Financial Reporting - July 2020 MTP

(a) H Ltd. has the following assets and liabilities as at March 31, 20X1, prepared in accordance with previous GAAP: Particulars Property, Plant and Equipment Investments in S. Ltd. Debtors Advances for purchase of inventory Inventory Total assets Deferral loan Notes Amount (Rs.) 1 2 1,34,50,000 48,00,000 3 2,00,000 50,00,000 8,00,000 49,000 2,42,99,000 60,00,000 Creditors Short term borrowing Provisions Total liabilities Share capital Reserves: 30,00,000 8,00,000 12,00,000 1,10,00,000 1,30,00,000 2,99,000 Cumulative translation difference ESOP reserve Retained earnings Total equity Total…

In relation to property, plant and equipment, the following adjustments were identified: Property, plant and equipment comprise land held for capital appreciation purposes costing Rs. 4,50,000 and was classified as investment property as per Ind AS 40. Exchange differences of Rs. 1,00,000 were capitalised to depreciable property, plant and equipment on which accumulated depreciation of Rs. 40,000 was recognised. There were no asset retirement obligations. The management intends to adopt deemed cost exemption for using the previous GAAP carrying values…

The Company had made an investment in S Ltd. (subsidiary of H Ltd.) for Rs. 48,00,000 that carried a fair value of Rs. 68,00,000 as at the transition date. The Company intends to recognise the investment at its fair value as at the date of transition.

The deferral loan of Rs. 60,00,000 was obtained on March 31, 20X1, for setting up a business in a backward region with a condition to create certain defined targets for employment of local population of that region. The loan does not carry any interest and is repayable in full at the end of 5 years. In accordance with Ind AS 109, the discount factor on the loan is to be taken as 10%, being the incremental borrowing rate. Accordingly, the…

The retained earnings of the Company contained the following: ESOP reserve of Rs. 20,000: The Company had granted 1,000 options to employees out of which 800 have already vested. The Company followed an intrinsic value method for recognition of ESOP charge and recognised Rs. 12,000 towards the vested options and Rs. 8,000 over a period of time as ESOP charge and a corresponding reserve. If fair value method had been followed in accordance with Ind AS 102, the corresponding charge…

RKA Private Ltd is an old company established in 1995. The company started with a very small capital base and today it is one of the leading companies in India in its industry. The company has an annual turnover of Rs. 11,000 crores and planning to get listed in the next year. The company has a large employee base. The company provided a defined benefit plan to its employees. Following is the information relating to the balances of the fund’s…

Continuing with the fact pattern in (a) above except for: The number of shares to be issued after one year is not fixed. Rather, A Ltd. agreed to issue variable number of shares having a fair value equal to Rs. 40 lakhs after one year, if the profit before interest and tax for the first year following acquisition exceeds Rs. 1 crore. A Ltd. issued shares with Rs. 40 lakhs after an year. (12 Marks) (a) X Ltd. has identified…

(a) KK Ltd. runs a departmental store which awards 10 points for every purchase of Rs. 500 which can be discounted by the customers for further shopping with the same merchant. Unutilised points will lapse on expiry of two years from the date of credit. Value of each point is Rs. 0.50. During the accounting period 20X1-20X2, the entity awarded 1,00,00,000 points to various customers of which 18,00,000 points remained undiscounted. The management expects only 80% will be discounted in…