IFRS 13 · Workpapers (Step 4 of 5)
Workpaper assignment
- Course
- Exercises
- Case studies
- Workpapers
- Exams
Fair value hierarchy classification file
Warranty liability: transfer, own credit risk and classification in the hierarchy
Section 1 of 7
Objective
Section brief
- What to document
- The engagement, its scope and the working mode chosen.
- Why
- A workpaper answers one precise question: framing it avoids off-topic work.
- How
- Read the objective and the assignment, then choose the mode (guided, semi-guided, professional).
- Expected result
- You know which question the workpaper must settle, and for which reporting date.
- Your role
- Preparer of the IFRS 13 workpaper
- Level
- Advanced
- Estimated time
- ≈ 40 min
- Progress
- 0 / 3 steps done (review excluded)
Context
Tectonia SA (fictitious entity) installs solar panels and gives its customers a performance warranty. At the 31 December 20X5 year-end, it must measure this liability at fair value; no market quotes the transfer of such a warranty. The valuation department proposes a risk-free rate, an own credit spread and a flow of repair costs.
Assignment
Hierarchy classification file
Purpose of the workpaper
For each measurement (one instance per item), list the inputs, whether each is observable and how much it matters to the measurement, check the criteria of each level, justify the level retained (that of the lowest level input that is significant), then prepare the line of the table by level and the related note.
Questions of the file covered by this workpaper
- Compute the fair value of the warranty.
- In which level of the hierarchy should the measurement be classified? Justify.
Documents in the file
Open the documents to pick out the relevant information.