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IFRS 9Workpapers (Step 4 of 5)

Workpaper assignment

Step 4 of 5
Mission · workpaperWorkpaper · IFRS 9L1 · Fundamental

Documents

Entity profile and case conventions

Memo

Entity profile and case conventions

Tarvane Industries SA (fictitious entity) closes its books on 31 December 20X6 and places part of its surplus cash in four financial instruments acquired in 20X6. Case conventions: amounts in EUR; the initial fair value is the market price paid excluding costs; transaction costs are given; no tax is considered; the entries are illustrative.

Classification decision for a financial asset: business model, contractual cash flow test, fair value option, equity election and initial measurement: Norvelle shares (B)

Classification and initial measurement of an investment portfolio: business model, contractual cash flow test, equity election and transaction costs

5 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 9 workpaper
Level
Foundation
Estimated time
≈ 60 min
Progress
0 / 5 steps done (review excluded)

Context

Tarvane Industries SA (fictitious entity) closes its books on 31 December 20X6. In 20X6 it acquired corporate bonds, listed shares for the trading desk, a strategic unlisted stake and a structured note indexed to a stock index. The finance department prepares the classification of these four instruments, their initial measurement and the first entries.

Assignment

Classification decision and initial amount of the four instruments

Purpose of the workpaper

Describe the instrument and its terms, gather the evidence on the business model and the sales history, assess the contractual cash flows (principal and interest), document the fair value option or the equity election where relevant, retain the category, compute the initial amount and prepare the entry and the note. Amounts are case data; the business model and the cash flows are judgments, with no threshold imposed by the standard.

Questions of the file covered by this workpaper

  • Classify the Corvane bonds (A): assess the business model and the contractual cash flows, then retain the category.
  • Classify the Norvelle shares (B) and the Eurolink structured note (D).
  • Classify the Sablon stake (C) and state the effect of the election on the presentation of fair value changes.
  • Compute the initial amount of each instrument on recognition.
  • Compute the fair value change of the Sablon stake (C) to recognise at the reporting date.
  • Record the acquisition of the Corvane bonds (A).
  • Record the acquisition of the Norvelle shares (B).
  • Record the remeasurement of the Sablon stake (C) at 31 December 20X6.

Documents in the file

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