Classification of income and expenses into the five categories: default category, investing, financing, exchange differences and specified main business activity: Interest on customer loans

Context

Gantrel SA (fictitious entity) makes agricultural machines and finances the purchase of its machines by its customers through a dedicated unit. It prepares its 20X7 statement of profit or loss under IFRS 18. You assess its specified main business activity, correct the classification of the interest on customer loans, judge the "other" label and prepare the note on expenses by nature, its operating expenses being presented by function.

Assignment

Classification of the Gantrel interest: customer loans and cash

Purpose of the workpaper

For each item of income or expense, record its nature, the asset or liability that generates it and the evidence about the activity of the entity. Classify it into one of the five categories: the operating category receives everything not classified in the other four. Then judge the effect of a specified main business activity and the classification of exchange differences, and prepare the reclassification entry where applicable. The facts are case data; each classification remains a supported judgment.

Questions of the file covered by this workpaper

• Does Gantrel have a specified main business activity?
• What effects on the classification of the interest on customer loans and on cash?
• Record the reclassification of the interest on customer loans.

• MemoEntity profile and case conventionsOpen
• ExtractEvidence on the financing of customersOpen
• ScheduleInterest income in the 20X7 ledgerOpen
• MemoManagement note: manufacturer-lessor leasingOpen
• ScheduleDetail of "other operating expenses"Open
• ScheduleExpenses by nature of 20X7Open
• MemoPresentation of operating expensesOpen
• InvoiceInvoice of a catererOpen