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Apply Your Knowledge: Case Study 1

SME A Group prepared a consolidated statement of financial position as of December 31, 20X1 in accordance with IFRS for SMEs. The statement distinguishes between current and non-current assets and liabilities. It shows total assets of CU8,484, total equity of CU4,920, and total liabilities of CU3,564.

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887 views3 pages

Apply Your Knowledge: Case Study 1

SME A Group prepared a consolidated statement of financial position as of December 31, 20X1 in accordance with IFRS for SMEs. The statement distinguishes between current and non-current assets and liabilities. It shows total assets of CU8,484, total equity of CU4,920, and total liabilities of CU3,564.

Uploaded by

Queen Valle
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd
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APPLY YOUR KNOWLEDGE

Apply your knowledge of the requirements for presenting a statement of financial position in
accordance with the IFRS for SMEs by solving the case studies below.
Once you have completed the case studies check your answers against those set out at the end of
this test.

Case study 1

SME A Group draft statement of financial position for the year ended 31 December 20X1
(in thousands of currency units):

ASSETS 20X1 20X0


Cash 200 140
Cash equivalent 30 20
Non-controlling interests’ share of profit for the year 120 150
Dividends declared by SME A 100 190
Accounts receivable 1,900 1,200
Inventory, cost 1,000 1,950
Inventory, fair value less costs to complete and sell 180 150
Investment property, fair value 2,500 2,500
Property, plant and equipment, cost 4,324 4,818
Total assets 10,354 11,118

CLAIMS AGAINST ASSETS


Long-term debt (CU500 capital due on 1 January each year) 2,300 2,800
Interest accrued on long-term debt (due in less than 12 months) 230 280
Share capital 1,500 1,250
Retained earnings at the beginning of the year 1,910 1,000
Profit for the year 1,000 1,250
Non-controlling interest 730 630
Accumulated depreciation on property, plant and equipment 1,450 1,060
Provision for doubtful receivables 200 115
Trade payables 250 1,890
Accrued expenses 3 2
Warranty provision (expires 12 months after the date of sale) 400 390
Environmental restoration provision (restoration is expected to take place in 20X9) 280 260
Provision for vacation leave (unused leave expires 12 months after the year in
which it accrues) 1 1
Dividends payable 100 190
Total claims against assets 10,354 11,118

Prepare, in compliance with the IFRS for SMEs, a consolidated statement of financial
position at 31 December 20X1 distinguishing between current and non-current items.
Answer to case study 1

SME A Group – Statement of financial position at 31 December 20X1


(in thousands of currency units)
20X1 20X0
ASSETS
Non-current assets
(a)
Property, plant and equipment 2,874 3,758
Investment property 2,500 2,500
Total non-current assets 5,374 6,258

Current assets
(b)
Inventory 1,180 2,100
(c)
Trade and other receivables 1,700 1,085
(d)
Cash and cash equivalents 230 160
Total current assets 3,110 3,345
Total assets 8,484 9,603

EQUITY AND LIABILITIES


Equity attributable to owners of the parent
Share capital 1,500 1,250
(e)
Retained earnings 2,690 1,910
Non-controlling interests 730 630
Total equity 4,920 3,790

Non-current liabilities
(f)
Long-term debt 1,800 2,300
Long-term provisions (environmental restoration) 280 260
Total non-current liabilities 2,080 2,560

Current liabilities
(g)
Trade and other payables 253 1,892
(f)
Current portion of long-term debt 500 500
Interest accrued on long-term debt 230 280
Warranty provision 400 390
Other short-term provisions 1 1
Dividends declared 100 190
Total current liabilities 1,484 3,253
Total liabilities 3,564 5,813
Total equity and liabilities 8,484 9,603

The calculations and explanatory notes below do not form part of the answer to this case study:

(a) PPE 20X1: CU4,324 less CU1,450 = CU2,874; PPE


20X0: CU4,818 less CU1,060 = CU3,758.

(b) Inventory 20X1: CU1,000 + CU180 = CU1,180; Inventory


20X0: CU1,950 + CU150 = CU2,100.

(c) Trade receivables 20X1: CU1,900 less CU200 = CU1,700;


Trade receivables 20X0: CU1,200 less CU115 = CU1,085.
(d) Cash and cash equivalents 20X1: CU200 + CU30 = CU230; Cash and cash equivalents 20X0: CU140 +
CU20 = CU160.
(e) Retained earnings 20X1: CU1,910 + CU1,000 less CU120 less CU100 = CU2,690;
Retained earnings 20X0: CU1,000 + CU1,250 less CU150 less CU190 = CU1,910.
Retained earnings at the end of the year = Retained earnings at the beginning of the year plus profit for the
year less non-controlling interests’ share of profit for the year less dividends declared.

(f) Long-term debt 20X1: CU2,300 less CU500 = CU1,800;


Long-term debt 20X0: CU2,800 less CU500 = CU2,300.
Short-term debt 20X1: CU500;
Short-term debt 20X0: CU500.

(g) Trade and other payables 20X1: CU250 + CU3 = CU253; Trade
and other payables 20X0: CU1,890 + CU2 = CU1,892.

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