Skip to main content
IFRS Academy

CERTYNEX IFRS ACADEMY

My account — Professional

Search the Academy

Home
My learning path
Exercises & quizzes
Cases
Workpapers
Exams
My progress

IFRS 10Case studies (Step 3 of 5)

Case study

Step 3 of 5
Practical caseIFRS 10L2 · Intermediate

Control without a majority, potential voting rights, structured entity and fund manager: principal or agent, reassessment of control

5 documents11 tasks≈ 75 min
0 / 16 items completed
Standards
IFRS 10 — Consolidated Financial Statements
Assistance levelHelp on demand · assistance on request
  • Method: on request
  • Checklist: on request
  • Hints: withdrawn
  • Step-by-step work: shown

Case brief

Situation

Lorvane Group SA (fictitious entity), a listed company, reviews three year-end 20X6 situations: a listed company in which it has held 44 % since 30 June, a company in which it holds 30 % and a call option, and a fund managed by its asset-management subsidiary. You prepare the consolidation department’s judgment note.

Your assignment

Check Lorvane’s exemption; for Haldrin, assess power before and after 30 June, compute the weight of the votes cast and set the reassessment date; for Quesnel, compute the voting rights with the substantive option and name the standard that applies on obtaining control; for Fonds Aster, determine whether Lorvane Gestion is principal or agent and compute its fee; record the entry eliminating the receivable from Haldrin, present its effect and conclude. One document is not useful.

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 / 5 consulted) · to do
  • Sort the information in the pieces · to do
  • Carry out the work (0 / 16) · to do
  • Submit the file, then assess yourself · to do

Documents

File documents

5 documents: open each one to read it.

Document 1Memo

Group profile and case conventions

Lorvane Group SA (fictitious entity) is listed on a regulated market and closes its consolidated accounts on 31 December 20X6. Case conventions: amounts in EUR; case convention (pedagogical assumption, not attributed to IFRS 10): the percentages, exercise prices and fees are case data, the standard setting no threshold; the weight of the votes cast at meetings is a reading indicator of the case, not a criterion of the standard; the entry requested is illustrative.

Data

Key data from the documents

The figures of the documents, gathered for your work.

ItemValueFound in
Lorvane’s voting rights before 30 June34%
Largest other holder before 30 June30%
Lorvane’s voting rights after 30 June44%
Average attendance at the last three meetings55%
Lorvane’s receivable from Haldrin€220,000.00
Lorvane’s voting rights in Quesnel30%
Points of voting rights under Lorvane’s option25%
Exercise price of Lorvane’s option€15.00
Quesnel share price€22.00
Points of voting rights under Brannec’s option10%
Exercise price of Brannec’s option€40.00
Assets of Fonds Aster€250,000,000.00
Annual management fee1.2%
Units held by the manager8%
Units held by Caisse Norde55%
Lorvane cultural sponsorship€120,000.00

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 sort5

  • Group profile and case conventions

  • Haldrin SA: change in shareholding and voting patterns

  • Quesnel SA: options and voting rights

  • Fonds Aster: management contract and unitholders’ rights

  • Lorvane sponsorship report

Relevant to the treatment0

    No effect0

      Questions

      Work programme

      11 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

        Can Lorvane Group, a listed company, use the parent exemption? Which conditions fail?

      2. Task 2Analysis

        Haldrin before 30 June 20X6: did Lorvane (34 %) have the practical ability to direct the relevant activities alone?

      3. Task 3Analysis

        Haldrin after 30 June 20X6: compute the weight of Lorvane’s voting rights in the votes cast (average attendance of 55 %) then assess power without a majority.

        Calculator

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

        Part 1 · Calculation

        Haldrin after 30 June 20X6: compute the weight of Lorvane’s voting rights in the votes cast (average attendance of 55 %) then assess power without a majority.

        1. %

        Checks

        • 0 / 1 step entered
        • Amounts readable

      4. Task 4Professional judgement

        Which fact requires control of Haldrin to be reassessed, on which date, and from when to consolidate?

      5. Task 5Analysis

        Quesnel: compute Lorvane’s voting rights if it exercises its option, then assess whether its option and Brannec’s are substantive and conclude on control.

        Calculator

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

        Part 1 · Calculation

        Quesnel: compute Lorvane’s voting rights if it exercises its option, then assess whether its option and Brannec’s are substantive and conclude on control.

        1. %

        Checks

        • 0 / 1 step entered
        • Amounts readable

      6. Task 6Analysis

        If Lorvane obtains control of Quesnel, which standard does it apply and on which date?

      7. Task 7Professional judgement

        Fonds Aster: does Lorvane Gestion act as principal or agent? Weigh the factors (authority, removal rights, remuneration, exposure).

      8. Task 8Analysis

        Fonds Aster: compute the annual management fee and place it in the analysis of remuneration.

        Calculator

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

        Part 1 · Calculation

        Fonds Aster: compute the annual management fee and place it in the analysis of remuneration.

        1. €

        Checks

        • 0 / 1 step entered
        • Amounts readable

      9. Task 9Journal entries

        Haldrin being consolidated, record the entry eliminating Lorvane’s receivable.

        Calculator

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

        Part 1 · Journal entry · Journal entries

        Entry 1 of 1

        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

      10. Task 10Effects on the financial statements

        What is the effect of the entry on the consolidated 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

        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. €

        Checks

        • 0 / 1 step entered
        • Amounts readable

      11. Task 11Conclusion

        Write the conclusion for the three entities.

      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 / 16).

      Document this file

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

      Normative references

      • IFRS 10 §4
      • IFRS 10 §8
      • IFRS 10 §B41
      • IFRS 10 §B58