Page 67 - 23. COMPILER QB - IND AS 109_32

c. 31 March 2020 – Before Kupa Limited approached the bank –
Particulars Dr. Amount (Rs) Cr. Amount (Rs)

Interest expense (profit and loss) Dr. 8,07,359
To Loan from bank A/c 47,359
To cash A/c 7,60,000
(Being loan payment of interest recorded by the

Company before it approached the Bank for deferment
of principal)

Upon receiving the new terms of the loan, Kupa Limited, re-computed the carrying value of the loan by
discounting the new cash flows with the original effective interest rate and comparing the same with the
current carrying value of the loan. As per requirements of Ind AS 109, any change of more than 10% shall be
considered a substantial modification, resulting in fresh accounting for the new loan:
Date Cash flows Interest outflow Discount factor PV of cash flows
(principal) @15%

st
31 March 20 (76,00,000)
st
31 March 21 9,50,000 11,40,000 0.903 18,87,270
st
31 March 22 9,50,000 9,97,500 0.815 15,87,213
st
31 March 23 9,50,000 8,55,000 0.735 13,26,675
st
31 March 24 9,50,000 7,12,500 0.664 11,03,900
st
31 March 25 9,50,000 5,72,700 0.599 9,12,097
st
31 March 26 9,50,000 4,30,200 0.540 7,45,308
st
31 March 27 9,50,000 2,87,700 0.488 6,03,998
st
31 March 28 9,50,000 1,45,200 0.440 4,81,888
PV of new contractual cash flows discounted at 10.80% 86,48,349
Carrying amount of loan as on 31 Dec 20X2 75,22,909

Difference 11,25,440
Percentage of carrying amount 14.96%

Considering a more than 10% change in PV of cash flows compared to the carrying value of the loan, the
existing loan shall be considered to have been extinguished and the new loan shall be accounted for as a
separate financial liability. The accounting entries for the same are included below:

st
d. 31 March 2020 – Accounting for Extinguishment
Particulars Dr. Amount (Rs) Cr. Amount (Rs)
Loan from bank (old) A/c Dr 75,22,909
Finance cost (profit and loss) Dr 77,091
To Loan from bank (new) A/c 76,00,000
(Being new loan accounted for at its principal amount
in absence of any transaction costs directly related to
such loan and correspondingly a de-recognition of
existing loan)

23. 66