Page 3 - 34.2 FR MARCH 22 MTP ANSWER

Journal Entry on the date of transition
Particulars Debit (Rs.) Credit (Rs.)

Investment in mutual funds Dr. 1,00,000
To Retained earnings 1,00,000

Issue 3: Borrowings - Processing fees/transaction cost:
Accounting Standards Ind AS Impact on Company’s
(Erstwhile IGAAP) financial statements

As per AS, such As per Ind AS, such expenditure is Fair value as on the date
expenditure is charged amortised over the period of the of transition is Rs.
to Profit and loss loan. 1,80,000 as against its
account or capitalised as Ind AS 101 states that if it is book value of Rs.
the case may be impracticable for an entity to 2,00,000.
apply retrospectively the effective Accordingly, the
interest method in Ind AS 109, the difference of Rs. 20,000
fair value of the financial asset or is adjusted through
the financial liability at the date Retained Earnings.
of transition to Ind AS shall be
the new gross carrying amount of
that financial asset or the new
amortised cost of that financial
liability.

Journal Entry on the date of transition
Particulars Debit (Rs.) Credit (Rs.)
Borrowings / Loan payable Dr. 20,000
To Retained earnings 20,000

Issue 4: Proposed dividend:
Accounting Standards Ind AS Impact on Company’s
(Erstwhile IGAAP) financial statements
As per AS, provision for As per Ind AS, liability for Since dividend should be
proposed divided is made proposed dividend is deducted from retained earnings
in the year when it has recognised in the year in during the year when it has
been declared and which it has been declared been declared and approved.
approved. and approved. Therefore, the provision declared
for preceding year should be
reversed (to rectify the wrong
entry). Retained earnings would
increase proportionately due to
such adjustment
Journal Entry on the date of transition
Particulars Debit (Rs.) Credit (Rs.)
Provisions Dr. 30,000
To Retained earnings 30,000

34.9