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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 file conventions

Memo

Group profile and file conventions

Alvane Group SA (fictitious entity) closes its consolidated accounts on 31 December 20X6. File conventions: amounts in EUR, rounded to the cent; fair values, scenarios, probabilities, rates and percentages are file data; file convention (pedagogical assumption, not attributed to IFRS 3): for Corvel, the non-controlling interest is measured at the proportionate share of the identifiable net assets; the fair value of the deferred price is the weighted average of the possible payments, discounted at the rate given, a method that is not the only one possible; the entries are illustrative: the combination entry records the assets and liabilities assumed excluding deferred tax, and the supplementary entry records the deferred tax against goodwill.

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

File of a group: identification, purchase price allocation, contingent consideration and step acquisition (IFRS 3)

9 documents8 sections to document
0 / 5 sections completed
Guided mode

Section 1 of 8

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 / 4 steps done (review excluded)

Context

Alvane Group SA (fictitious entity) closes its consolidated accounts on 31 December 20X6. In 20X6, it took control of Corvel Mécanique SA in stages with a deferred price, then acquired Plastex SARL on bargain terms. The preparer builds the consolidation file of these two combinations, submitted to a reviewer, and receives in February 20X7 information on a liability existing at the acquisition date. Teaching simulation: the review trail of the file (preparation, reviewer notes and final sign-off) is simulated for demonstration purposes; it is neither a real review nor a validation of the content.

Assignment

Deferred price and measurement period of Corvel

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 weighted estimate of the deferred price of Corvel.
  • Compute the initial fair value of the deferred price (present value) using the treasury information.
  • Compute the change in fair value of the deferred price at 31 December 20X6.
  • Does the claim known on 5 February 20X7 give rise to an adjustment of the combination? What information is still missing?
  • Compute the measurement period goodwill adjustment.
  • Record the increase in fair value of the deferred price.
  • Record the measurement period adjustment.

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