Page 36 - 23. COMPILER QB - IND AS 109_32

♦ Additional amount payable = Rs. 45,600
The above represents a contractual obligation to pay cash against settlement of a financial liability under
conditions that are unfavorable to A Ltd. (owing to additional amount payable in comparison to amount that

would have been paid without one-time settlement). Hence the rescheduled arrangement meets the definition
of ‘financial liability’.

Q24 (October 21 – 4 Marks)

Which of the following would meet and not meet the definition of financial instruments and fall outside the
scope of Ind AS 32?
(1) Cash deposited in banks

(2) Gold deposited in banks
(3) Trade receivables
(4) Investments in debt instruments
(5) Investments in equity instruments
(6) Prepaid expenses
(7) Inter-corporate loans and deposits

(8) Deferred revenue
(9) Tax liability
(10) Provision for estimated litigation losses.
SOLUTION

Table showing classification of various items:
S. No. Item Classification
(1) Cash deposited in banks Financial Instrument
(2) Gold deposited in banks Not a financial instrument
(3) Trade receivables Financial Instrument
(4) Investments in debt instruments Financial Instrument
(5) Investments in equity instruments Financial Instrument

(6) Prepaid expenses Not a financial instrument
(7) Inter-corporate loans and deposits Financial Instrument
(8) Deferred revenue Not a financial instrument
(9) Tax liability Not a financial instrument
(10) Provision for estimated litigation losses Not a financial instrument

Q25 (April 22)

On 1st April, 20X1, Star Limited has advanced a housing loan of Rs. 15 lakh to one of its employees at an
interest rate of 6% per annum which is repayable in 5 equal annual installments along with interest at each
year end. Employee is not required to give any specific performance against this benefit. The market rate of
similar loan for housing finance by banks is 10% per annum.

The accountant of the company has recognized the staff loan in the balance sheet equivalent to the amount
of housing loan disbursed i.e. Rs. 15 lakh. The interest income for the year is recognized at the contracted
rate in the Statement of Profit and Loss by the company i.e. Rs. 90,000 (6% of Rs. 15 lakh).
Analyze whether the above accounting treatment made by the accountant is in compliance with the relevant

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