Page 47 - 23. COMPILER QB - IND AS 109_32

Dividend @ 10% = 9,00,000
1. Computation of Liability & Equity Component
Date Particulars Cash Discount Net present

Flow Factor Value
01-Apr-2017 0 1 0.00
31-Mar-2018 Dividend 9,00,000 0.8696 7,82,640

31-Mar-2019 Dividend 9,00,000 0.7561 6,80,490
31-Mar-2020 Dividend 9,00,000 0.6575 5,91,750

31-Mar-2021 Dividend 9,00,000 0.5718 5,14,620
31-Mar-2022 Dividend 9,00,000 0.4971 4,47,390
Total Liability Component 30,16,890

Total Proceeds 90,00,000
Total Equity Component (Bal
fig) 59,83,110

2. Allocation of transaction costs
Particulars Amount Allocation Net Amount
a b a-b
Liability Component 30,16,890 60,338 29,56,552
Equity Component 59,83,110 1,19,662 58,63,448
Total Proceeds 90,00,000 1,80,000 88,20,000

3. Accounting for liability at amortised cost
● Initial accounting = Present value of cash outflows less transaction costs
● Subsequent accounting = At amortised cost, i.e. initial fair value adjusted for interest and
repayments of the liability.
Opening Interest Cash Flow Closing Financial
Financial @ 15.86% (Dividend Liability A+B-C
Liability A B payment) C

01-Apr-2017 29,56,552 29,56,552
31-Mar-2018 29,56,552 4,68,909 9,00,000 25,25,461
31-Mar-2019 25,25,461 4,00,538 9,00,000 20,25,999
31-Mar-2020 20,25,999 3,21,323 9,00,000 14,47,322
31-Mar-2021 14,47,322 2,29,545 9,00,000 7,76,867
31-Mar-2022 7,76,867 1,23,133* 9,00,000 -
st
*Difference of Rs 78 (adjusted in the interest value of 31 March, 2022) is due to approximation of figures in
the earlier years.
4. Journal Entries to be recorded for entire term of arrangement are as follows:
Date Particulars Debit Credit
01-Apr-2017 Bank A/c Dr. 88,20,000

To Preference Shares A/c 29,56,552
To Equity Component of Preference shares A/c 58,63,448

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