Page 18 - 2. COMPILER QB - INDAS 12

Year Opening balance (Rs) Interest @ 10% Closing balance
(A) (Rs) (B) (Rs) (A) + (B)

3 59,29,000 5,92,900 65,21,900

Since the closing balance calculated as per the above table on the basis of 10% matches with the bullet
payment of Rs 65,21,900, it assures that 10% rate of interest taken as effective rate of interest is correct
and is in accordance with Ind AS 109. It considers the impact of cost of borrowing adjusted from the loan

amount at initial recognition.

Q13. (Jan. 21)
C Ltd. acquired the following assets and liabilities of D Ltd. in a business combination:
in Rs. 000s

Fair Value Carrying Amount Temporary
Difference
Plant & equipment 500 510 (10)
Inventory 130 150 (20)
Trade receivables 200 210 (10)
Loans and advances 80 85 (5)
910 955 (45)
10% Debentures 200 200
710 755
Consideration Paid 760 760
50 5
Goodwill Paid 50 5 45
Goodwill is deductible as permissible expenses under the existing tax law. Calculate Deferred Tax Asset /
liability as per relevant Ind AS and also pass related journal entry in the books of C Ltd. and assume tax rate
at 25%.

SOLUTION

In this case there is a Deferred Tax Asset as the Tax base of assets acquired is higher by Rs. 45,000.
Deferred Tax Asset would be Rs.11,250 (45,000 x 25%)
Journal entry
Plant and equipment Dr. 5,00,000

Inventory Dr. 1,30,000
Trade receivables Dr. 2,00,000
Loans and advances Dr. 80,000
Goodwill (50,000 - 11,250) Dr. 38,750*
Deferred Tax Asset Dr. 11,250
To 10% Debentures 2,00,000

To Bank 7,60,000
(Assets and liabilities taken over, goodwill and deferred tax asset have been recognised)

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