Page 10 - 30. COMPILER QB - IND AS 101

measured at fair based on its categorization either Fair Value
values except for through Profit & Loss (FVTOCI) or at business
investments in model assessment and contractual cash flow.
subsidiaries, Since investment in mutual fund are designated
associates and JVs’ at FVTPL, increase of Rs.1,00,000 in mutual funds
which are recorded fair value would increase the value of investments
at cost. with corresponding increase to Retained Earnings.

Journal Entry on the date of transition

Particulars Debits (Rs.) Credit (Rs.)
Investment in mutual funds Dr. 1,00,000
To Retained earnings 1,00,000

Issue 3: Borrowings Processing fees/transaction cost:
Accounting Standards Ind AS Impact on company’s
(Erstwhile IGAAP) financial statements
As per AS, such As per Ind AS, such expenditure Fair value as on the
expenditure is charged to is amortised over the period of date of transition is Rs.
Profit and Loss account the loan. Ind AS 101 states that 1,80,000 as against its
or capitalized as the if it is impracticable for an entity book value of Rs.
case may be. to apply retrospectively the 2,00,000. Accordingly,
effective interest method in Ind the difference of Rs.
AS 109, the value of the financial 20,000 is adjusted
liability at the date of transition through Retained
to Ind AS shall be the new gross Earning.
carrying amount of that financial
asset or the new amortised cost
of that financial liability.

Journal Entry on the date of transition
Particulars Debits (Rs.) Credit (Rs.)

Borrowing / Loan payable Dr. 20,000
To Retained earning 20,000

Issue 4: Proposed dividend:
Accounting Standards Ind AS Impact on company’s financial
(Erstwhile IGAAP) statements
As per AS, provision for As per Ind AS, liability for Since dividend should be deducted from
proposed dividend is proposed dividend is recognised in retained earnings during and approved.
made in the year when the year in which it has been Therefore, the provision declared for the
it has been declared declared and approved. preceding year should be reserved (to
and approved. rectify the wrong entry). Retained earnings
would increase proportionately due to such
adjustment.

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