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recorded at cost. Since investment in mutual fund are designated
at FVTPL, increase of Rs.1,00,000 in mutual
funds fair value would increase the value of
investments with corresponding increase to
Retained Earnings.

Journal Entry on the date of transition

Particulars Debits (Rs.) Credit (Rs.)
Investment in mutual funds Dr. 1,00,000
To Retained earnings 1,00,000

Issue 3: Borrowings Processing fees/transaction cost:
Accounting Standards Ind AS Impact on company’s
(Erstwhile IGAAP) financial statements
As per AS, such As per IND AS, such expenditure is Fair value as on the date of
expenditure is charged to amortised over the period of the loan. Ind transition is Rs. 1,80,000 as
Profit and Loss account AS 101 states that if it is impracticable against its book value of
or capitalized as the for an entity to apply retrospectively the Rs. 2,00,000. Accordingly,
case may be. effective interest method in Ind AS 109, the difference of Rs.
the value of the financial liability at the 20,000 is adjusted through
date of transition to Ind AS shall be the retained earnings.
new gross carrying amount of that
financial asset or the new amortised cost
of that financial liability.

Journal Entry on the date of transition

Particulars Debits (Rs.) Credit (Rs.)
Borrowing / Loan payable Dr. 20,000
To Retained earning 20,000

Issue 4: Proposed dividend:
Accounting Standards Ind AS Impact on company’s financial
(Erstwhile IGAAP) statements
As per AS, provision for As per Ind AS, liability for Since dividend should be deducted from
proposed dividend is proposed dividend is recognised in retained earnings during and approved.
made in the year when the year in which it has been Therefore, the provision declared for
it has been declared declared and approved. preceding year should be reserved (to
and approved. rectify the wrong entry). Retained
earnings would increase proportionately
due to such adjustment.

Journal Entry on the date of transition

Particulars Debt (Rs.) Credit (Rs.)
Provisions Dr. 30,000
To Retained earnings 30,000
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