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IAS 8Case studies (Step 3 of 5)

Case study

Step 3 of 5

IAS 8 Accounting Policies, Changes in Accounting Estimates and Errors — wording before IFRS 18Applicable today

Applies to annual periods beginning before January 1, 2027.

Practical caseIAS 8L4 · Expert

Transaction with no applicable standard: developing and documenting an accounting policy

5 documents7 tasks≈ 110 min
0 / 11 items completed
Standards
IAS 8 — Accounting Policies, Changes in Accounting Estimates and Errors
Assistance levelFree workspace · autonomous situation
  • Method: withdrawn
  • Checklist: withdrawn
  • Hints: withdrawn
  • Step-by-step work: withdrawn

Case brief

Situation

Groupe Halvenor (fictitious entity) receives water sobriety certificates created by a fictitious national regulation. You prepare the group's accounting policy memo and the 20X5 closing entries; little guidance is given.

Your assignment

Determine the applicable approach, assess the policy adopted, deal with the practices of the subsidiaries, identify the accounting estimate, post the entries, measure their effect, spot the missing information and write the policy and the conclusion.

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.

Autonomous professional situation

As on a real engagement: no method, no checklist and no hints. You identify the issues yourself, organise the work and defend your conclusion.

  • Organise the work
  • Document each point
  • Argue the conclusion

Documents

File documents

5 documents: open each one to read it.

Document 1Contract

National regulation on water sobriety certificates

In the (fictitious) country where Groupe Halvenor (beverages) operates, each industrial site receives transferable water sobriety certificates (WSC) free of charge at the start of the year. By 30 April of the following year it must surrender one certificate per thousand cubic metres drawn; otherwise it pays a penalty. WSC are traded on a public platform. In 20X5, the subsidiary Halvenor Sources received 10,000 certificates, with a market value of 30 at grant; its 20X5 water use requires it to surrender 11,200 certificates; it holds 10,000 certificates at 31 December 20X5.

Data

Key data from the documents

The figures of the documents, gathered for your work.

ItemValueFound in
Certificates received free of charge in 20X510,000 units
Market value of a certificate at grant€30.00
Certificates to surrender for 20X511,200 units
Certificates held at 31 December 20X510,000 units
Certificate price at 31 December 20X5€35.00
Group materiality threshold€25,000.00
Certificates and deferred income carried by Halvenor Nord€120,000.00
Certificate purchases expensed by Halvenor Sud€2,800.00

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 sort5

  • National regulation on water sobriety certificates

  • Analysis by the group finance department

  • Platform quotation and materiality threshold

  • Practices of the other subsidiaries

  • Brand press release

Relevant to the treatment0

    No effect0

      Workspace

      Work programme

      Organise your work freely: deal with each point, then argue your conclusion.

      1. Task 1Analysis

        Does an IFRS specifically apply to the certificates? Which approach must be followed?

      2. Task 2Professional judgement

        Assess approach (A) adopted by management against the hierarchy of sources and the required qualities.

      3. Task 3Professional judgement

        What should be done with the practices of Halvenor Nord and Halvenor Sud on consolidation?

      4. Task 4Analysis

        Does the measurement of the liability involve an accounting estimate? Which one?

      5. Task 5Journal entries

        Post the 20X5 closing entries under the group's policy.

        Calculator

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

        Part 1 · Calculation

        Post the 20X5 closing entries under the group's policy.

        1. units
        2. €

        Checks

        • 0 / 2 steps entered
        • Amounts readable

        Result: Liability for the certificate shortfall

        Calculator

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

        Part 2 · Journal entry · Journal entries

        Entry 1 of 2

        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

        Calculator

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

        Part 3 · Journal entry · Journal entries

        Entry 2 of 2

        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

      6. Task 6Effects on the financial statements

        What is the effect of these entries on the 20X5 consolidated 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

        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

      7. Task 7Conclusion

        Write the group's accounting policy and the conclusion.

      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 / 11).

      Document this file

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

      Normative references

      • IAS 8 §5
      • IAS 8 §7
      • IAS 8 §8
      • IAS 8 §10
      • IAS 8 §11
      • IAS 8 §12
      • IAS 8 §13
      • IAS 8 §32
      • IAS 8 §32A