IFRS 12 · Case studies (Step 3 of 5)
Case study
Brelmar Group SA (fictitious entity) holds 30 % of the associate Marlen SA, 50 % of the joint venture Tosca SAS and 30 % of the associate Valdec SA, whose investment has been reduced to zero. You prepare the IFRS 12 notes for 20X6.
Your assignment
For Marlen and Tosca, compute the share of the summarised net assets and reconcile it to the carrying amount of the interest; compute the cumulative unrecognised share of the losses of Valdec; state how to provide the summarised information, the commitments and the contingent liabilities; record the dividend received from Marlen, 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.
Advanced level: no help, the work is grouped by kind.
6 documents: open each one to read it.
Document 1Memo
Brelmar Group SA (fictitious entity) closes its consolidated accounts on 31 December 20X6. Case conventions: amounts in EUR; case convention (pedagogical assumption, not attributed to IFRS 12): the carrying amounts come from the equity method of IAS 28, goodwill and adjustments are case data and the loss-limitation rule of IAS 28 is outside the scope; the entry is illustrative.
The figures of the documents, gathered for your work.
| Item | Value | Found in |
|---|---|---|
| Summarised net assets of Marlen | €5,000,000.00 | |
| Share of Brelmar in Marlen | 30% | |
| Goodwill included in the interest in Marlen | €200,000.00 | |
| Adjustments increasing the amount (Marlen) | €50,000.00 | |
| Carrying amount reported for the interest in Marlen | €1,750,000.00 | |
| Dividends received from Marlen | €90,000.00 | |
| Summarised net assets of Tosca | €3,200,000.00 | |
| Share of Brelmar in Tosca | 50% | |
| Adjustment decreasing the amount (Tosca) | €100,000.00 | |
| Carrying amount reported for the interest in Tosca | €1,500,000.00 | |
| Capital commitment to Tosca | €400,000.00 | |
| Share of the contingent liability of Tosca | €60,000.00 | |
| Loss of Valdec | €150,000.00 | |
| Share of Brelmar in Valdec | 30% | |
| Cumulative unrecognised share at the opening | €120,000.00 | |
| Unrecognised share for the period | €45,000.00 | |
| Account opening fees | €3,500.00 |
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.
Group profile and case conventions
Marlen SA: summarised information and carrying amount
Tosca SAS: summarised information, commitments and contingent liabilities
Valdec SA: unrecognised losses
Management note on the presentation
Opening of a group bank account
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.
Task 1Analysis
Are Marlen and Tosca material, and how should their summarised information be provided?
Task 2Calculation
Marlen: compute the share of the summarised net assets.
Part 1 · Calculation
Marlen: compute the share of the summarised net assets.
Task 3Calculation
Marlen: reconcile the summarised information to the carrying amount of the interest.
Part 1 · Calculation
Marlen: reconcile the summarised information to the carrying amount of the interest.
Task 4Calculation
Tosca: compute the share of the summarised net assets.
Part 1 · Calculation
Tosca: compute the share of the summarised net assets.
Task 5Calculation
Tosca: reconcile the summarised information to the carrying amount of the interest.
Part 1 · Calculation
Tosca: reconcile the summarised information to the carrying amount of the interest.
Task 6Calculation
Valdec: compute the cumulative unrecognised share of the losses at the closing date.
Part 1 · Calculation
Valdec: compute the cumulative unrecognised share of the losses at the closing date.
Task 7Analysis
How should the commitments, contingent liabilities and restrictions relating to Tosca be presented?
Task 8Journal entries
Record the dividend received from Marlen.
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.
Line 1
Line 2
Task 9Effects 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.
Financial position (balance sheet)
Profit or loss
Other comprehensive income
Equity
Task 10Analysis
How are IFRS 11, IAS 28 and IFRS 12 divided for the joint venture and the associate?
Task 11Conclusion
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 / 12).
Document this file
These working papers use the data and results of this case.
Normative references