Page 11 - 33. FR RTP NOV. 22

procurement and handling, loading and unloading charges incurred.
o Labour cost/ Factory Overheads - includes salaries and other expenses of direct production department,
and also expenses allocated from indirect departments to direct department.
o Material Overheads - Includes salaries and other expenses (including expenses allocated from other

departments) booked under departments linked with materials like purchases, stores and quality control.
Accordingly, provision has been made considering the above costs only. The value of provision created for 21
remaining equipment to be produced is as per the working shown below:

Particulars Value (Rs. in lakh)
(i) Cost of production (which includes material cost, labour 199.00
cost/factory overhead and material overhead)
(ii) Selling price (190.00)
(iii) Differential cost per equipment 9.00
(iv) Differential cost of Rs. 9 Lakh per equipment for 21 189.00
equipment
Whether the company's accounting treatment of cost for creation of provision towards onerous contracts is in

line with the provisions of Ind AS 37?

Ind AS 2 and Ind AS 16

Question 16

(i) A retailer company imported goods at a cost of Rs. 1,30,000 including Rs. 20,000 non-refundable import
duties and Rs. 10,000 refundable purchase taxes. The risks and rewards of ownership of the imported goods
were transferred to the retailer company upon collection of the goods from the harbour warehouse. The retailer
company was required to pay for the goods upon collection. The retailer company incurred Rs. 5,000 to
transport the goods to its retail outlet and a further Rs. 2,000 in delivering the goods to its customer. Further
selling costs of Rs. 3,000 were incurred in selling the goods.

State whether delivery charges and selling expenses will form part of the cost of inventory. If not, then why?
Also calculate the cost of inventory.
(ii) Company A incurred Rs. 20,000 as cost for restoring the site on which the item of PPE was located. This
item was used for manufacturing of goods and the requirement for restoring will arise due to

manufacturing of goods.
What will the treatment of this Rs. 20,000 in the books of Company A? Analyse on the basis of the
provisions of relevant Ind AS.

Ind AS 33

Question 17

Company S is a subsidiary of Company P. Following facts are in respect of Company S:
 Company S has 10,000 ordinary shares and 1,000 options outstanding, of which Company P owns 9,000
shares and 500 options, respectively.
 The options have an exercise price of Rs. 40.
 The average market price of Company S‖s ordinary share was Rs. 50 in 20X1.

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