Page 2 - 23. COMPILER QB - IND AS 109_32

INDAS – 109 & 32

FINANCIAL INSTRUMENTS

(TOTAL NO. OF QUESTIONS – 44)

INDEX

S.No. Particulars Page No.

1 RTP Questions 23.1

2 MTP Questions 23.13

3 Past Exam Questions 23.32

RTPs QUESTIONS

Q.1 (RTP May 18, MTP Oct.20, MTP April 19, MTP Nov.19, MTP Aug. 18)

On 1st April, 20X4, Shelter Ltd. issued 5,000, 8% convertible debentures with a face value of Rs 100 each
maturing on 31st March, 20X9. The debentures are convertible into equity shares of Shelter Ltd. at a
conversion price of Rs 105 per share. Interest is payable annually in cash. At the date of issue, Shelter Ltd.
could have issued non-convertible debt with a 5-year term bearing a coupon interest rate of 12%. On 1st April,
20X7, the convertible debentures have a fair value of Rs 5,25,000. Shelter Ltd. makes a tender offer to

debenture holders to repurchase the debentures for Rs 5,25,000, which the holders accepted. At the date of
repurchase, Shelter Ltd. could have issued non-convertible debt with a 2-year term bearing a coupon interest
rate of 9%.
Show accounting entries in the books of Shelter Ltd. for recording of equity and liability component:
1. At the time of initial recognition and

2. At the time of repurchase of the convertible debentures.
The following present values of Rs 1 at 8%, 9% & 12% are supplied to you:

Interest Rate Year 1 Year 2 Year 3 Year 4 Year 5

8% 0.926 0.857 0.794 0.735 0.681
9% 0.917 0.842 0.772 0.708 0.650

12% 0.893 0.797 0.712 0.636 0.567

23.1