Page 19 - 30. COMPILER QB - IND AS 101

is to be repaid in equal installments over the period of ten years at the year end. Interest is also
payable at each year end. The fair value of loan as on the date of transition is Rs 50,000 as against the
carrying amount of loan which at present amounts to Rs 40,000. However, Ind AS 109 mandates to

charge the interest expense as per effective interest method after the adjustment of transaction costs.
Management says it is a tedious task in the given case to apply the effective interest rate changes with
retrospective effect and hence is reluctant to apply the same retrospectively in its first-time adoption.
f) In the long-term borrowings, Rs 4,50,000 of component is due towards the State Government. Interest is
payable on the government loan at 4%, however the prevailing rate in the market at present is 8%. The

fair market value of the loan stands at Rs 4,20,000 as on the relevant date.
g) Under Previous GAAP, the mutual funds were measured at cost or market value, whichever is lower. Under
Ind AS, the Company has designated these investments at fair value through profit or loss. The value of
mutual funds as per previous GAAP is Rs 2,00,000 as included in ‘current investment’. However, the fair
value of mutual funds as on the date of transition is Rs 2,30,000.

h) Ignore separate calculation of deferred tax on above adjustments. Assume the net deferred tax income to
be Rs 50,000 on account of Ind AS transition adjustments.

Requirements:
- Prepare transition date balance sheet of Shaurya Limited as per Indian Accounting Standards
Show necessary explanation for each of the items presented by the chief financial officer in the form of

notes, which may or may not require the adjustment as on the date of transition.
SOLUTION

Transition date (opening) IND-AS BALANCE SHEET of SHAURYA LIMITED As at 1 April 2018 (All figures
are in ’000, unless otherwise specified)
Particulars Previous Transitional Ind Opening Ind AS
GAAP AS adjustments Balance sheet
ASSETS
Non-current assets
Property, plant and equipment (Note 1) 20,00,000 5,00,000 25,00,000
Goodwill (Note 2) 1,00,000 - 1,00,000

Other Intangible assets (Note 3) 2,00,000 - 2,00,000
Financial assets:
Investment 5,00,000 - 5,00,000
Loans (Note 4) 40,000 10,000 50,000
Other financial assets 1,10,000 - 1,10,000
Other non-current assets 2,00,000 - 2,00,000

Current assets
Inventories 12,50,000 - 12,50,000
Financial assets
Investment (Note 5) 18,00,000 30,000 18,30,000
Trade receivables (Note 6) 9,00,000 - 9,00,000
Cash and cash equivalents/Bank 10,00,000 - 10,00,000

Other financial assets 3,50,000 - 3,50,000
30. 18