Page 9 - 30. COMPILER QB - IND AS 101

Issue 4: The company has declared a dividend of Rs. 30,000 for last financial year. On the date of transition,
the declared dividend has already been deducted by the accountant from the company’s ‘Reserves & Surplus’
and the dividend payable has been grouped under ‘Provisions’. The dividend was only declared by the board of

directors at that time and it was not approved in the annual general meeting of shareholders. However,
subsequently when the meeting was held it was ratified by the shareholders.
Issue 5: The company had acquired intangible assets as trademarks amounting to Rs. 2,50,000. The company
is assumed to have indefinite life of these assets. The fair value of the intangible assets as on the date of
transition was Rs. 3,00,000. However, the company wants to carry the intangible assets at Rs. 2,50,000 only.

Issue 6: After consideration of possible effects as per Ind AS, the deferred tax impact is computed as Rs.
25,000. This amount will further increase the portion of deferred tax liability. There is no requirement to carry
out the separate calculation of deferred tax on account of Ind AS adjustment.
Management wants to know the impact of Ind AS in the financial statements of the company for its general
understanding. Prepare Ind AS Impact Analysis Report (Extract) for HIM Limited for presentation to the

management wherein you are required to discuss the corresponding differences between Earlier IGAAP (AS)
and Ind AS against each identified issue for preparation of transition date balance sheet. Also pass journal
entries for each issue.
SOLUTION

Preliminary Impact Assessment on Transition to Transition to Ind AS in HIM Limited’s Financial Statements
Issue 1: Fair value as deemed cost for property plant and equipment:
Accounting Standards Ind AS Impact on Company’s
(Erstwhile IGAAP) financial statements
As per AS 10, Property, Plant Ind AS 101 allows entity to The company has decided
and Equipment is recognised elect to measure property, to adopt fair value as
at cost less depreciation Plant an Equipment on the deemed cost in this case.
transition date at its fair Since fair value exceeds
value or previous GAAP book value, so the book
carrying value (book value) value should be brought up
as deemed cost. to fair value. The resulting
impact of fair valuation of
land Rs.3,00,000 should be
adjusted in other equity

Journal Entry on the date of transition
Particulars Debits (Rs.) Credit (Rs.)
Property Plant and Equipment Dr. 3,00,000
To Revaluation Surplus (OCI- Other Equity) 3,00,000

Issue 2: Fair valuation of Financial Assets
Accounting Standards Ind AS Impact on company’s financial statements
(Erstwhile IGAAP)
As per Accounting Standard, On transition, All financial assets (other than in subsidiaries,
investments are measured at financial assets associates and JVs’ which are recorded at cost)
lower of cost and fair value. including are initially recognized at fair value.
investments The subsequent measurement of such assets are
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