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IFRS 3Workpapers (Step 4 of 5)

Workpaper assignment

Step 4 of 5
Mission · workpaperWorkpaper · IFRS 3L4 · Expert

Documents

Group profile and case conventions

Memo

Group profile and case conventions

Sorvane Group SA (fictitious entity) closes its consolidated accounts on 31 December 20X6. Case conventions: amounts in EUR; fair values, discount rates, percentages and allocation keys are case data; case convention (pedagogical assumption, not attributed to IFRS 3): Tarvel is a business, Sorvane is its acquirer and the acquisition date is 1 October 20X6, as established by the identification analysis; for Tarvel, the non-controlling interest, made up of ordinary shares only, is measured at the proportionate share of the identifiable net assets; deferred tax effects are set aside; the expense of the replacement award is spread on a straight-line basis; the entries are illustrative: the combination entry records the assets and liabilities assumed excluding leases, and the lease entry records the lease liability and the right-of-use asset, the difference against market terms being charged to goodwill.

Contingent consideration and measurement period: classification, initial fair value, remeasurement, retrospective adjustments, contingent liability, indemnification asset, reacquired right and replacement award

File of an acquiring group: complex allocation (leases, reacquired rights, replacement awards, employee benefits, liabilities within IAS 37), reverse acquisition in outline, allocation of goodwill and disclosures

10 documents9 sections to document
0 / 6 sections completed
Guided mode

Section 1 of 9

Objective

In progress
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 3 workpaper
Level
Expert
Estimated time
≈ 90 min
Progress
0 / 5 steps done (review excluded)

Context

Sorvane Group SA (fictitious entity) takes control of Tarvel Technologies SA in 20X6 by increasing its interest from 20 % to 70 %. The consolidation file must deal with the measurement exceptions (lease, reacquired right, replacement award, retirement plan, litigation, insurance contracts), the previous interest, the items outside the exchange, the goodwill, its allocation to cash-generating units, a reverse acquisition and the disclosures.

Assignment

Reacquired right, replacement award and provisional amounts

Purpose of the workpaper

Classify the contingent consideration (liability or equity), estimate its initial fair value from the scenarios and the rate of the case, track its changes after the acquisition date, distinguish measurement period adjustments (against goodwill) from later changes (in profit or loss), and deal with the contingent liability, the indemnification asset, the reacquired right and the replacement award. Scenarios, probabilities, rates and caps are case data; the probability-weighted estimate is not the only fair value method.

Questions of the file covered by this workpaper

  • Compute the amortisation of the period of the reacquired right.
  • Compute the portion of the replacement award included in the consideration, the remainder and the expense of the period.
  • Are the valuations of the reacquired right, the lease and the award final at 31 December 20X6? What treatment for what follows?
  • Record the amortisation of the reacquired right for the period.
  • Record the remuneration expense of the replacement award for the period.

Documents in the file

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