IFRS 5 · Case studies (Step 3 of 5)
Case study
Altaïr Distribution SA (fictitious entity) decides to dispose of its logistics division and classifies it, at 31 December 20X5, as a disposal group held for sale (the criteria are met, case data). The group comprises assets within the measurement scope of the standard, receivables and a deferred tax asset, as well as liabilities. A year later, the fair value of the group has increased.
Your assignment
Explain why the measurement applies to the whole group and which items are excluded from the allocation; deal with the missing information; compute the carrying amount of the group, the loss and its allocation, then the capped reversal of 20X6; record the loss, the reversal, the reclassification of the liabilities and the interest (case data); present the effect and conclude.
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.
4 documents: open each one to read it.
Document 1Table
Composition of the logistics division at 31 December 20X5, after remeasuring each item under its own standard: property, plant and equipment 300,000 EUR, intangible assets 100,000 EUR, trade receivables 90,000 EUR, deferred tax asset 30,000 EUR; payables (trade and related) 120,000 EUR. The group includes no goodwill.
The figures of the documents, gathered for your work.
| Item | Value | Found in |
|---|---|---|
| Property, plant and equipment of the group | €300,000.00 | |
| Intangible assets of the group | €100,000.00 | |
| Trade receivables of the group | €90,000.00 | |
| Deferred tax asset of the group | €30,000.00 | |
| Payables of the group | €120,000.00 | |
| Net fair value of the group at 31 December 20X5 | €340,000.00 | |
| Net fair value of the group at 31 December 20X6 | €430,000.00 | |
| Interest of 20X5 on the payables of the group | €3,600.00 | |
| Transport tariff 20X6 | €2,300.00 |
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.
Composition of the logistics division
Expert's reports
Term supplier credit
Transport tariff
9 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
Why does the measurement apply to the whole group, and which items of the group cannot receive a share of the loss?
Task 2Missing information
What information is missing to measure the group?
Task 3Professional judgement
Which allocation order should be used and can the fair value of the group be relied on? Justify.
Task 4Calculation
Compute the carrying amount of the group after prior remeasurement.
Part 1 · Calculation
Compute the carrying amount of the group after prior remeasurement.
Task 5Calculation
Compute the loss of the group and allocate it.
Part 1 · Calculation
Compute the loss of the group and allocate it.
Result: Share of the loss allocated to intangible assets
Task 6Calculation
Compute the 20X6 reversal capped at the cumulative loss.
Part 1 · Calculation
Compute the 20X6 reversal capped at the cumulative loss.
Result: Capped reversal gain
Task 7Journal entries
Record the loss, the reversal, the reclassification of the liabilities and the interest.
Part 1 · Journal entry · Journal entries
Entry 1 of 4
One line = one account and one side. Add a line if the entry needs more; the balance check updates live.
Line 1
Line 2
Part 2 · Journal entry · Journal entries
Entry 2 of 4
One line = one account and one side. Add a line if the entry needs more; the balance check updates live.
Line 1
Line 2
Part 3 · Journal entry · Journal entries
Entry 3 of 4
One line = one account and one side. Add a line if the entry needs more; the balance check updates live.
Line 1
Line 2
Part 4 · Journal entry · Journal entries
Entry 4 of 4
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 8Effects on the financial statements
What is their effect on the 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
Part 2 · Calculation · Analysis
Quantify the effect on the aggregates concerned.
Result: Amount of the effect — Equity
Task 9Conclusion
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 / 14).
Document this file
These working papers use the data and results of this case.
Normative references