Page 4 - 15. COMPILER QB - INDAS 21
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State the date of transaction for advance consideration and recognition of revenue. Also state the amount of
revenue in INR to be recognized on the date of recognition of revenue. The exchange rates on 1st January,
2018 and 31st March, 2018 are Rs 72 per USD and Rs 75 per USD respectively.
SOLUTION
This is the case of Revenue recognised at a single point in time with multiple payments. As per the
guidance given in Appendix B to Ind AS 21:
A Ltd. will recognise a non-monetary contract liability amounting Rs1,440 million, by translating USD 20
million at the exchange rate on 1st January, 2018 ieRs72 per USD.
A Ltd. will recognise revenue at 31st March, 2018 (that is, the date on which it transfers the goods to the
customer).
A Ltd. determines that the date of the transaction for the revenue relating to the advance consideration of
USD 20 million is 1st January, 2018. Applying paragraph 22 of Ind AS 21, A Ltd. determines that the date of
the transaction for the remainder of the revenue as 31st March, 2018.
On 31st March, 2018, A Ltd. will:
De-recognise the non-monetary contract liability of USD 20 million and recognise USD 20 million of
revenue using the exchange rate as at 1st January, 2018 ieRs72 per USD; and
Recognise revenue and a receivable for the remaining USD 30 million, using the exchange rate on 31st
March, 2018 ieRs75 per USD.
The receivable of USD 30 million is a monetary item, so it should be translated using the closing rate until the
receivable is settled.
Q4 (Nov. 19)
th
Global Limited, an Indian company acquired on 30 September, 20X1 70% of the share capital of Mark
Limited, an entity registered as company in Germany. The functional currency of Global Limited is Rupees
st
and its financial year end is 31 March, 20X2.
(i) The fair value of the net assets of Mark Limited was 23 million EURO and the purchase consideration paid
th
is 17.5 million EURO on 30 September, 20X1.
st
th
The exchange rates as at 30 September, 20X1 was Rs.82/EURO & at 31 March, 20X2 was Rs. 84/EURO.
What is the value at which the goodwill has to be recognised in the financial statements of Global Limited
st
as on 31 March, 20X2?
(ii) Mark Limited sold goods costing 2.4 million EURO to Global Limited for 4.2 million EURO during the year
st
ended 31 March, 20X2. The exchange rate on the date of purchase by Global Limited was Rs. 83/EURO
st
and on 31 March, 20X2 was Rs. 84/EURO. The entire goods purchased from Mark Limited are unsold as
st
on 31 March, 20X2. Determine the unrealised profit to be eliminated in the preparation of consolidated
financial statements.
SOLUTION
(i) Ind AS 21 requires that goodwill arose on business combination shall be expressed in the functional
currency of the foreign operation and shall be translated at the closing rate in accordance with paragraphs
39 and 42. In this case the amount of goodwill will be as follows:
Net identifiable asset Dr. 23 million
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