by class and reconcile it with the general ledger.
• Classify the contingencies and determine the amounts to be disclosed.
• Determine the extent of the disclosures and answer the chief financial officer's proposals.

• ScheduleProvisions trial balance at 31 December 20X4Open
• MemoQuality department memoOpen
• ContractSettlement agreement with Coradine ÉnergieOpen
• DocumentFile on the Belvaux depotOpen
• MemoTechnical department memo on the restorationOpen
• MemoLawyers' letter on contingenciesOpen
• MemoChief financial officer's proposalsOpen
• ScheduleGroup sales budgetOpen