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IFRS 9Workpapers (Step 4 of 5)

Workpaper assignment

Step 4 of 5
Mission · workpaperWorkpaper · IFRS 9L2 · Intermediate

Documents

Entity profile and case conventions

Memo

Entity profile and case conventions

Lorvane Crédit SA (fictitious entity), a credit institution, closes its books on 31 December. Case conventions: amounts in EUR, interest rounded to the cent (half up) at each period; the effective interest rates are given by the finance department (they exactly discount the estimated cash flows); contractual cash flows are as forecast; case convention (pedagogical assumption, not attributed to IFRS 9): the fair value difference of portfolio M at the reclassification date is recognised in profit or loss; the entries are illustrative.

Amortised cost schedule at the effective interest rate: net initial amount, interest, cash flows, closing amount and comparison with fair value: Loan L — initial amount

Loan at the effective interest rate and debt securities: amortised cost schedule with integral fees, FVOCI with recycling and reclassification

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 9 workpaper
Level
Intermediate
Estimated time
≈ 60 min
Progress
0 / 4 steps done (review excluded)

Context

Lorvane Crédit SA (fictitious entity) closes its books on 31 December. In 20X6 it granted a loan to a company with an arrangement fee, it holds a zero-coupon bond in its liquidity portfolio, it decided to sell a mortgage loan portfolio and it monitors a loan whose borrower is in liquidation. You prepare the calculations and the entries.

Assignment

Amortised cost schedule of loan L and of the Aldane bond

Purpose of the workpaper

List the contractual cash flows, compute the initial amount net of integral fees and transaction costs, apply the effective interest rate to the opening carrying amount, deduct the cash flow collected, check the closing amount and, for a debt instrument at FVOCI, reconcile amortised cost and fair value. The effective interest rate is a case datum; each period is one instance of the workpaper.

Questions of the file covered by this workpaper

  • Compute the net initial amount of loan L (fair value, integral fee, direct costs).
  • Compute the interest of each period of loan L and of the first period of the Aldane bond.
  • Compute the closing carrying amount of each period of loan L and of the Aldane bond.
  • Check the closing amounts by discounting at the effective interest rate the remaining cash flow of loan L (start of period 3) and of the Aldane bond.
  • Compute the cumulative amount in other comprehensive income of the Aldane bond at 31 December 20X6.
  • Record the interest of the first period of loan L.
  • Record the collection of the first coupon of loan L.
  • Record the remeasurement of the Aldane bond at 31 December 20X6.
  • Record the recycling to profit or loss of the cumulative OCI on the sale of the Aldane bond.

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