Page 13 - 1. COMPILER QB - INDAS 1

Notes:
1. Current investments are held for the purpose of trading. Hence, it is a financial asset classified as FVTPL.
Any gain in its fair value will be recognised through profit or loss. Hence, Rs. 20,000 (50,000 – 30,000)

increase in fair value of financial asset will be recognised in profit and loss.
2. Assets for which the future economic benefit is the receipt of goods or services, rather than the right to
receive cash or another financial asset, are not financial assets.
3. Liabilities for which there is no contractual obligation to deliver cash or other financial asset to another
entity, are not financial liabilities.

4. As per Ind AS 10, ‘Events after the Reporting Period’, If dividends are declared after the reporting period
but before the financial statements are approved for issue, the dividends are not recognized as a liability
at the end of the reporting period because no obligation exists at that time. Such dividends are disclosed
in the notes in accordance with Ind AS 1, Presentation of Financial Statements.
5. Other current financial liabilities:

(Rs.)
Balance of other current liabilities as per financial statements 45,000
Less: Dividend declared for FY 2019 - 2020 (Note – 4) (15,000)
Reclassification of government statuary dues payable to ‘other current
liabilities’ (15,000)
Closing balance 15,000

Working Note:
Calculation of deferred tax on temporary differences as per Ind AS 12 for financial year 2019 – 2020:
Item Carrying amount Tax base Difference DTA / DTL @
(Rs.) (Rs.) (Rs.) 30% (Rs.)
Property, Plant and Equipment 1,00,000 80,000 20,000 6,000-DTL

Pre-incorporation expenses Nil 24,000 24,000 7,200-DTA
Net DTA 1,200-DTA

Q5 (May 21)

An entity has the following trial balance line items. How should these items be classified, i.e., current or non-
current as per Ind AS 1?

(a) Receivables (viz., receivable under a contract of sale of goods in which an entity deals)
(b) Advance to suppliers
(c) Income tax receivables [other than deferred tax]
(d) Insurance spares

SOLUTION

(a) As per paragraph 66(a) of Ind AS 1, an entity shall classify an asset as current when it expects to realise
the asset, or intends to sell or consume it, in its normal operating cycle.
Paragraph 68 provides the guidance that current assets include assets (such as inventories and trade
receivables) that are sold, consumed or realised as part of the normal operating cycle even when they are
not expected to be realised within twelve months after the reporting period.

If the operating cycle exceeds twelve months, then additional disclosure as required by paragraph 61 of Ind
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