Page 4 - 34.2 FR MARCH 22 MTP ANSWER

Issue 5 : Intangible assets:
Accounting Standards Ind AS Impact on Company’s
(Erstwhile IGAAP) financial statements

The useful life of an The useful life of an intangible asset Consequently, there would be no
intangible asset cannot be like brand/trademark can be indefinite. impact as on the date of
indefinite under IGAAP Not required to be amortised and only transition since company intends
principles. The Company tested for impairment. Company can to use the carrying amount
amortised brand/trademark on avail the exemption given in Ind AS 101 instead of book value at the date
a straight line basis over as on the date of transition to use the of transition.
maximum of 10 years as per carrying value as per previous GAAP.
AS 26.

Issue 6: Deferred tax
Accounting Standards Ind AS Impact on Company’s
(Erstwhile IGAAP) financial statements
As per AS, deferred taxes are As per Ind AS, deferred taxes On date of transition to Ind
accounted as per income are accounted as per balance AS, deferred tax liability
statement approach. sheet approach. would be increased by Rs.
25,000.

Journal Entry on the date of transition

Particulars Debit (Rs.) Credit (Rs.)
Retained earnings Dr. 25,000
To Deferred tax liability 25,000

(b) (i) Basic Earnings per share
Year ended 31.3.20X2
Net profit attributable to equity shareholders (A) Rs. 90,000

Number of equity shares outstanding (B) 16,000
Earnings per share (A/B) Rs. 5.625
(ii) Diluted earnings per share
Options are most dilutive as their earnings per incremental share is nil. Hence, for the purpose of
computation of diluted earnings per share, options will be considered first. 10% convertible debentures being
second most dilutive will be considered next and thereafter convertible preference shares will be considered
(as per W.N.).

Net profit No. of Net Profit
attributable to equity attributable
equity shares per share
shareholders Rs.
Rs.

Net profit attributable to equity 90,000 16,000 5.625
shareholders
Options 150
90,000 16,150 5.572 Dilutive

34.10