IAS 8 · Case studies (Step 3 of 5)
Practical case
IAS 8 Accounting Policies, Changes in Accounting Estimates and Errors — wording before IFRS 18Applicable today
Applies to annual periods beginning before January 1, 2027.
Halverne SA, a fictitious company that designs and manufactures street furniture (benches, bus shelters, planters), 420 employees, two plants, IFRS financial statements, year end 31 December, amounts in euros, one comparative year presented.
L1 · Guided · Year N — year end at 31 December N
You follow Halverne over two years: revision of estimates in N (level 1), errors discovered while preparing N+1 (level 2), change in policy in N+1 (level 3), then the year-end file with impracticability, hindsight and the note (level 4). All figures and tax rules are case data; professional judgements are flagged as such and no method chosen by Halverne is presented as required by the standard. Teaching assumption: rounded amounts, summary entries.
Standard involved: IAS 8 Accounting Policies, Changes in Accounting Estimates and Errors. Halverne is closing year N. A technical study calls into question the useful life of its cutting machines, and warranty claims have increased. Classify, calculate, record and prepare the disclosure. The questions are guided.
Fundamental level: the method, help and references are shown.
Method
File checklist
2 / 6 stages reached
Context · Dated fact of the file
Halverne SA, a fictitious company that designs and manufactures street furniture (benches, bus shelters, planters), 420 employees, two plants, IFRS financial statements, year end 31 December, amounts in euros, one comparative year presented.
Initial event · L1·Year N — year end at 31 December N · Current stage
Standard involved: IAS 8 Accounting Policies, Changes in Accounting Estimates and Errors. Halverne is closing year N. A technical study calls into question the useful life of its cutting machines, and warranty claims have increased. Classify, calculate, record and prepare the disclosure. The questions are guided.
Pieces added
New period · L2·Year N+1 — preparing the statements, comparative N · Upcoming: unlocks after the current stage
New period · L3·Year N+1 — a new policy · Upcoming: unlocks after the current stage
New period · L4·Year N+1 — year-end file · Upcoming: unlocks after the current stage
Conclusion · Upcoming: unlocks after the current stage
1 document to work from at this level.
Document 1Supporting document
| Item | Data |
|---|---|
| Fleet of cutting machines acquired 1/1/N−3 | cost 2,000,000, initial life 10 years, zero residual value, straight-line |
| Technical study received in February N (new information) | total life reduced to 8 years; estimated residual value 100,000 |
| Warranty provision at 31/12/N−1 | 150,000 |
| Estimate at 31/12/N, based on N claims | 190,000 |
| Tax rate | 25% (no effect on the questions at this level) |
First level: all the data is in the brief and the pieces of this level.
5 parts to answer, marked when you submit the level.
Find the useful facts in the pieces before concluding.
Part 1 · Classification · Recognition
Classify the two revisions.
Drag each item into its category, or tap the category under the item.
Useful life and residual value of the machines revised after the February N study
Warranty provision raised from 150,000 to 190,000 in the light of N claims
Move from 'first-in, first-out' to average cost (considered for N+1)
4 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