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IFRS 7Workpapers (Step 4 of 5)

Workpaper assignment

Step 4 of 5
Mission · workpaperWorkpaper · IFRS 7L3 · Advanced

Documents

Company profile and case conventions

Memo

Company profile and case conventions

Harven SA (fictitious entity) closes its accounts on 31 December 20X6; its functional currency is the euro. Case conventions: amounts in EUR; the flows are those of the contracts, without discounting; case convention (pedagogical assumption, not attributed to IFRS 7): the floating rate of the closing date applies to all the future interest of the bank loan; the carrying amount includes only the amounts due at 31 December 20X6; no hedge and no tax.

Liquidity risk and market risk: maturity analysis on contractual cash flows, difference from the carrying amount and sensitivity analysis

Liquidity risk and market risk: maturity analysis on contractual cash flows, supplier finance and sensitivity analysis

6 documents8 sections to document
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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 7 workpaper
Level
Advanced
Estimated time
≈ 75 min
Progress
0 / 4 steps done (review excluded)

Context

Harven SA (fictitious entity) finances its business with a floating-rate bank loan, a fixed-rate bond and trade payables, part of which goes through a supplier finance provider. For the closing date of 31 December 20X6, you prepare the maturity analysis and the sensitivity analysis.

Assignment

Maturity and sensitivity analysis of Harven

Purpose of the workpaper

Enter in each maturity bucket the contractual cash flows of the financial liabilities as they appear in the contract and without discounting (convention of the table), add them by bucket and in total, compare the total with the carrying amount, and calculate the effect on profit or loss of a reasonably possible change in the risk variable. The buckets, the flows and the change are case data; the change is a judgment of the entity and is not imposed by the standard.

Questions of the file covered by this workpaper

  • Compute the total of the first bucket.
  • Compute the total of the second bucket.
  • Compute the total of the third bucket.
  • Compute the total of the undiscounted contractual cash flows.
  • Compute the difference between the total of the flows and the carrying amount.
  • What share of the trade payables goes through the finance provider, and why describe it?
  • Is the change in rates retained by management a reasonably possible change?
  • Compute the effect on profit or loss of the increase retained.

Documents in the file

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