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amount of Rs. 4,85,500. If maintenance alone was required, it would have cost the customer Rs. 12,500
per annum.
Explain the requirements of Ind AS in relation to the XYZ Ltd.’s supply of customized contract and the

maintenance that has been agreed to be provided to the customer. Ignore discounting and calculate the
amounts to be recognized in the financial statements as at 31 st March, 20X2. (INDAS115)

(c) ABC Limited granted 500 stock appreciation rights (SAR) each to 80 employees on 1st April, 20X1 with
a fair value Rs. 100 each. The terms of the award require the employee to provide service for four years to
earn the award. The SARs are expected to be settled in cash and it is expected that 100% of the
employees will exercise the option. The fair value of each SAR at each reporting date is as follows:

31st March, 20X2 Rs. 110
31st March, 20X3 Rs. 120
31st March, 20X4 Rs. 115
31st March, 20X5 Rs. 130
Please present the journal entries in the books of ABC Limited over the entire life of the grants.
What would be the difference if at the end of the second year of service (i.e. at 31 st March, 20X3), ABC

Limited modifies the terms of the award to require only three years of total service? Please present with the
revised journal entries. Answer on the basis of relevant Ind AS.

Question 5

(a) On 1st April 20X1, A Limited acquired 80% of the share capital of S Limited. On acquisition date the
share capital and reserves of S Ltd. stood at Rs. 5,00,000 and Rs. 1,25,000 respectively. A Limited paid
initial cash consideration of Rs. 10,00,000. Additionally, A Limited issued 2,00,000 equity shares with a
nominal value of Rs. 1 per share at current market value of Rs. 1.80 per share.

It was also agreed that A Limited would pay a further sum of Rs. 5,00,000 after three years. A Limited's cost
of capital is 10%. The appropriate discount factor for Rs. 1 @ 10% receivable at the end of
1st year: 0.91
2nd year: 0.83
3rd year: 0.75
The shares (issued in the year 20X2-20X3) and deferred consideration have not yet been recorded by A

limited.
Below are the Balance Sheet of A Limited and S Limited as at 31st March, 20X3:
A Limited S Limited (Rs.
(Rs. 000) 000)
Non-current assets:
Property, plant & equipment 5,500 1,500
Investment in S Limited at cost 1,000
Current assets:

Inventory 550 100
Receivables 400 200
Cash 200 50
7,650 1,850
Equity:

34.5