Page 13 - 33. FR RTP NOV. 22

ANSWERS

Solution 1

For 80,000 share-based options vested before transition date:
Ind AS 101 provides that a first-time adopter is encouraged, but not required, to apply Ind AS 102 on ―Share-
based Payment‖ to equity instruments that vested before the date of transition to Ind AS. Hence, Nuogen Ltd.
may opt for the exemption given in Ind AS 101 for 80,000 share options vested before the transition date.

However, since no earlier accounting was done for these share-based options under previous GAAP too,
therefore this led to an error on the transition date, as detected on the reporting date i.e. 31st March, 20X4.
Hence, being an error, no exemption could be availed by Nuogen Ltd. on transition date with respect to Ind AS
102.
While preparing the financial statements for the financial year 20X3 -20X4, an error has been discovered
which occurred in the year 20X1 -20X2, i.e., for the period which was earlier than earliest prior period

presented. The error should be corrected by restating the opening balances of relevant assets and/or liabilities
and relevant component of equity for the year 20X2-20X3. This will result in consequential restatement of
balances as at 1st April, 20X2 (i.e, opening balance sheet as at 1st April, 20X2).
Accordingly, on retrospective calculation of Share based options with respect to 80,000 options, Nuogen Ltd.
will create ―Share based payment reserve (equity)‖ by Rs. 16,00,000 and correspondingly adjust the same

though Retained earnings.
For 40,000 share based options to be vested on 31st March, 20X5:
Since share-based options have not been vested before transition date, no option as per Ind AS 101 is available
to Nuogen Ltd. The entity will apply Ind AS 102 retrospectively. However, Nuogen Ltd. did not account for the
same at the grant date. This will result in consequential restatement of balances as at 1st April, 20X2 (i.e,
opening balance sheet as at 1st April, 20X2). Adjustment is to be made by recognising the ― Share based

payment reserve (equity)‖ and adjusting the retained earnings by Rs. 2,00,000.
Further, expenses for the year ended 31st March, 20X3 and share based payment reserve (equity) as at 31st
March, 20X3 were understated because of non-recognition of ―employee benefits expense‖ and related reserve.
To correct the above errors in the annual financial statements for the year ended 31st March, 20X4, the

entity should restate the comparative amounts (i.e., those for the year ended 31 st March, 20X3) in the
statement of profit and loss. In the given case, ―Share based payment reserve (equity)‖ would be credited by
Rs. 2,00,000 and ―employee benefits expense‖ would be debited by Rs. 2,00,000
For the year ending 31st March, 20X4, ―Share based payment reserve (equity)‖ would be credited by Rs.
2,00,000 and ―employee benefits expense‖ would be debited by Rs. 2,00,000.
Working Note:

Period Lot Proportion Fair value Cumulative Expenses
expenses
a b d= b x a e = d- previous
period d

20X1-20X2 1 (1-year vesting 1/1 16,00,000 16,00,000 16,00,000
period)
20X1-20X2 2 (4-year 1/4 8,00,000 2,00,000 2,00,000
vesting period)

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