Page 25 - 16. COMPILER QB - INDAS 103

Gain on disposal of Stuti 440 440
Pvt. Ltd.
Balance at the end of the 0 4,700 4,700
reporting period

Working Notes:

1. When sold, the carrying amount of all assets and liabilities attributable to Stuti Pvt. Ltd. were eliminated
from the consolidated statement of financial position.
2. Cash in hand
Cash before disposal of Stuti Pvt. Ltd. 3,100
Less: Stuti Pvt. Ltd. Cash (1,000)
Add: Cash realized from disposal 3,000
Cash in hand 5,100
3. Gain / Loss on disposal of entity (in million)
Proceeds from disposal 3,000
Less: Net assets of Stuti Pvt. Ltd. (2,560)

Gain on disposal 440
4. Retained Earnings (in million)
Retained earnings before disposal 4,260
Add: Gain on disposal 440
Retained earnings after disposal 4,700

Q12. (August 18)

In March 2018, Pharma Ltd. acquired Dorman Ltd. in a business combination for a total cost of Rs. 12,000
lakhs. At that time Dorman Ltd.'s assets and liabilities are as follows:
Item Rs. in lakhs
Assets
Cash 780

Receivables (net) 5,200
Plant and equipment 7,000
Deferred tax asset 360
Liabilities
Payables 1,050
Borrowings 4,900
Employee entitlement liabilities 900
Deferred tax liability 300
The plant and equipment has a fair value of Rs. 8,000 lakhs and a tax written down value of Rs. 6,000 lakhs.
The receivables are short-term trade receivables net of a doubtful debts allowance of Rs. 300 lakhs.

Bad debts are deductible for tax purposes when written off against the allowance account by Dorman Ltd.
Employee benefit liabilities are deductible for tax when paid.
Dorman Ltd. owns a popular brand name that meets the recognition criteria for intangible assets under Ind AS
103 'Business Combinations‖. Independent valuers have attributed a fair value of Rs. 4.300 lakhs for the brand.
However, the brand does not have any cost for tax purposes and no tax deductions are available for the same.

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