Context · Dated fact of the file
Valdera: a zero-coupon bond, from acquisition to impairment
Valdera SA, a fictitious industrial group, consolidated IFRS financial statements, year-end 31 December.
IFRS 9 · Case studies (Step 3 of 5)
Practical case
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File · Progressive casePath L1 → L4L1 · Fundamental
Valdera: a zero-coupon bond, from acquisition to impairment
Valdera SA, a fictitious industrial group, consolidated IFRS financial statements, year-end 31 December.
2 documents6 tasks
- Period
- Year N
- Standards
- IFRS 9 — Financial Instruments
- Levels
- 0 / 4 levels validated
- Current level
- L1 · Guided≈ 100 min
Assistance levelFull guidance · strong assistance
- Method: shown
- Checklist: shown
- Hints: shown
- Step-by-step work: shown
Case brief
L1 · Guided · Year N
Level 1: classifying the bond and measuring year N
Progressive case in four levels around a zero-coupon bond held by treasury: (1) classification, interest and 12-month allowance in N; (2) significant increase in credit risk in N+1; (3) modification of the contract in N+2, without derecognition; (4) credit-impaired asset and review file. Rates and loss percentages are case data; expected loss calculations follow a case convention, not a method imposed by the standard.
Valdera SA acquires a zero-coupon bond on 1 January N. You classify the instrument, compute the first year's interest and recognise the 12-month loss allowance. The standards involved are announced.
Fundamental level: the method, help and references are shown.
Method
- 1Read the brief and the assignment.
- 2Open each document and spot the relevant data.
- 3Carry out the work in the suggested order.
- 4Submit, then read the conclusion and the model answer.
File checklist
- Open each piece (0 / 2 consulted) · to do
- Answer the questions of the level (0 / 6) · to do
- Validate the level, then read the conclusion · to do
Events
The file, period by period
2 / 6 stages reached
Initial event · L1·Year N · Current stage
Level 1: classifying the bond and measuring year N
Valdera SA acquires a zero-coupon bond on 1 January N. You classify the instrument, compute the first year's interest and recognise the 12-month loss allowance. The standards involved are announced.
Pieces added
- Acquisition sheet of the Karvelle bond
- Credit note at 31 December N
New period · L2·Year N+1 · Upcoming: unlocks after the current stage
Upcoming stage
New period · L3·Year N+2, opening · Upcoming: unlocks after the current stage
Upcoming stage
New period · L4·N+2 closing and year N+3 · Upcoming: unlocks after the current stage
Upcoming stage
Conclusion · Upcoming: unlocks after the current stage
Upcoming stage
Documents
Case documents
2 documents to work from at this level.
Document 1Document
Acquisition sheet of the Karvelle bond
Valdera SA, a fictitious industrial group, invests part of its surplus cash in a zero-coupon bond issued by Karvelle Énergie.
| Item | Data |
|---|---|
| Acquisition date | 1 January N |
| Price paid (equal to fair value), with no transaction costs | €1,000,000 |
| Redemption amount, on 31 December N+2 | €1,259,712 |
| Effective interest rate of the bond (case data) | 8% |
| Valdera's year-end | 31 December |
Treasury policy, extract: securities are held to collect the contractual cash flows; sales are exceptional and approved by the treasury committee. The only contractual cash flow is the repayment at maturity, with no conversion, indexation or participation feature.
Data
Facts of the file
- Entity
- Valdera SA, a fictitious industrial group, consolidated IFRS financial statements, year-end 31 December.
- Period
- Year N
- Current level
- L1 · Guided
- Standards
- IFRS 9 — Financial Instruments
Pieces carried over from earlier levels
First level: all the data is in the brief and the pieces of this level.
Questions
6 parts to answer, marked when you submit the level.
- Information to identify1
- Calculations2
- Journal entries2
- Questions1
Information to identify
Find the useful facts in the pieces before concluding.
Part 1 · Multiple choice · Recognition
In which category does Valdera classify the Karvelle bond?
5 more questions will appear once the current question is complete.
Complete the question to continue.
Workspace
Your working draft for this file: points noted, leads, intermediate calculations.
Saved on this device only; never graded.
Conclusion
Answer every part to submit the level and see the conclusion.
Normative references
- IFRS 9 §4.1.2
- IFRS 9 §4.1.2A
- IFRS 9 §B4.1.7B
- IFRS 9 §5.1.1
- IFRS 9 §5.4.1
- IFRS 9 §B5.4.1
- IFRS 9
- IFRS 9 §5.5.3
- IFRS 9 §5.5.5
- IFRS 9 §5.5.9
- IFRS 9 §5.5.11
- IFRS 9 §5.4.3
- IFRS 9 §5.5.12
- IFRS 9 §5.4.2