Page 12 - 30. COMPILER QB - IND AS 101

(a) recognise all assets and liabilities whose recognition is required by Ind AS:
(i) customer related intangible assets if an entity elects to restate business combinations
(ii) share-based payment transactions with non-employees

(iii) recognition of deferred tax on land
(b) reclassify items that it recognised in accordance with previous GAAP as one type of asset, liability or
component of equity, but is a different type of asset, liability or component of equity in accordance with
Ind AS:
(i) redeemable preference shares that would have earlier been classified as equity;

(ii) non-controlling interests which would have been earlier classified outside equity; and
(c) apply Ind ASs in measuring all recognised assets and liabilities:
(i) discounting of long-term provisions
(ii) measurement of deferred income taxes for all temporary differences instead of timing differences.

Q7. (Nov 22)
On 1st April 20X1, Nuogen Ltd. had granted 1,20,000 share options to its employees with the vesting condition
being a service condition as follows:

 Vesting date : 31st March 20X2 - 80,000 share options (1-year vesting period since grant date)
 Vesting date : 31st March 20X5 - 40,000 share options (4-year vesting period since grant date)
Each option can be converted into one equity share of Nuogen Ltd. The fair value of the options on grant
date, i.e., on 1st April 20X1 was Rs. 20.

Nuogen Ltd. is required to prepare financial statements in Ind AS for the financial year ending 31st March
20X4. The transition date for Ind AS being 1st April 20X2.
The entity has disclosed publicly the fair value of both these equity instruments as determined at the
measurement date, as defined in Ind AS 102.
The previous applicable GAAP for the entity was IGAAP (AS) and therein, the entity had not adopted intrinsic
method of valuation.

The share options have not been yet exercised by the employees of Nuogen Ltd.
How the share based payment should be reflected in, the books of Nuogen Ltd. as on 31st March 20X4,
assuming that the entity has erred by not passing any entry for the aforementioned transactions in the books
of Nuogen Ltd. on grant date, i.e. 1st April 20X1?

Solution
For 80,000 share-based options vested before transition date:
Ind AS 101 provides that a first-time adopter is encouraged, but not required, to apply Ind AS 102 on ‘Share-

based Payment’ to equity instruments that vested before the date of transition to Ind AS. Hence, Nuogen Ltd.
may opt for the exemption given in Ind AS 101 for 80,000 share options vested before the transition date.
However, since no earlier accounting was done for these share-based options under previous GAAP too,
therefore this led to an error on the transition date, as detected on the reporting date i.e. 31st March, 20X4.
Hence, being an error, no exemption could be availed by Nuogen Ltd. on transition date with respect to Ind AS

102.

While preparing the financial statements for the financial year 20X3 -20X4, an error has been discovered
which occurred in the year 20X1 -20X2, i.e., for the period which was earlier than earliest prior period
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