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IFRS 11Case studies (Step 3 of 5)

Practical case

Step 3 of 5
File · Progressive casePath L1 → L4L1 · Fundamental

Vordane and Pelagia: from the joint arrangement to the sale of an asset

Vordane SA, a fictitious company, investor; Halvex SA, Ormin SA and Brezan SA, fictitious companies, other parties; Pelagia Énergie SAS and Aurélia Terminal SA, fictitious entities; IFRS consolidated statements, year end 31 December, amounts in euros. The facts and amounts are case data; conclusions come from the standard or from judgement and are flagged as such; no rounding is needed (whole amounts, case convention); the counterparts of the entries are case conventions; the vote splits are practice examples, not thresholds of the standard.

1 document4 tasks
0 / 4 tasks completed
Period
1 January N
Standards
IFRS 11 — Joint Arrangements
Levels
0 / 4 levels validated
Current level
L1 · Guided≈ 90 min
Assistance levelFull guidance · strong assistance
  • Method: shown
  • Checklist: shown
  • Hints: shown
  • Step-by-step work: shown

Case brief

L1 · Guided · 1 January N

Level 1: three investors in Pelagia

Progressive case in four levels: (1) on 1 January N, Vordane joins Halvex and Ormin in Pelagia: joint control, parties without joint control; (2) classification of Pelagia (joint operation), Aurélia (joint venture) and a convention with no vehicle; (3) year N: line-by-line shares, applicable standard, sale of equipment with a limited gain, equity method for Aurélia; (4) year N+1: lease liability, sale of output, separate statements and texts not applied.

Vordane SA joins forces with Halvex SA and Ormin SA. It must be said whether the arrangement is a joint arrangement (the standard is announced at this level), then which parties have joint control.

Fundamental level: the method, help and references are shown.

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 / 1 consulted) · to do
  • Answer the questions of the level (0 / 4) · to do
  • Validate the level, then read the conclusion · to do

Events

The file, period by period

2 / 6 stages reached

  1. Context · Dated fact of the file

    Vordane and Pelagia: from the joint arrangement to the sale of an asset

    Vordane SA, a fictitious company, investor; Halvex SA, Ormin SA and Brezan SA, fictitious companies, other parties; Pelagia Énergie SAS and Aurélia Terminal SA, fictitious entities; IFRS consolidated statements, year end 31 December, amounts in euros. The facts and amounts are case data; conclusions come from the standard or from judgement and are flagged as such; no rounding is needed (whole amounts, case convention); the counterparts of the entries are case conventions; the vote splits are practice examples, not thresholds of the standard.

  2. Initial event · L11 January N · Current stage

    Level 1: three investors in Pelagia

    Vordane SA joins forces with Halvex SA and Ormin SA. It must be said whether the arrangement is a joint arrangement (the standard is announced at this level), then which parties have joint control.

    Pieces added

    • Exhibit 1: the Pelagia agreement (case data)

  3. New information · L21 January N · Upcoming: unlocks after the current stage

    Upcoming stage

  4. New period · L3Year N · Upcoming: unlocks after the current stage

    Upcoming stage

  5. New period · L4Year N+1 · Upcoming: unlocks after the current stage

    Upcoming stage

  6. Conclusion · Upcoming: unlocks after the current stage

    Upcoming stage

Documents

Case documents

1 document to work from at this level.

Document 1Contract

Exhibit 1: the Pelagia agreement (case data)

ItemDatum
Date of the arrangement1 January N
PurposeBuild and operate a gas-processing plant
Parties and voting rightsVordane SA 47%, Halvex SA 41%, Ormin SA 12%
Decisions on the relevant activities (budget, investments, appointment of managers)Adopted with 72% of the voting rights
Vehicle of the activityA separate company, Pelagia Énergie SAS
Nature of the arrangementContract signed by the three parties

Data

Facts of the file

Entity
Vordane SA, a fictitious company, investor; Halvex SA, Ormin SA and Brezan SA, fictitious companies, other parties; Pelagia Énergie SAS and Aurélia Terminal SA, fictitious entities; IFRS consolidated statements, year end 31 December, amounts in euros. The facts and amounts are case data; conclusions come from the standard or from judgement and are flagged as such; no rounding is needed (whole amounts, case convention); the counterparts of the entries are case conventions; the vote splits are practice examples, not thresholds of the standard.
Period
1 January N
Current level
L1 · Guided
Standards
IFRS 11 — Joint Arrangements

Pieces carried over from earlier levels

First level: all the data is in the brief and the pieces of this level.

Questions

4 parts to answer, marked when you submit the level.

  • Calculations1
  • Analysis and judgement2
  • Information to identify1

Calculations

Start from the data in the pieces, set the formula, check the unit and the order of magnitude.

3 of 3

Calculator

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

Part 1 · Calculation · Recognition

Calculate the total voting rights of each pair of parties.

Data

Vordane
47%
Halvex
41%
Ormin
12%
Required majority
72%
  1. %
  2. %
  3. %

Checks

  • 0 / 3 steps entered
  • Amounts readable

Result: Halvex + Ormin

3 more questions will appear once the current question is complete.

Complete the question to continue.

Workspace

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

Saved on this device only; never graded.

Conclusion

Answer every part to submit the level and see the conclusion.

Normative references

  • IFRS 11
  • IFRS 11 §8
  • IFRS 11 §14
  • IFRS 11 §B16
  • IFRS 11 §B15
  • IFRS 11 §17
  • IFRS 11 §B22
  • IFRS 11 §B26
  • IFRS 11 §B30
  • IFRS 11 §20
  • IFRS 11 §21
  • IFRS 11 §23
  • IFRS 11 §22
  • IFRS 11 §B34
  • IFRS 11 §24
  • IFRS 11 §26
  • IFRS 11 §27
  • IFRS 11 §25