Page 17 - 32. ANALYSIS OF FS

2. Trade Receivables (Rs in lakh)
Trade receivables considered good 1,065
Trade receivables which have significant increase in credit 40
risk
Less: Provision for doubtful debts (5) 35
Total 1,100
5. Long Term Borrowings (Rs in lakh)

Term Loan from Bank (5,700 - 700) 5,000
Total 5,000
6. Other Financial Liabilities (Rs in lakh)
Unclaimed dividends 10
Interest on term loan 700
Total 710
7. Short-term provisions (Rs in lakh)
Provisions 300
Foreseeable loss against a service contract 400
Total 700
8. Other Current Liabilities (Rs in lakh)
Billing in Advance 150
Other 40
Total 190

9. Dividends not recognised at the end of the reporting period
At year end, the directors have recommended the payment of dividend of 10% i.e., Rs 1 per equity share. This
proposed dividend is subject to the approval of shareholders in the ensuing annual general meeting.

Q5 (Nov. 20 Exam)

On 1 April 2020, Star Limited has advanced a housing loan of Rs. 15 lakhs to one of its employee at an
interest rate of 6% per annum which is repayable in 5 equal annual installments along with interest at each
year end. Employee is not required to give any specific performance against this benefit. The market rate of
similar loan for housing finance by banks is 10% per annum.

The accountant of the company has recognized the staff loan in the balance sheet equivalent to the amount
of housing loan disbursed i.e. Rs. 15 lakhs. The interest income for the year is recognized at the contracted
rate in the Statement of Profit and Loss by the company i.e. Rs. 90,000 (6% of Rs. 15 lakhs).

Analyze whether the above accounting treatment made by the accountant is in compliance with the relevant

Ind AS. If not, advise the correct treatment of housing loan, interest and other expenses in the financial
statements of Star Limited for the year 2020 -2021 along with workings and applicable Ind AS.

You are required to explain how the housing loan should be reflected in the Ind AS compliant Balance Sheet
of Star Limited on 31 March 2021.

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