Page 15 - 30. COMPILER QB - IND AS 101

Cumulative translation difference 4 1,00,000
ESOP reserve 4 20,000
Retained earnings 1,79,000
Total equity 1,32,99,000
Total equity and liabilities 2,42,99,000

The following GAAP differences were identified by the Company on first-time adoption of Ind AS with effect
from April 1, 20X1:
1. In relation to property, plant and equipment, the following adjustments were identified:
• Property, plant and equipment comprise land held for capital appreciation purposes costing Rs.
4,50,000 and was classified as investment property as per Ind AS 40.
• Exchange differences of Rs. 1,00,000 were capitalised to depreciable property, plant and equipment on

which accumulated depreciation of Rs. 40,000 was recognised.
• There were no asset retirement obligations.

• The management intends to adopt deemed cost exemption for using the previous GAAP carrying values
as deemed cost as at the date of transition for PPE and investment property.

2. The Company had made an investment in S Ltd. (subsidiary of H Ltd.) for Rs. 48,00,000 that carried a
fair value of Rs. 68,00,000 as at the transition date. The Company intends to recognise the investment at its
fair value as at the date of transition.

3. Financial instruments:

● Deferral loan Rs. 60,00,000:
The deferral loan of Rs. 60,00,000 was obtained on March 31, 20X1, for setting up a business in a backward
region with a condition to create certain defined targets for employment of local population of that region.
The loan does not carry any interest and is repayable in full at the end of 5 years. In accordance with Ind AS
109, the discount factor on the loan is to be taken as 10%, being the incremental borrowing rate. Accordingly,

the fair value of the loan as at March 31, 20X1, is Rs. 37,25,528. The entity chooses to exercise the option
given in paragraph B11 of Ind AS 101, i.e., the entity chooses to apply the requirements of Ind AS 109,
Financial Instruments and Ind AS 20, Accounting for Government Grants and Disclosure of Government
Assistance, retrospectively as required information had been obtained at the time of initially accounting for
deferral loan.

4. The retained earnings of the Company contained the following:
● ESOP reserve of Rs. 20,000:
The Company had granted 1,000 options to employees out of which 800 have already vested. The Company
followed an intrinsic value method for recognition of ESOP charge and recognised Rs. 12,000 towards the
vested options and Rs. 8,000 over a period of time as ESOP charge and a corresponding reserve. If the fair

value method had been followed in accordance with Ind AS 102, the corresponding charge would have been Rs.
15,000 and Rs. 9,000 for the vested and unvested shares respectively. The Company intends to avail the Ind
AS 101 exemption for share-based payments for not restating the ESOP charge as per previous GAAP for
vested options.
● Cumulative translation difference

30. 14