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IFRS 9Workpapers (Step 4 of 5)

Workpaper assignment

Step 4 of 5
Mission · workpaperWorkpaper · IFRS 9L4 · Expert

Documents

Group profile and file conventions

Memo

Group profile and file conventions

Brenvane Group SA (fictitious entity) closes its consolidated accounts on 31 December 20X6. File conventions: amounts in EUR, interest and present values rounded to the cent (half up); the effective interest rates are given; loss rates, probabilities and percentages are file data and not rules; file conventions (pedagogical assumptions, not imposed by IFRS 9): the expected loss of loan M is computed as exposure × probability of default × loss given default, without discounting, and the €2,000 commissions on the convertible bond measured at fair value through profit or loss are recognised as expenses; differences are expressed as percentages; the entries are illustrative.

Classification decision for a financial asset: business model, contractual cash flow test, fair value option, equity election and initial measurement: Ostrel convertible bond

File of a group: classification, measurement, impairment and derecognition of financial instruments (IFRS 9)

10 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
Expert
Estimated time
≈ 60 min
Progress
0 / 5 steps done (review excluded)

Context

Brenvane Group SA (fictitious entity) closes its consolidated accounts on 31 December 20X6. In 20X6 it acquired a convertible bond, granted a loan with an arrangement fee, acquired a zero-coupon bond at FVOCI, recorded the deterioration of a loan, sold loans to a fund with restrictions and renegotiated a bank loan. The preparer builds the file on financial instruments, submitted to a reviewer. Teaching simulation: the review trail of the file (preparation, reviewer notes and final sign-off) is simulated for demonstration purposes; it is neither a real review nor a validation of the content.

Assignment

Classification decision: convertible bond and loan portfolio

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

  • Does the convertible bond held contain a derivative to separate? Test the cash flows of the whole and retain the category.
  • Compute the initial amount of the convertible bond.
  • Does the intention expressed to sell a few loans require a reclassification of the loan portfolio?
  • Record the acquisition of the convertible bond.

Documents in the file

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