Page 5 - 33. FR RTP NOV. 22

PART – II QUESTIONS

Ind AS 101, Ind AS 102 and Ind AS 8

Question 1

On 1st April 20X1, Nuogen Ltd. had granted 1,20,000 share options to its employees with the vesting condition
being a service condition as follows:
 Vesting date : 31st March 20X2 - 80,000 share options (1-year vesting period since grant date)
 Vesting date : 31st March 20X5 - 40,000 share options (4-year vesting period since grant date)
Each option can be converted into one equity share of Nuogen Ltd. The fair value of the options on grant
date, i.e., on 1st April 20X1 was Rs. 20.

Nuogen Ltd. is required to prepare financial statements in Ind AS for the financial year ending 31st March
20X4. The transition date for Ind AS being 1st April 20X2.
The entity has disclosed publicly the fair value of both these equity instruments as determined at the
measurement date, as defined in Ind AS 102.
The previous applicable GAAP for the entity was IGAAP (AS) and therein, the entity had not adopted intrinsic

method of valuation.
The share options have not been yet exercised by the employees of Nuogen Ltd.
How the share based payment should be reflected in, the books of Nuogen Ltd. as on 31st March 20X4,
assuming that the entity has erred by not passing any entry for the aforementioned transactions in the books
of Nuogen Ltd. on grant date, i.e. 1st April 20X1?

Ind AS 116

Question 2
A company manufactures specialised machinery. The company offers customers the choice of either buying or
leasing the machinery. A customer chooses to lease the machinery. Details of the arrangement are as follows:

(i) The lease commences on 1st April, 20X1 and lasts for three years.
(ii) The lessee is required to make three annual rentals payable in arrears of Rs. 57,500.
(iii) The leased machinery is returned to the lessor at the end of the lease.
(iv) The fair value of the machinery is Rs. 1,50,000, which is equivalent to the selling price of the machinery

(v) The machinery cost Rs. 1,00,000 to manufacture. The lessor incurred costs of Rs. 2,500 to negotiate and
arrange the lease.
(vi) The expected useful life of the machinery is 3 years. The machinery has an expected residual value of Rs.
10,000 at the end of year three. The estimated residual value does not change over the term of the lease.
(vii) The interest rate implicit in the lease is 10.19%. The lessor classifies the lease as a finance lease.
How should the Lessor account for the same in its books of accounts? Pass necessary journal entries.

Ind AS 20

Question 3
To encourage entities to expand their operations in a specified development zone, the government provides

interest-free loans to fund the purchase of manufacturing equipment.
In accordance with the development scheme, an entity receives an interest -free loan of Rs. 5,00,000 from the

33.4