Cross-IFRS · Case studies (Step 3 of 5)
Practical case
Seravane Software SAS, a fictitious software publisher for water utilities (85 employees), IFRS financial statements, year end 31 December, amounts in euros.
L1 · Guided · Year N (January to May: research, then development)
Seravane Software is developing Hydrosense in-house, a leak detection platform for water networks, which it will run itself and access to which it will sell by subscription. You follow the project over three years: research, development, capitalisation criteria and cost in N; annual impairment test of an asset not yet available for use in N+1; entry into service, amortisation, arrival of a competitor, impairment and abandonment of an extension in N+2. All figures are case data; teaching assumptions and professional judgements are flagged as such. Teaching assumptions: expenditure is first recorded by nature and then transferred to the asset; discount factors are rounded to four decimals; no useful life, rate or method chosen by Seravane is required by the standards.
Standard involved: IAS 38 Intangible Assets (internally generated assets). Before measuring a cost, you must know which phase the project is in and on what date all the conditions for capitalisation are met. Read the two documents, then answer in order.
Fundamental level: the method, help and references are shown.
Method
File checklist
2 / 6 stages reached
Context · Dated fact of the file
Seravane Software SAS, a fictitious software publisher for water utilities (85 employees), IFRS financial statements, year end 31 December, amounts in euros.
Initial event · L1·Year N (January to May: research, then development) · Current stage
Standard involved: IAS 38 Intangible Assets (internally generated assets). Before measuring a cost, you must know which phase the project is in and on what date all the conditions for capitalisation are met. Read the two documents, then answer in order.
Pieces added
New period · L2·Year N (June to the year end) · Upcoming: unlocks after the current stage
New period · L3·Year N+1 · 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
2 documents to work from at this level.
Document 1Supporting document
| Period | Activity | Amount |
|---|---|---|
| January - February | review of scientific publications on acoustic leak detection and search for possible algorithmic approaches | 64,000 |
| March - April | evaluation of the approaches and final selection of the chosen algorithm | 86,000 |
| May | design, construction and testing of a prototype of the platform with the chosen algorithm | 52,000 |
| June - December | coding, integration and testing of the final platform | see level 2 |
| October - December | training of the sales staff on the future offer; pre-launch campaign | see level 2 |
First level: all the data is in the brief and the pieces of this level.
3 parts to answer, marked when you submit the level.
Find the useful facts in the pieces before concluding.
Part 1 · Classification · Recognition
Classify each activity or item of expenditure of the project according to its treatment under IAS 38.
Review of scientific publications (January - February)
Evaluation and final selection of the algorithm (March - April)
Design and testing of the prototype (May)
Coding and testing of the final platform (June - December)
Training of the sales staff on the future offer
Pre-launch campaign
2 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