Financial Reporting - May 2019 MTP

(a) H Ltd. acquired equity shares of S Ltd., a listed company, in two tranches as mentioned in the below table: Equity stake purchased 1 November, 2016 15% 1 January, 2017 45% Remarks The shares were purchased based on the quoted price on the stock exchange on the relevant dates. Both the above-mentioned companies have INR as their functional currency. Consequently, H Ltd. acquired control over S Ltd. on 1 st January, 2017. Following is the Balance Sheet of S…

(a) An entity has a nuclear power plant and a related decommissioning liability. The nuclear power plant started operating on April 1, 2015. The plant has a useful life of 40 years. Its initial cost was Rs. 1,20,000. This included an amount for decommissioning costs of Rs. 10,000, which represented Rs. 70,400 in estimated cash flows payable in 40 years discounted at a risk-adjusted rate of 5 per cent. The entity’s financial year ends on March 31. Assume that a…

(a) QA Ltd. sold a property on 1 st April, 2016 for Rs. 48 crores to raise cash for the future expansion of its business. The carrying value of the property on 1 st April, 2016 was Rs. 50 crores and as per the independent valuation report the market value of the property is Rs. 55 crores and the distress sale value is Rs. 52 crores. The estimated future life of the property as on 1 st April, 2016 was…

(a) A company has a scheme for payment of settlement allowance to retiring employees. Under the scheme, retiring employees are entitled to reimbursement of certain travel expenses for class they are entitled to as per company rule and to a lump-sum payment to cover expenses on food and stay during the travel. Alternatively, employees can claim a lump sum amount equal to one month pay last drawn. The company’s contentions in this matter are: (i) Settlement allowance does not depend…

20X1, Pluto Ltd. has advance a loan for Rs. 10 lakhs to one of its employees for an interest rate at 4% per annum (market rate 10%) which is repayable in 5 equal annual installments along with interest at each year end. Employee is not required to give any specific performance against this benefit. The accountant of the company has recognised the staff loan in the balance sheet equivalent to the amount disbursed i.e. Rs. 10 lakhs. The interest income…

(a) An entity enters into a contract with a customer for two intellectual property licences (Licences A and B), which the entity determines to represent two performance obligations each satisfied at a point in time. The stand-alone selling prices of Licences A and B are Rs. 1,600,000 and Rs. 2,000,000, respectively. The entity transfers Licence B at inception of the contract and transfers Licence A one month later. Case A—Variable consideration allocated entirely to one performance obligation The price stated…