IAS 37 · Workpapers (Step 4 of 5)
Workpaper assignment
- Course
- Exercises
- Case studies
- Workpapers
- Exams
Measurement of the provision: Quessandre clean-up
Professional file: review of the provisions and contingencies of an industrial group
Section 1 of 9
Objective
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 37 workpaper
- Level
- Expert
- Estimated time
- ≈ 40 min
- Progress
- 0 / 5 steps done (review excluded)
Context
The Halvoria group (fictitious entities) designs and manufactures agricultural and industrial equipment: irrigation pumps (Merquin), mechanical parts (Lunvalle Mécanique), a foundry (Vellmont), logistics (Rocbrune) and a distribution subsidiary in Spain (Junquera). You are the preparer of the group's provisions and contingencies review file at 31 December 20X5; the group financial controller is the reviewer. The financial statements will be authorised on 3 March 20X6. The ordinary movements of the year (utilisations) have already been recognised; the closing adjustments remain to be prepared.
Assignment
Measurement of the provision workpaper (Merquin, Corvella, Quessandre, Vellmont).
Purpose of the workpaper
Determine the best estimate of the expenditure (expected value, midpoint of a range or most likely outcome adjusted), justify how risks and future events are reflected, discount it at a pre-tax rate where the effect is material, then record the recognition entry.
Questions of the file covered by this workpaper
- Calculate the expected value of the Merquin warranties and of the outcomes of the Corvella dispute.
- Determine the best estimate of the Corvella dispute and the treatment of the insurer's reimbursement.
- Discount the Quessandre provision and re-estimate the Vellmont remediation.
- Record the closing entries.
Documents in the file
Open the documents to pick out the relevant information.