Page 15 - 34.2 FR MARCH 22 MTP ANSWER

Less: Impairment on goodwill 258.00 (51.60) (206.40)
347.40 (130.40)

6. Consolidated Retained Earnings as on 31st March 20X3

Rs. in 000s
A Ltd. 1,400.00
Add: Share of post-acquisition loss of S Ltd. (W.N.5) (130.40)
Less: Finance cost on deferred consideration (37.5 + 41.25) (W.N.7) (78.75)
Retained Earnings as on 31st March 20X3 1,190.85

7. Calculation of value of deferred consideration as on 31 st March 20X3
Rs. in 000s
Value of deferred consideration as on 1st April 20X1 (W.N.1) 375.00
Add: Finance cost for the year 20X1-20X2 (375 x 10%) 37.50
412.50
Add: Finance cost for the year 20X2-20X3 (412.50 x 10%) 41.25
Deferred consideration as on 31st March 20X3 453.75

8. Calculation of current Liability as on 31st March, 20X3
Rs. in 000s
A Ltd. 1,250.00
S Ltd. 650.00
Deferred consideration as on 31st March, 20X3 (W.N.7) 453.75

Current Liability as on 31st March, 20X3 2,353.75

(b) Accounting treatment for Government Grant:

Government grants, related to assets, including non-monetary grants at fair value should be presented in the
Balance Sheet either by setting up the grant as deferred income or by deducting the grant in arriving at the
asset’s carrying amount. (Para 24 of Ind AS 20)
Government grants should be recognised as income over the periods in which the entity recognises as
expenses the related costs that they are intended to compensate, on a systematic basis. The outcome should

be same in the Profit and Loss account statement regardless of whether grants are netted or deferred.
In case the grant had been offset against the acquisition cost of the factory and net carrying value is less
than the recoverable amount, there would be no need for an impairment write-down. The Profit and Loss
account would be charged with annual depreciation on the net acquisition cost.
Government grant relating to ‘Innovative Product’:

To match the same result for the grant ‘Innovative Product’ which has been shown as deferred income and
the factory is initially recorded at its cost, it is reasonable to release an amount of deferred income to the
Profit and Loss account to compensate for the impairment write-down. Treatment in case of further conditions
attached:
If there are further conditions attached to the grant beyond construction of the factory, it may not be
appropriate to release an amount of the deferred income to compensate for the impairment write down. An

entity would need to assess those further conditions to determine the amou nt, if any, of deferred income to

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