IAS 7 · Case studies (Step 3 of 5)
Case study
Version of this content
IAS 7 Statement of Cash Flows — wording before IFRS 18Applicable today
Applies to annual periods beginning before January 1, 2027.
Orbeval Logistique SA (fictitious entity) operates warehouses and a fleet of trucks. In 20X5 it drew a new loan, repaid part of its borrowings including a dollar loan, leased new warehouses and saw its convertible bonds converted. You prepare the note on liabilities arising from financing activities.
Your assignment
Define the liabilities concerned, split the lease payments, check the repayments, compute the proceeds from the share issue, prepare the reconciliation by class and in total, determine the net financing cash flow, present the entries and their effect, draft the note and conclude. One item of information is missing: document your assumption.
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.
Advanced level: no help, the work is grouped by kind.
5 documents: open each one to read it.
Document 1Contract
Bank borrowings (EUR): 2,400,000 at 1 January 20X5; new loan drawn in April 800,000; repayments per the bank statements 500,000; unfavourable exchange difference on the dollar loan, recognised in profit or loss, 36,000; 2,736,000 at 31 December 20X5.
The figures of the documents, gathered for your work.
| Item | Value | Found in |
|---|---|---|
| Bank borrowings at the beginning | €2,400,000.00 | |
| Drawdown of the new loan | €800,000.00 | |
| Repayments of the period | €500,000.00 | |
| Exchange difference on the dollar loan | €36,000.00 | |
| Bank borrowings at the end | €2,736,000.00 | |
| Convertible bonds at the beginning | €600,000.00 | |
| Bonds converted into shares | €600,000.00 | |
| Convertible bonds at the end | €0.00 | |
| Lease liabilities at the beginning | €950,000.00 | |
| New leases | €420,000.00 | |
| Lease payments | €310,000.00 | |
| Interest included in the payments | €45,000.00 | |
| Lease liabilities at the end | €1,105,000.00 | |
| Increase in share capital and premium | €1,000,000.00 | |
| Amount owed to a supplier of equipment | €70,000.00 | |
| Fuel consumption (litres) | 412,000 units |
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.
Loan agreements and bank statements
Issue agreement and conversion minutes
Lease schedule
Extracts of equity and other payables
Fleet statistics
10 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.
Task 1Analysis
Which liabilities are within the reconciliation?
Task 2Calculation
Split the lease payments.
Part 1 · Calculation
Split the lease payments.
Task 3Calculation
Check the repayments against the balances.
Part 1 · Calculation
Check the repayments against the balances.
Task 4Calculation
Compute the cash proceeds from the share issue.
Part 1 · Calculation
Compute the cash proceeds from the share issue.
Task 5Calculation
Prepare the reconciliation by class and in total.
Part 1 · Calculation
Prepare the reconciliation by class and in total.
Result: Cash flows relating to these liabilities
Task 6Analysis
Determine the net financing cash flow of the statement.
Part 1 · Calculation
Determine the net financing cash flow of the statement.
Task 7Journal entries
Present the entries for the four transactions.
Part 1 · Journal entry · Journal entries
Entry 1 of 4
One line = one account and one side. Add a line if the entry needs more; the balance check updates live.
Line 1
Line 2
Part 2 · Journal entry · Journal entries
Entry 2 of 4
One line = one account and one side. Add a line if the entry needs more; the balance check updates live.
Line 1
Line 2
Part 3 · Journal entry · Journal entries
Entry 3 of 4
One line = one account and one side. Add a line if the entry needs more; the balance check updates live.
Line 1
Line 2
Part 4 · Journal entry · Journal entries
Entry 4 of 4
One line = one account and one side. Add a line if the entry needs more; the balance check updates live.
Line 1
Line 2
Line 3
Task 8Effects on the financial statements
What is their effect on the financial statements?
Part 1 · Classification · Analysis
State the direction of the effect on each financial statement aggregate.
Financial position (balance sheet)
Profit or loss
Other comprehensive income
Equity
Part 2 · Calculation · Analysis
Quantify the effect on the aggregates concerned.
Result: Amount of the effect — Equity
Task 9Analysis
Draft the note and the disclosures on non-cash transactions.
Task 10Conclusion
Write the conclusion.
Your working draft for this file: points noted, leads, intermediate calculations.
Saved on this device only; never graded.
Complete every item of the file to submit it (0 / 16).
Document this file
These working papers use the data and results of this case.
Normative references