Page 8 - 30. COMPILER QB - IND AS 101

Total equity component per debenture (Balancing figure) (B) = (C) – (A) 6.18
Face value per debenture (C) 100
Total equity component for 30,000 debentures 1,85,400

Total debt amount (30,000 x 93.82) 28,14,600
Thus, on the date of transition, the amount of Rs 30,00,000 being the amount of debentures will be split as
under:
Debt Rs 28,14,600
Equity Rs 1,85,400
However, on the date of transition, unwinding of ₹ 28,14,600 will be done for two years as follows:

Year Opening balance Finance cost @ 10% Interest paid Closing balance

1 28,14,600 2,81,460 1,80,000 29,16,060
2 29,16,060 2,91,606 1,80,000 30,27,666

Therefore, on transition date, Sigma Ltd. shall –
a. recognise the carrying amount of convertible debentures at ₹ 30,27,666;
b. recognise equity component of compound financial instrument of ₹ 1,85,400;
c. debit ₹ 63,066 to retained earnings being the difference between the previous GAAP amount of ₹
31,50,000 and ₹ 30,27,666 and the equity component of compound financial instrument of ₹1,85,400; and

d. de-recognise the debenture liability in previous GAAP of ₹ 31,50,000.
Notes:
1. 3.17 is the annuity factor of the present value of Re. 1 at a discount rate of 10% for 4 years.
2. On maturity, Rs. 110 will be paid (Rs. 100 as principal payment + Rs. 10 as premium)

Q5. (RTP May 21 & MTP March 22)
HIM Limited having net worth of Rs.250 crores is required to adopt Ind AS from 1 April, 20X2 in accordance

with the Companies (Indian Accounting Standard) Rules 2015.
Rahul, the senior manager, of HIM Ltd. has identified following issues which need specific attention of CFO so
that opening Ind AS balance sheet as on the date of transition can be prepared:
Issue 1: As part of Property, Plant and Equipment, Company has elected to measure land at its fair value and
want to use this fair value as deemed cost on the date of transition. The carrying value of land as on the

date of transition was Rs. 5,00,000. The land was acquired for a consideration of Rs. 5,00,000. However, the
fair value of land as on the date of transition was Rs. 8,00,000.
Issue 2: Under Ind AS, the Company has designated mutual funds as investments at fair value through profit
or loss. The value of mutual funds as per previous GAAP was Rs.4,00,000 (at cost). However, the fair value of
mutual funds as on the date of transition was Rs.5,00,000.

Issue 3: Company had taken a loan from another entity. The loan carries an interest rate of 7% and it had
incurred certain transaction costs while obtaining the same. It was carried at cost on its initial recognition.
The principal amount is to be repaid in equal installments over the period of loan. Interest is also payable at
each year end. The fair value of loan as on the date of transition is Rs. 1,80,000 as against the carrying
amount of loan which at present equals Rs. 2,00,000.

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