Page 16 - 33. FR RTP NOV. 22

Immediately after all the accretions are recognised, the carrying amount of the loan is equal to its face value
of Rs. 5,00,000, which is also the amount payable to the government.

Rs. Rs.
Loan (financial liability) Dr. 5,00,000
To Cash/Bank 5,00,000
(Being loan repaid to the government)

Working Note:
Calculation of Amortised Cost
Year Opening balance Interest at 5% Cash flow Closing balance (A)
(A) (B) = (A) x 5% (C) + (B) – (C)

1 4,32,000 21,600 – 4,53,600
2 4,53,600 22,680 – 4,76,280
3 4,76,280 23,720* (5,00,000) –
* Difference is due to approximation.

Solution 4

Exceptional items have not been defined in Indian Accounting Standards (Ind AS). However, paragraph 97 of
Ind AS 1 requires that when items of income or expense are material, an entity shall disclose their nature and

amount separately.
As per Ind AS 1, information is material if omitting, misstating or obscuring it could reasonably be expected to
influence decisions that the primary users of general purpose financial statements make on the basis of those
financial statements, which provi de financial information about a specific reporting entity. Materiality depends
on the nature or magnitude of information, or both and it could be the determining factor.
When items of income and expense within profit or loss from ordinary activities are of such size, nature or

incidence that their disclosure is relevant to explain the performance of the enterprise for the period, the
nature and amount of such items should be disclosed separately.
Generally, items of income or expense fulfilling the abovementioned criteria are classified as exceptional items
and are disclosed separately.
From the above, it appears that all material items are not exceptional items. In other words, exceptional items

are those items which meet the test of ―materiality‖ (si ze and nature) and the test of ―incidence‖.
Following are some examples which may give rise to a separate disclosure of items as an ―exceptional item‖ in
financial statements if they meet the test of ―materiality‖ and ―incidence‖:
(i) write-downs of inventories to net realisable value or of property, plant and equipment to recoverable
amount, as well as reversals of such write-downs;
(ii) restructurings of the activities of an entity and reversals of any provisions for the costs of restructuring;

(iii) disposals of items of property, plant and equipment;
(iv) disposals of investments;
(v) discontinued operations;
(vi) litigation settlements; and

(vii) other reversals of provisions.

33.15