Page 19 - 33. FR RTP NOV. 22

AS 41.

Solution 8
Particulars Rs.
1. Interest expense on loan Rs. 2,00,00,000 at 15% 30,00,000
2. Total cost of Phases I and II (Rs. 34,00,000 +64,00,000) 98,00,000
3. Total cost of Phases III and IV (Rs. 55,00,000 + Rs. 68,00,000) 1,23,00,000
4. Total cost of all 4 phases 2,21,00,000
5. Total loan 2,00,00,000
6. Interest on loan used for Phases I & II, based on proportionate 13,30,317
Loan amount = (30,00,000/2,21,00,000) X 98,00,000 (approx.)

7. Interest on loan used for Phases III & IV, based on proportionate Loan amount = 16,69,683
(30,00,000/2,21,00,000) X 1,23,00,000 (approx.)

Accounting treatment:
1. For Phase I and Phase II
Since Phase I and Phase II have become operational at mid of the year, half of the interest amount of Rs.
6,65,158.50 (i.e. Rs. 13,30,317/2) relating to Phase I and Phase II should be capitalized (in the ratio of asset

costs 34:64) and added to respective assets in Phase I and Phase II and remaining half of the interest
amount of Rs. 6,65,158.50 (i.e. Rs. 13,30,317/2) relating to Phase I and Phase II should be expensed off
during the year.
2. For Phase III and Phase IV
Interest of Rs. 16,69,683 relating to Phase III and Phase IV should be held in Capital Work-in-Progress till
assets construction work is completed, and thereafter capitalized in the ratio of cost of assets. No part of this

interest amount should be charged/expensed off during the year since the work on these phases has not been
completed yet.

Solution 9

Paragraph 39 of Ind AS 103 provides that the consideration the acquirer transfers in exchange for the acquiree
includes any asset or liability resulting from a contingent consideration arrangement. The acquirer shall
recognise the acquisition-date fair value of contingent consideration as part of the consideration transferred in

exchange for the acquiree.
With respect to contingent consideration, obligations of an acquirer under contingent consideration
arrangements are classified as equity or a liability in accordance with Ind AS 32
Paragraph 58 of Ind AS 103 provides guidance on the subsequent accounting for contingent consideration.
(a)

(i) In the given case, the amount of purchase consideration to be recognized on initial recognition shall
as follows:
Fair value shares issued (10,00,000 x Rs. 20) Rs. 2,00,00,000
Fair value of contingent consideration Rs. 25,00,000
Total purchase consideration Rs. 2,25,00,000

(ii) Subsequent measurement of contingent consideration payable for business combination
In the given case, given that the acquirer has an obligation to issue fixed number of shares on fulfillment of
the contingency, the contingent consideration will be classified as equity as per the requirements of Ind AS32.

33.18