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IAS 38Case studies (Step 3 of 5)

Case study

Step 3 of 5
Practical caseIAS 38L2 · Intermediate

Internal development of planning software

2 documents6 tasks≈ 40 min
0 / 10 items completed
Standards
IAS 38 — Intangible Assets
Assistance levelHelp on demand · assistance on request
  • Method: on request
  • Checklist: on request
  • Hints: withdrawn
  • Step-by-step work: shown

Case brief

Situation

Logistique Ardoise (a fictitious company) is developing in-house warehouse planning software for its own use. It closes its accounts on 31 December and does not revalue its intangible assets. In 20X0, it had already expensed preliminary studies on the project. You are preparing the accounting for the project for the 20X1 financial year.

Your assignment

Using the project committee minutes and the statement of costs, analyse the project phases, determine the amount to capitalise and the research and development expense, then record the 20X1 entries.

Work on this file as you would in practice: read the situation, open the documents, sort the useful information, then carry out the work requested. The solution is revealed once you submit.

Intermediate level: help remains available, on demand.

Method

  1. Read the brief and the assignment.
  2. Open each document and spot the relevant data.
  3. Carry out the work in the suggested order.
  4. Submit, then read the conclusion and the model answer.

File checklist

  • Open each piece (0 / 2 consulted) · to do
  • Sort the information in the pieces · to do
  • Carry out the work (0 / 10) · to do
  • Submit the file, then assess yourself · to do

Events

Chronology of the file

  1. July 1 20X1Date on which all the criteria are demonstrated · Dated fact of the file

    Document 1

  2. December 31 20X1Date of completion and availability · Dated fact of the file

    Document 1

Documents

File documents

2 documents: open each one to read it.

Document 1Minutes

Project committee minutes

Project committee minutes. From January to March 20X1, the team compared several possible technical approaches (research). From April to June, it designed the architecture of the chosen software. On 1 July 20X1, the committee notes that all the development-phase criteria are demonstrated: technical feasibility established by a prototype, intention and ability to complete and use the software, documented productivity gains, budget and team allocated until completion, time tracking by project. The software is completed and available on 31 December 20X1.

Data

Key data from the documents

The figures of the documents, gathered for your work.

ItemValueFound in
Date on which all the criteria are demonstratedJuly 1 20X1
Date of completion and availabilityDecember 31 20X1
20X0 preliminary studies, expensed€25,000.00
Salaries of the research team€60,000.00
Design services from April to June€45,000.00
Salaries of the development team from July to December€120,000.00
External development services from July to December€30,000.00

Sorting the information

Not every document matters: identify those that affect the accounting treatment.

Part 1 · Classification · Analysis

Sort each document: does it affect the accounting treatment?

Drag each item into its category, or tap the category under the item.

To sort2

  • Project committee minutes

  • Statement of project costs

Relevant to the treatment0

    No effect0

      Questions

      Work programme

      6 tasks in the order of the file. Calculations, entries and effects on the financial statements are marked; written answers are self-assessed against the solution.

      1. Task 1Analysis

        Which phases do you distinguish in the project, and from which date can costs be capitalised?

      2. Task 2Calculation

        Calculate the development amount to capitalise and the amount to expense in 20X1.

        Calculator

        Click in an answer field to be able to insert the result.

        Part 1 · Calculation

        Calculate the development amount to capitalise and the amount to expense in 20X1.

        1. €
        2. €

        Checks

        • 0 / 2 steps entered
        • Amounts readable

        Result: Development expensed

      3. Task 3Calculation

        Calculate the total research and development expense for 20X1, to be disclosed in the notes.

        Calculator

        Click in an answer field to be able to insert the result.

        Part 1 · Calculation

        Calculate the total research and development expense for 20X1, to be disclosed in the notes.

        1. €

        Checks

        • 0 / 1 step entered
        • Amounts readable

      4. Task 4Journal entries

        Which entries do you record in 20X1?

        Calculator

        Click in an answer field to be able to insert the result.

        Part 1 · Journal entry · Journal entries

        Entry 1 of 3

        One line = one account and one side. Add a line if the entry needs more; the balance check updates live.

        1. Line 1

        2. Line 2

        3. Line 3

        TotalsDebit0Credit0

        Calculator

        Click in an answer field to be able to insert the result.

        Part 2 · Journal entry · Journal entries

        Entry 2 of 3

        One line = one account and one side. Add a line if the entry needs more; the balance check updates live.

        1. Line 1

        2. Line 2

        3. Line 3

        TotalsDebit0Credit0

        Calculator

        Click in an answer field to be able to insert the result.

        Part 3 · Journal entry · Journal entries

        Entry 3 of 3

        One line = one account and one side. Add a line if the entry needs more; the balance check updates live.

        1. Line 1

        2. Line 2

        TotalsDebit0Credit0

      5. Task 5Effects on the financial statements

        What is the impact of the project on the 20X1 financial statements?

        Part 1 · Classification · Analysis

        State the direction of the effect on each financial statement aggregate.

        1. Financial position (balance sheet)

        2. Profit or loss

        3. Other comprehensive income

        4. Equity

        5. Notes

        Calculator

        Click in an answer field to be able to insert the result.

        Part 2 · Calculation · Analysis

        Quantify the effect on the aggregates concerned.

        1. €
        2. €
        3. €

        Checks

        • 0 / 3 steps entered
        • Amounts readable

        Result: Amount of the effect — Equity

      6. Task 6Conclusion

        Write the conclusion of the project file.

      Workspace

      Your working draft for this file: points noted, leads, intermediate calculations.

      Saved on this device only; never graded.

      Conclusion

      Submission and solution

      Complete every item of the file to submit it (0 / 10).

      Document this file

      These working papers use the data and results of this case.

      Normative references

      • IAS 38 §52
      • IAS 38 §54
      • IAS 38 §57
      • IAS 38 §65
      • IAS 38 §66
      • IAS 38 §71
      • IAS 38 §126