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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.

Amortised cost schedule at the effective interest rate: net initial amount, interest, cash flows, closing amount and comparison with fair value: Loan K — 20X6

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

Amortised cost schedule of loan K and of the Pavane 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 K.
  • Compute the 20X6 interest of loan K and of the Pavane bond.
  • Compute the closing carrying amounts of loan K and of the Pavane bond.
  • Check these amounts by discounting at the effective interest rate the remaining cash flow of each instrument.
  • Compute the cumulative OCI of the Pavane bond.
  • Record the 20X6 interest of loan K.
  • Record the collection of the 20X6 coupon of loan K.
  • Record the remeasurement of the Pavane bond at FVOCI.

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