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in Financial Reporting (Batch 10) Module A

MODULE A – IND AS ON ASSETS

1. Ind AS 16 – PROPERTY, PLANT & EQUIPMENT

1. Ind AS 16 – Cost of Fixed Asset

Basic Cost of Machine X is USD 1,85,000. Basic Customs Duty is 10%, which is not eligible for Input
Tax Credit. You may assume that the IGST is payable 18% of the Basic Cost of the Machine X, which
is eligible for Input Tax Credit. The Importer has to pay an Annual Maintenance Cost in advance
measured at 20% of the Basic Price in USD. The overall credit period for settlement of dues to the
overseas supplier is 90 Days, and if paid within 30 Days, the Indian importer is eligible for a cash
discount of 1%.

Indian importer settled the dues in fifteen days, fearing exchange rate changes. Determine the
amount to capitalized. You may assume the following exchange rates –
a. CBEC Notified Exchange Rate for Duty Computation – Rs.66.50 per USD
b. Bank’s Exchange Rate on the date on which the transactions were recorded / settled – Rs./USD
65.20 – 66.80

2. Ind AS 16 – Cost of Fixed Asset

A Ltd acquired a heavy road trailer at a cost of Rs.10 Lakhs. The entire unit is treated as one, and
componentization approach is not followed in this case. The estimated useful life is 10 years. At the
end of the 6th year, the engine requires replacement, as further maintenance is uneconomical de to
the offroad time required. The remainder of the vehicle is perfectly road worthy and is expected to
last for the next four years. The cost of the new engine now is Rs.3,00,000. The original cost of
machine, which is included in the initial trailer cost is Rs.4.50 Lakhs. One year later, the new machine
developed snags and had to be replaced with another machine at a cost of Rs.3,20,000. Advice
accounting over the past three years. You may assume that there is no change in overall useful life.

3. Ind AS 16 – Cost of Fixed Asset

AB Ltd purchased machinery from K Ltd on 30.09.2016. The price inclusive of non–refundable VAT of
5% was Rs.370.44 Lakhs. This was after 2% Trade Discount on the quoted price. Transportation
Charges were 0.50% of the Quoted Price, and installation Charges were levied at 2% of the Quoted
Price. AB Ltd took a loan of Rs.300 Lakhs at 12% pa. Expenditure incurred on the trial run conducted
over four months were as follows –
a. Material Costs Rs.35000
b. Labour / Wages Rs.25000
c. Overheads Rs.15000

The output generated during the trial run were sold as scrap for Rs.22,900 inclusive of VAT at 14.5%
of the Basic Sale Price. Machinery was ready as at 31.01.2017, and was put into use only on
01.05.2017. The loan was repayable four years later, with interest being serviced on monthly basis.

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The expected economic life of the asset is 126 Months and the Company intends to use the asset till
31.12.2025, when the realizable value is expected to be Rs.25,000. The Company also expects to incur
a sum of Rs.10,000 in dismantling the asset and restoration of site at that time. Determine the Cost
of the Machine (Initial Capitalisation and Closing Net Value) and suggest the accounting treatment
for the expenses incurred between 31.01.2017 to 01.05.2017.

4. Ind AS 16 – Treatment of Decommissioning Costs / Liabilities

A building was constructed at a cost of Rs.240 Lakhs at a Leasehold Land. The land lease was for a
period of 6 Years, and at the end of the lease, the land was to be handed over in the condition in
which it was initially given i.e. free of all constructions. The initial estimate of cost of demolition was
expected to be Rs.30 Lakhs, and the suitable discount rate pegged against the prevailing Treasury Bill
rate is 10%. Advice accounting for the six years.

5. Ind AS 16 – Treatment of Changes in Decommissioning Costs / Liabilities

A Ltd had estimated a cost of Rs.1,25,000 towards decommissioning / dismantling of one of its plants
and accounted for the same suitably in accordance with the Standard on Property, Plant &
Equipment. During the year ending 31.03.2017, the Company reascertained the estimated cost of
such decommissioning / dismantling. It seeks your advice in the following independent cases –
a. Reascertained cost of decommissioning / dismantling is Rs.1,85,000 and the asset is measured
using Cost Model and the carrying amount is Rs.15,25,000.
b. Reascertained cost of decommissioning / dismantling is Rs.25,000 and the asset is measured using
Cost Model and the carrying amount is Rs.95,000.

In both the above cases, would your answer differ, if the assets were measured using revaluation
model and previously there was a revaluation deficit of Rs.2,50,000 previously debited to statement
of profit and loss account.

6. Ind AS 16 – Disposal of Revalued Assets

Barbeque Nation, a chain of fast food and restaurants, purchased a multipurpose dishwasher for
Rs.75 Lakhs in April 2015. It was depreciated under Straight Line Method basis at 15% per annum. In
April 2017, the Company revalued all its assets including the dishwasher by 1/3rd of their existing
book value. Revised depreciation worked out to Rs.15 Lakhs per annum. In April 2019, the asset was
sold for Rs.45 Lakhs. Pass journal entries for Financial Year 2019-20.

7. Retiral of Fixed Assets

You are the Chief Accountant of a Company. Your Company has a machinery with Gross Value of
Rs.15.75 Crores and an accumulated depreciation of Rs.9.50 Crores. The machinery has now been
kept aside as newer machine has come up in the factory. It has not been sold as at 31 st March 2019.
Advice accounting and disclosure in the Balance Sheet, if the machinery can be sold for Rs.75 Lakhs
after incurring an expense of Rs.15 Lakhs towards its dismantling and transportation.

8. Ind AS 16 – Amount to be Capitalized – Exchange of Assets

Determine the amount at which asset is to be capitalized in each of the following cases.

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 CASE A: Asset A with a Book value of Rs.1,50,000 is exchanged for Asset B whose Fair Market
Value is Rs.1,20,000. Fair Market Value of Asset A is not ascertainable.
 CASE B: Asset B whose Book Value is Rs.1,50,000 and Fair Market Value is Rs.1,75,000 is given up
to takeover Asset A whose Fair Market Value is not ascertainable.
 CASE C: Asset X with Book Value Rs.2,45,000 and Fair Market Value Rs.1,75,000 is exchanged for
Asset Y with Fair Market Value Rs.1,80,000.
 CASE D: Old Machine having a book value of Rs.5,00,000 were exchanged for acquisition of a new
machine whose fair value is Rs.15,75,000. The company paid a sum of Rs.7,50,000 in addition to
the old machine. The fair value of the old machine was estimated at Rs.6,25,000. Would your
answer differ if the old machine’s fair value was unascertainable?

9. Ind AS 16 – Subsequent Expenditure

Explain whether the subsequent expenditure in the following cases will be capitalized –
a. A furnace was purchased five years ago, when the furnace lining was separately identified in the
accounting records. The furnace now requires re-lining at a cost of Rs.20 Lakhs. When the furnace
re-lined, it will enable the business to use the furnace for a further period of five years.
b. An office building was badly damaged in a fire. The cost to restore the building to its original
condition will be Rs.25 Lakhs.

10. Ind AS 16 – Subsequent Expenditure

During the current year, A Ltd made the following expenditure relating to its factory buildings
a. Regular Repairs Rs.4 Lakhs
b. Special Repairs of Slightly Damaged Wall Rs.1 Lakh
c. Partial Replacement of Roof Tiles Rs.1 Lakh
d. Substantial Improvements in Electrical Wiring to withstand high intensity cables Rs.10
Lakhs
What is the treatment of the above expenditure?

11. Ind AS 16 – Disclosure Notes

A building was purchased many years ago for Rs.200 Lakhs. It has been depreciated at 2% per annum
on Straight Line Basis and the carrying amount of the asset on 1 st April 2017 is Rs.132 Lakhs. The
Directors have had the asset valued at Rs.750 Lakhs, and would like to incorporate this valuation into
the financial statement for the year ended 31st March 2018. Prepare a note for non current asset for
the year ending 31st March 2018 and calculate the revaluation surplus assuming that –
a. The valuation is as at 1st April 2017
b. The valuation is as at 31st March 2018

12. Ind AS 16 – Capitalisation of Expenditure

A Ltd acquired a Building for Rs.8 Crores from B Ltd which already had non-moving tenants.
Subsequently A Ltd paid Rs.2 Crores as compensation and legal costs to evict existing tenants, so that
property could be leased out to third parties at higher rates. Advice A Ltd on the accounting
treatment for the above.

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13. Ind AS 16 – Depreciation

A Ltd acquired an asset costing Rs.20 Lakhs on 01.04.2013 with a useful life of 12 Years. It follows
Straight Line Method of Depreciation with a Salvage Value of Rs.2 Lakhs. As from 01.04.2015, the
Company decided to change the method of depreciation to WDV at 18%. Advice accounting and
presentation in the financial statements for FY 2015-16.

14. Ind AS 16 – Presentation

Tibet acquired a new office building on 1 October 2017. Its initial carrying amount consisted of –
(Rs.Lakhs)
Land 200
Building Structure 1000
Air Conditioning System 400
Total 1600

The estimated lives of the building structure and air conditioning system are 25 years and 10 years
respectively. When the air conditioning system is due for replacement, it is estimated that the old
system will be dismantled and sold for Rs.50 Lakhs. Depreciation is time-apportioned where
appropriate. At what amount will the office building be shown in Tibet’s statement of financial
position as at 31st March 2018?

15. Ind AS 16 – Deferred Payment

On 1st April 2017, an item of property is offered for sale at Rs.75 Lakhs, with payment term being the
following –
a. Rs.25 Lakhs Down Payment
b. Rs.12.50 Lakhs per annum at the end of each year over the next four years.

The property developer is offering a discount of certain percentage, which translates into an
implied discount rate of 6.83%. Show how the property will be recorded in the books.

16. Ind AS 16 – Revaluation

V Ltd. is a large manufacturing group. It owns a considerable number of industrial buildings, such as
factories and warehouses, and office buildings in several capital cities. The industrial buildings are
located in industrial zones whereas the office buildings are in central business districts of the cities.
Venus’s Ltd. management want to apply the Ind AS 16 revaluation model to the subsequent
measurement of the office buildings but continue to apply the historical cost model to the industrial
buildings. Is this acceptable under Ind AS 16, Property, Plant and Equipment?

17. Ind AS 16 – Revaluation

An item of PPE was purchased for Rs.90 Lakhs on 1st April 2017. It is estimated to have an useful life
of 10 Years and is depreciated on a Straight Line basis. On 1 st April 2019, the asset is revalued to Rs.96
Lakhs. The useful life remains unchanged at ten years. Show the necessary accounting treatment as
per Ind AS 16 for Financial Year 2019-20.

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18. Ind AS 16 – Accounting Policy

A Ltd owns three properties which are shown in the financial statements as PPE. All three properties
were purchased on 1st April 2017. The details of purchase price and market values of the properties
are given as follows –

Property 1 Property 2 Property 3

Factory Building Factory Building Let Out Building
Purchase Price (Rs.Lakhs) 500 200 300
Market Value on 31st March 2018 550 220 330
Useful Life 10 Years 10 Years 10 Years
Subsequent Measurement Cost Model Revaluation Model Revaluation Model

Property 1 and 2 are used by A Ltd as its factory building while property 3 is let out to a non-related
party at a market rent. A Ltd does not depreciate any of the properties on the basis that fair values
are exceeding their carrying amount and recognize the difference between purchase price and fair
value in the Statement of Profit and Loss. Evaluate the actions of A Ltd.

2. Ind AS 105 – Non Current Assets Held for Sale

19. Ind AS 105 – Classification

In the following cases, can the asset be classified as held for sale?
1. A Ltd has acquired a building exclusively with a view of its subsequent disposal. The management
is highly confident that the property can be sold in one year. The property requires refurbishing
it to enhance its value which is highly probable to be completed in less than 3 months.
2. A Ltd is committed to selling plan of a manufacturing facility at Sri Perumbudur in its present
condition. After a firm purchase commitment, the buyer’s inspection identifies environmental
damages not previously known to exist. The entity is required by the buyer to make good the
damage, which will extend the time frame of one year to complete the sale within one year. A
Ltd has initiated actions to make good the damage and satisfactory rectification is highly
probable.
3. A Ltd operates out of a Commercial Building at Brigade Road, Bangalore. It has decided to sell the
property and it needs to vacate the property before it can sell. It can vacate the property in
another 12 months time and shifting its operations to the new building.

20. Ind AS 105 – Measurement

A Ltd owns a machinery and it was carried in the books at the following values as at 31st March 2018
– (a) Cost Rs.12 Crores; (b) Accumulated Depreciation Rs.7 Crores. The asset is depreciated at 15%
per annum. During July 2018, the Company has decided to sell the asset and on 1 st August it meets
the condition to be classified as held for sale. Analyze.

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21. Ind AS 105 – Classification and Events After Balance Sheet Date
On 1st March 2018, A Ltd decided to sell one of its factories. An agent is appointed and the factory is
actively marketed. As on 31st March, it is expected that the factory will be sold by 28th February 2019.
However in May 2018, the market price of the factory deteriorated. A Ltd believed that the market
will recover and thus did not reduce the price of the factory. The Company’s accounts are authorized
for issue on 26th June 2018. Should the factory be shown as held for sale as at 31 st March 2018?

22. Ind AS 105 – Change in Plans

A Ltd purchased a property for Rs.60 Lakhs on 1st April 2016. The useful life of the property is 15
Years. On 31 March 2018, A Ltd classified the property as held for sale. The impairment testing
provides the estimated recoverable amount of Rs.47 Lakhs.

The Fair Value Less Cost to Sell on 31st March 2018 was Rs.47 Lakhs. On 31st March 2019, the
management has changed the plan as property no longer met the criteria of held for sale. The
recoverable amount as at 31st March 2019 is Rs.50 Lakhs. Value the property as at the end of 31st
March 2018 and 31st March 2019.

3. Ind AS 38 – INTANGIBLE ASSETS

23. Ind AS 38 – Intangible Assets
On 01.04.2016, A Ltd had brands worth Rs.20,00,000 with a remaining legal life of 8 years. On the
same day, A Ltd started using its Patent, the capitalized value of which is Rs.50,00,000. The Company
follows Straight Line Method of amortization for intangible assets.
Patent has got a useful life of only 4 years and the expected revenue over the 4 years are as follows.
Financial Year 2016-17 2017-18 2018-19 2019-20
Benefit Expected Rs.120L Rs.180L Rs.100L Rs.50L
Pass journal entries to amortise the intangibles for the financial years.

24. Ind AS 38 – Intangible Assets vs. Intangible Items

A Company with a turnover of Rs.250 Crores and an annual advertising budget of Rs.15 Crores has
taken up the marketing of a new product. It was estimated that the Company would have a turnover
of Rs.60 Crores per annum for four years from the new product. The Company had debited the entire
advertisement expenditure of Rs.15 Crores to its Profit and Loss Statement in the first year itself. Is
the procedure adopted by the Company correct? Would it be appropriate if the Company contends
that it can carry forward the amount spent as “Intangible Asset” in the books?

25. Ind AS 38 – Intangible Assets Under Business Combinations

A Ltd acquired the business of B Ltd under a scheme of corporate restructuring, and paid Rs.100L for
100% interest in the latter. On the date of acquisition, B Ltd’s net assets had a fair value of Rs.65L
and a net book value of Rs.62L. B Ltd also held the following assets –
Asset Book Value Fair Value Information

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Trade Marks Rs.15L Rs.11L

Sole Distribution Right for a Paint Rs.NIL Future CF of Rs.1.5L (Perpetual), Discount Factor
of 10%.
Calculate the value of goodwill and other intangible assets arising from acquisition.

26. Ind AS 38 – Exchange of Assets

S Ltd acquired a software from B Ltd in exchange for a copyright. The copyright is carried at Rs.5L in
the books of S Ltd. The software is carried at Rs.1L in the books of B Ltd, which is not the fair value.

Advise journal entries in the following situations in the books of S Ltd and B Ltd –
a. Fair value of software is Rs.5.20L and fair value of copyright is Rs.5L
b. Fair value of software is not measurable. However, similar copyrights is transacted by another
company for Rs.4.90L
c. Neither the fair value of software nor the copyright could be reliably measured.

27. Ind AS 38 – Intangible Assets and Impairment Loss

UK Ltd is developing a new production process. During the financial year ending 31.03.2013, the total
expenditure incurred was Rs.50 Lakhs. This process met the criteria for recognition as an intangible
asset on 1st December 2012. Expenditure incurred till this date was Rs.17 Lakhs. Further expenditure
incurred on the process for the financial year ending 31.03.2014 was Rs.80 Lakhs. As at 31.03.2014,
the recoverable amount of know how embodied in the process is estimated to be Rs.72 Lakhs. This
includes estimates of future cash flows as well as inflows. Calculate accounting for Financial Year
2012-13 and 2013-14. Ignore depreciations / amortisations.

28. Ind AS 38 – Accounting in Specific Cases

Advice accounting in the following cases –
Case A: A Ltd is in the business of telemarketing for various customers. It acquires a customer list for
Rs.2L and expects that it will derive benefit from the information on the list for atleast two years, but
no more than five years. Would your answer change if A Ltd may add more details or more customers
to that list in the future?
Case B: R Ltd has acquired motor cycle design patent from B Ltd for Rs.80 Crores. R Ltd has a firm
commitment from Y Ltd to purchase the patent in five years time at 60% of the fair value of the patent
on the date of acquisition i.e. today.
Case C: K Ltd acquired a broadcasting license which is renewable every 10 years. It acquired the same
when the current license had five more years to expiry. K Ltd intends to hold this license forever, and
intends to renew the license indefinitely.
29.

30. Ind AS 38 – Intangible Assets – Research Expenses

Refiners and Projects Limited is a company in the oil and gas sector. It undertakes extensive research
and development work as part of its operations. It has till the end of the financial year 31.03.2015,
spent Rs.592.23 Crores on research expenses.

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The development of a new process was completed in the accounting year 2015–16 after incurring an
expenditure of Rs.322.26 Crores. In the accounting year 2016-17, the company intends to implement
the new process resulting in a post tax saving of Rs.100 Crores in the first year of operation and
savings of Rs.80 Crores per annum thereafter for the next four years.
Cost of capital to the company is 12 per cent. Kindly indicate how you will, in the background of accounting
standards prescribed, proceed to record the transactions in the books of accounts of the company.

You are given to understand that the research expenses shown above do not include any general or
selling and administrative expenses. The present value discounted at 12 per cent of a Rupee can be
adopted at 0.893, 0.797, 0.712, 0.636 and 0.567 for the purpose of calculation.

4. IND AS 36 – IMPAIRMENT OF ASSETS

31. IND AS 36 – Identification of CGU
A Ltd presents you its Division / Asset Structure as follows –

A Ltd

Division X Division Y Division Z

Asset X1 Asset X2 Asset X3 Asset Y1 Asset Y2 Asset Y3 Asset Z1 Asset Z2 Asset Z3

Determine the Cash Generating Unit of A Ltd from the following further information –
a. None of the assets of Division X is a Cash Generating Unit on a stand alone basis.
b. Assets Y1 and Y2 do not generate Cash Flows independent of each other. Together they
generated cash flows which are independent of cash flows of other assets / group of assets. Asset
Y3 is capable of generating Cash Flows independently.
c. All the assets of Division Z are capable of generating cash flows independently.

32. IND AS 36 – Impairment of Assets – Computation of Value in Use and Impairment Testing
E Ltd estimates the following Cash Flows for a Fixed Assets subjected to impairment testing as at
31.03.2019 –
Years FY 201920 FY 202021 FY 202122 FY 202223 FY 202324
Cash Flows (Rs.Lakhs) 4000 6000 6000 8000 4000
Over and above the above operating inflows from the asset, the Residual Value estimated as at
31.03.2024 is Rs.1000 Lakhs. The above fixed asset was purchased on 01.04.2011 for Rs.40000 Lakhs,
with an estimated total useful life of 8 Years.

Given a Net Selling Price of Rs.20000 Lakhs as at 31.03.2024 and a fair discount rate of 15%. Do the
impairment testing and determine the depreciation charge for the Financial Year 2019-20.

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33. Ind AS 36 – Value In Use and Benefit of Future Reorganisation

A Ltd is reviewing one of its business segments for impairment. The carrying value of its net assets is
Rs.40 Crores. Management has two computations for value in use of the segment. The first value of
Rs.36 Crores excludes the benefit to be derived from a future reorganization, but the second value
of Rs.44 Crores includes the benefits to be derived from the future reorganization. There is no active
market for the sale of business segments. Whether the business segment needs to be impaired?

34. Contingent Loss Accounting / Treatment

V Ltd has a fixed asset which is carried in the Balance Sheet on 31 st March 2017 at Rs.575 Lakhs. As
on that date the value in use is Rs.415 Lakhs and the Fair Value less Costs of Disposal is Rs.395 Lakhs.
From the above data –
a. Calculate the impairment loss
b. Prepare journal entries for adjustment of impairment loss
c. Show how the impairment loss will be shown in the Balance Sheet.

35. IND AS 36 – Impairment of Assets – Testing of Impairment for CGU

Division X has the following assets, none of which generate cash flows independently, but together
they generate cash flows.
Stitching Machine Rs.4,75,000
Shearing Machine Rs.3,00,000
Transport Equipment Rs.12,00,000
Quality Control Equipment Rs.7,00,000
Other Tangible Fixed Assets Rs. 3,25,000

Value in use for Division X is estimated at Rs.24,00,000. Net Realisable Value in total is estimated at
Rs.23,00,000. Identify the impairment– loss attributable to each asset.

36. IND AS 36 – Impairment Loss And Current Year Depreciation

From the following details of an asset find out (i) Impairment Loss (ii) Treatment of Impairment Loss
(iii) Current Year Depreciation
Cost of the Asset Rs. 56 Lakhs
Life period useful 10 Years
Salvage Value Nil
Current Carrying Value Rs. 27.3 Lakhs
Life remaining useful 3 Years
Recoverable Amount Rs. 12 Lakhs
Upward Revaluation done in last year Rs. 14 Lakhs

37. IND AS 36 – Applicability of Impairment Loss

Good Drugs and Pharmaceuticals Ltd acquired at Sachet Filling Machine on 01.04.2015 for Rs.60
Lakhs. The machine was expected to have a productive life of 6 years. At the end of the Financial
Year 2016-17, the carrying amount was Rs. 41 Lakhs. A Short circuit occurred in this financial year

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but luckily the machine did not get badly damaged and was still in working order at the close of the
Financial Year. The machine was expected to fetch Rs. 36 Lakhs, if sold in the market.

The machine by itself is not capable of generating cashflows. However the smallest group of assets
comprising of this machine also, is capable of generating cashflows of Rs. 54 Crores per annum and
has a carrying amount of Rs. 3.46 Crores. All machines put together could fetch a sum of Rs. 4.44
Crores if disposed. Discuss applicability of IND AS 36.

38. IND AS 36 – Impairment of Assets

A plant was acquired 15 years ago at a cost of Rs.5 crores. Its accumulated depreciation as at
31.03.2013 was Rs.4.15 crores. Depreciation estimated for the Financial Year 2013–14 is Rs.25 Lakhs.
Estimated Net Selling Price as 31.03.2013 was Rs.30 Lakhs, which is expected to decline by 20% by
the end of the next Financial Year.

Its value in use has been computed at Rs.35 Lakhs as of 01.04.2013, which is expected to decrease
by 30% by the end of the Financial Year.
1. Assuming that other conditions for applicability of the impairment Accounting Standard are
satisfied, what should be the carrying amount of this plant as at 31.03.2014?
2. How much will the amount of write off for the financial year to end on 31.03.2014?
3. If the plant has been revalued ten years ago and the current reserves against this plant were to
be Rs.12 lakhs, how would you answer to questions (i) and (ii) above change?
4. If the value in use was zero and the enterprise were required to incur a cost of Rs.2 lakhs to
dispose of the plant, what would be your response to questions (i) and (ii) above?

39. IND AS 36 – Treatment of Goodwill

Chandra Ltd has 3 divisions (each of which is a CGU) with the following assets – (Rs.Lakhs)
Particulars Earth Moving Equipment Concrete Machine Road Roller
a. Building 30 145 27
b. Machine A 43 72 65
c. Machine B 136 - 29
d. Patents - 40 -
e. Other Tangible Assets 16 16 23
Total Assets 225 273 144
Value In Use 216 177 157
Net Realisable Value 237 211 135

Apart from this, the Company had Goodwill of Rs.110 Lakhs. Compute impairment loss if –
Case A: Goodwill is attributable to Earth Moving Equipment Division only
Case B: Goodwill is apportioned equally across all the divisions

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40. IND AS 36 – Treatment of Corporate Assets

YR Ltd has the following assets across four divisions, each of which is a CGU – (Rs.Lakhs)
Particulars Division A Division B Division C Division D
Building 60 300 100 150
Machineries 360 50 200 400
Furniture 120 50 100 250
Software 30 100 100 100
Goodwill 30 – – –
Total Assets 600 500 500 900
Net Selling Price 450 450 600 800
Value in Use 500 480 400 1200
In addition, the Company had certain commonly used asset comprising of Software and Registered
Office Building, which were not capable of generating any cash flows, and hence considered as
Corporate Assets. Their carrying amount was Rs.200 Lakhs, and their Net Selling Price was estimated
at Rs.600. The company considers it appropriate to allocate corporate assets across the four divisions
in the ratio of 4 : 3 : 3 : 6. Determine the Impairment Loss, if any.

41. IND AS 36 – Impairment of Asset and Reversal

Rajesh Industries Ltd is in the business of manufacturing and export. In August 2014, the Government
put a restriction on export of goods exported by Rajesh Industries Ltd leading to impairment of its
assets. Rajesh Industries acquired by way of absorption of a company at the end of March 2012,
identifiable assets worth Rs.420 Lakhs for Rs.600 Lakhs, the balance being treated as Goodwill. The
useful life of the identifiable assets is 15 years and depreciated on straight–line basis.

When Government put the restriction at the end of August 2014, the Company recognized the
impairment loss by determining the recoverable amount of assets at Rs.272 Lakhs. In March 2016,
the “restriction” was withdrawn by the Government and due to this favourable change, Rajesh
Industries Ltd estimates its recoverable amount at Rs.342 Lakhs. Treatment of Goodwill is in
accordance with AS 14 “Accounting for Amalgamations”.

(a) Calculate and allocate Impairment Loss in 2014–15.

(b) Compute reversal of Impairment Loss and its allocation in 2015-16.

5. Ind AS 23 – BORROWING COSTS (AS 16)

42. IND AS 23 – Borrowing Costs – Computation of Net Borrowing Cost

On 01.07.2015, A Ltd issued 12% Debentures of Face Value Rs.100 Lakhs at a discount of 5%,
repayable at par, 8 years hence. The initial issue costs amounted to Rs.2.50 Lakhs. The Company has
a policy of writing off the discount and issue cost over the tenor of the financial instruments issued.
The proceeds of issue could not be used for the construction of plant, till 01.09.2015, during which
the said amount was invested in money market instruments carrying interest at 4.50% per annum.
Determine the borrowing cost for the year and its treatment in the financial statements.

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43. IND AS 23 – Treatment of Income arising out of Surplus funds

Rainbow Limited borrowed an amount of Rs. 150 Crores on 01.04.2015 for construction of Boiler
Plant at 11% p.a. The Plant is expected to be completed in 4 years. Since the Weighted Average Cost
of Capital is 13% p.a. the Accountant of Rainbow Ltd capitalized Rs. 19.50 Crores for the accounting
period ending on 31.03.2009. Due to surplus fund out of Rs. 150 Crores, an income of Rs. 3.50 Crores
was earned and credited to P&L Account.

Comment on the above treatment of Accountant with reference to relevant Accounting Standard.

44. IND AS 23 – Treatment of Income arising out of Surplus funds

A Ltd began construction of a new building on 1st January 2016. It obtained Rs.1 Lakh special loan to
finance the construction of the building on 1st January 2016 at an interest rate of 10%. The Company’s
other outstanding two non-specific loans –
Rs.5L at 11%; and Rs.9L at 13%

The expenditure that were made on the building project were as follow –
Rs.2L in January; Rs.2.5L in April; Rs.4.5L in July and Rs.1.2L in December.

Building was completed by 31st December 2016. Following the principles prescribed in IND AS 23
Borrowing Cost, calculate the amount of interest to be capitalized and pass one Journal Entry for
capitalizing the cost and borrowing cost in respect of the building.

45. IND AS 23 – Borrowing Costs – Computation of Net Borrowing Cost

RR Ltd was sanctioned Rs.550 Crores and 80% of which was disbursed on 1st August 2016. No further
disbursement took place till 31st March 2017. Interest is at 15% p.a. serviced on monthly basis.
Principal amount repaid after the final disbursement.

The funds were applied as follows –

1. For purchase of Land Rs.100 Crores (paid on 1st August)
2. For Construction of Shed Rs.140 Crores (paid on 1st September)
3. For Working Capital Rs.100 Crores (utilized on 1st August)
4. Advance for Purchase of Materials for Development of a Generator Rs.50 Crores (paid on 1 st
October) (materials not yet received till 31st March)
5. For layout and assembly of a piping line Rs.50 Crores (paid on 1st November) (materials received
on 29th February. Installation not yet over till 31st March)

Whenever funds were not used for expansion purposes, were kept invested in Money Market
Instruments carrying 9% p.a. interest. Compute the total Amount of Borrowing Cost and its treatment
under IND AS 23.

46. IND AS 23 – Borrowing Cost – Treatment of Incidental Expenses

The borrowings profile of SP Ltd set up for the manufacture of antibiotics at Mumbai is as under —

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Date Nature of Amt Borrowed Purpose of Borrowings Incidental

Borrowings (Rs.Lakhs) Expenses
01.04.2016 15% Demand Loan 60.00 Acquisition of Fixed Assets 1.33%
01.10.2016 14.5% Term Loan 40.00 Acquisition of Plant and Machinery 2.00%
01.01.2017 14% Bonds 50.00 Acquisition of Fixed Assets 2.00%

Incidental expenses consist of commission and service charges for arranging the loans and are paid
after rounding off to the nearest lakh. Fixed Assets considered as Qualifying Assets are as under —
Sterile Manufacturing Shed Rs.10,00,000
Plant and Machinery (Total) Rs.90,00,000
Other Fixed Assets Rs.10,00,000

The project is completed on 31.03.2017 and is ready for commercial production. Show the
capitalization of borrowing costs. Would your answer change, if the incidental expenses are
amortized over the loan period of six financial years assuming all the loans have equal tenor?

47. Foreign Currency Loans – Preliminary

R Ltd took a loan of USD 500,000 at 5% p.a. on 1st April, for a specific capital expansion project. The
exchange rate at the date of the loan was 1 USD = Rs.60.00. However, the Company could have taken
a corresponding Rupee Loan from Banks at 13.75% p.a. on that date. At the end of the year, the
exchange rate was 1 USD = Rs.64.00. How will you treat the Borrowing Costs and exchange
differences in the above case?

Analyse the impact of the following changes independently. What will be the treatment if the
exchange rate at the end of the year were 1 USD = Rs.61.00? What would be the accounting
treatment, if the Rupee Loans carried an interest rate of 9% p.a.?

Assume that interest would be payable annually and loan would be repaid in lumpsum at the end of
the loan period.

48. Foreign Currency Loans – Installments

H Ltd acquired a fixed asset at the start of the financial year from the USA at an agreed price of USD
1.25 Millions and made the downpayment at 20% of the Agreed Price. The exchange rate was
Rs.61.50 per USD at the date of purchase. The balance amount was payable in four equal half yearly
instalments with interest at 6% pa. The exchange rates on due dates of instalments have been
Rs.61.60, Rs.61.80, Rs.61.90 and Rs.62.10. The asset was under construction / installation during the
period of six months from the date of its acquisition. Ascertain the amount to be capitalized and the
gain or loss to be recognized in each of the years.

49. Foreign Currency Loans – Advanced

On 01.05.2015, R Ltd raised a sum of EUR 2 Millions under the ECB Route from an overseas Financial
Institution at Six Month LIBOR + 250 Basis Points, with interest payable on quarterly basis. The terms
of repayment stipulate that R Ltd repay the loan in four equal installments, each one six months

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apart, and the first installment being due on 31.10.2015. Determine the borrowing cost for the
financial year 2015-16 given the following Exchange Rates and LIBOR Rates –

Date Exchange Rate (Rs. Per Euro) Relevant LIBOR Rate

31.07.2015 77.00 0.45%
31.10.2015 82.00 0.48%
31.01.2016 88.00 0.49%
31.03.2016 85.00 0.51%
30.04.2016 83.00 0.50%
Assume Exchange Rate on 01.05.2015 was Rs.79 per Euro, and that State Bank of India offered
equivalent Rupee Loan at 11.00% on the same repayment terms.

50. Suspension vs. Cessation

ABC Ltd took a loan of Rs.25 Lakhs to construct a chemical processing plant costing Rs.42 Lakhs. The
entire amount was borrowed and spent on 01.05.2010, and the construction was completed on
31.01.2012 i.e. in the next financial year. Interest was payable on monthly basis at 12% p.a.

Between 01.11.2010 to 31.12.2010, the construction activity was stopped due to heavy rains and
cyclone’s after effects. Construction could commence only on 01.01.2011. Construction once again
stopped on 01.05.2011 due to labour unrest, and commenced again only on 01.08.2011. However,
during June 2011, the Company managed to do the administrative work relating to the Chemical
Processing Plant, including obtaining approval from Pollution Control Board.

The plant was actually put to use only on 01.03.2012, and it could reach the full capacity only in the
next financial year i.e. in FY 2012–13. Determine the accounting treatment of interest for FY 2010–
11, FY 2011–12 and FY 2012–13, assuming the loan was repaid in a single shot at the end of Financial
Year 2012–13.

51. Borrowing Cost – General Borrowings

A Ltd borrowed loans from two banks PQ Bank and XY Bank for an amount of Rs.100 Lakhs and Rs.150
Lakhs respectively, and disbursed as follows –
On 01.04.2014 Received from PQ Bank Rs.30 Lakhs and received from XY Bank Rs.65 Lakhs.
On 30.06.2014 Received from PQ Bank Rs.50 Lakhs
On 31.07.2014 Received from PQ Bank Rs.10 Lakhs and received from XY Bank Rs.75 Lakhs.
On 30.09.2014 Received the Balance from both the Banks.
On 01.03.2015, loan amount of Rs.20 Lakhs was repaid to XY Bank. Interest rates were 12.50% for
loan from PQ Bank and 15.75% for loan from XY Bank. The funds were utilized as follows –
(a) On Factory Building — Rs.25 Lakhs on 01.04.2014; Rs.15 Lakhs on 01.07.2014; Rs.15 Lakhs on
01.11.2014
(b) On Water Processing Plant — Rs.20 Lakhs on 01.04.2014; Rs.20 Lakhs on 01.08.2014; Rs.60 Lakhs
on 01.10.2014, Rs.45 Lakhs on 01.02.2015
(c) On Land — Rs.50 Lakhs on 01.04.2014

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Determine the total borrowing cost for the year, and their treatment. Assume, the construction
activity was still under progress as at 31.03.2015.

52. IND AS 23 – Capitalisation Rate for General Borrowings

P Ltd had the following borrowings during a year in respect of capital expansion.
Plant Cost of Asset Remarks
Plant P Rs.100 Lakhs No Specific Borrowings.
Plant Q Rs.125 Lakhs Bank Loan of Rs.65 Lakhs at 10%.
Land Rs.75 Lakhs Bank Loan of Rs.40 Lakhs at 12%
Plant R Rs.175 Lakhs 9% Debentures of Rs.125 Lakhs were issued.

In addition to the above specific borrowings, the Company had obtained Term Loans from two banks –
(1) Rs.100 Lakhs at 10% from Corporation Bank and (2) Rs.145 Lakhs at 11.50% from Canara Bank, to
meet its capital expansion requirements. What is the amount of Borrowing Costs to be capitalised in
each of the above items of Fixed Asset?

53. IND AS 23 – Determination of Borrowing Cost – Running Account

K Ltd has undertaken a project for expansion as per the following details:
Month Plan Actual
April Rs.2,00,000 Rs.2,00,000
May Rs.2,00,000 Rs.3,00,000
June Rs.10,00,000 –
July Rs.1,00,000 –
August Rs.2,00,000 Rs.1,00,000
September Rs.5,00,000 Rs.7,00,000
The Company pays to its Bankers at the rate of 12% p.a. interest being debited on a monthly basis.
During the half year, the Company had Rs.10 Lakhs Overdraft upto 31st July, surplus cash in August
and again Overdraft of over Rs.10 Lakhs from 1st September. The Company had a strike during June
and hence, could not continue the work during June. Work again commenced on 1st July and all the
works were completed on 30th September. Assume that expenditure were incurred on 1st day of
each month.
Calculate the interest to be capitalised, giving reasons wherever necessary. You may assume that –
(a) Overdraft will be less, if there is no capital expenditure.
(b) The Board of Directors considering facts and circumstances, has decided that any capital
expenditure taking more than 3 months will be substantial period of time.

6. IND AS 17 – ACCOUNTING FOR LEASES (AS 19)

54. IND AS 17 – Leases – Introduction
Case A: A Ltd and B Ltd have entered into an agreement on 3rd December 2017, whereunder A Ltd
will taken an asset (an industrial scanning machine) on lease from B Ltd, effective 1 st April 2018. The
actual delivery of the asset will take place only on 1st April 2018. Required – (a) What is the date of

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inception of the lease; (b) On what date will the Lease be classified as either Finance Lease or
Operating Lease; (c) When will the accounting for the said lease be done?

Case B: From the following information, determine the minimum lease payments for A Ltd which has
taken an asset on a 6 year lease from B Ltd – (Rs.)
Monthly Lease Rent 25,000 Cost for services given by B Ltd (Monthly) 8,000
Residual Value guaranteed by A Ltd 2,50,000 Fair Value of Asset after 6 Years 3,00,000
Additional Rent - for every usage 500 Taxes to be paid to B Ltd 4,500
above 1500 scans per quarter
A Ltd has an option to purchase the asset after a period of 6 years at Rs.75,000. It is reasonably certain
that A Ltd will exercise the option.

55. IND AS 17 – Leases – Dealer Cum Lessor – Accounting and Disclosure

A Limited is a Dealer Cum Lessor. It has 5 units of ‘Machine A’ available for sale. Each machine costs
Rs.15,00,000. Normal Sale Price is Rs.20,00,000 B Limited takes one machine on lease over a period
of 3 years which is also the useful life of the machine, at an annual lease rent of Rs.9,00,000. Lessor’s
cost of capital is 20%. Journalise the above. Also show the extract from the Financial Statements.

56. IND AS 17 – Accounting In Lessees’ Books

On 1st April 2017, A Ltd began to lease a property on a 20 year lease. A Ltd paid a lease premium of
Rs.30 Lakhs on the same day. The terms of the lease required A Ltd to make annual payment of Rs.5L
(payable in arrears), the first of which was made on 31st March 2018.

On 1st April 2017, the fair values of the lease interest in the leased property were as follows – (a) Land
Rs.30L; (b) Buildings Rs.45L. There is no opportunity to extend the lease term beyond the agreed
period. The estimated useful economic life coincides with the lease term.

The annual rate of interest implicit in finance lease can be considered at 9.2%. The annuity factor at
the implicit rate for a 20 year period is 9.00. You are required to explain the accounting treatment
for the above property lease, and produce appropriate extracts from the financial statements of A
Ltd for the year ended 31st March 2018.

57. IND AS 17 — Leases – Accounting and Disclosure – Dealer’s Books

Ogive Equipments own a Tandem Roller which is recorded at a Net Book Value of Rs.15 Lakhs in their
books as at 01.04.2014. On that date, leased out the Asset to K&R India Services Ltd (KRIS) on
following terms –
 Lease Period 3 Years
 Annual Lease Payment Rs.8 Lakhs
 At the end of the Lease Period, the Lessee will pay Rs.3 Lakhs and take over the asset.
 For outright sale, the asset is available at Rs.24 Lakhs.
 Total Residual Value estimated by Ogive is Rs.4 Lakhs.
 Ogive’s rate of return is 10% p.a.

Required –

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1. Journal Entries in the books of Ogive Equipments for the three years
2. Disclosure in the Balance Sheet as at 31.03.2015.

58. IND AS 17 – Accounting In Lessees’ Books

S Ltd wishes to obtain a machine costing Rs. 30 Lakhs by way of Lease. The effective life of the
Machine is 14 years, but the Company requires it only for the first 5 years. It enters into an agreement
with A Ltd, for a lease rental for Rs. 3 Lakhs p.a. payable in arrears and that implicit rate of interest is
15%. The Accountant is not sure about the treatment of these lease rentals and seeks your advice.

59. IND AS 17 — Leases – Accounting and Disclosure – Dealer’s Books

A Ltd leased a machine from B Ltd on 1st April 2017 on a three year lease. The expected future
economic life of the machine on 1st April 2017 was 8 years. If the machine breaks down, then B Ltd
would be required to repair the machine or provide a replacement. B Ltd agreed to allow A Ltd to use
the machine for the first six months of the lease without the payment of any rental as an incentive
to A Ltd to sign the lease agreement. After this initial period, lease rentals of Rs.2.1L were payable six
monthly in arrears, the first payment falling due on 31st March 2018. Explain the treatment required
in accordance with Ind AS 17 in the books of A Ltd.

60. IND AS 17 — Sale and Lease Back – Accounting for Loss / Gain
Lessee Ltd has an asset, whose original cost is Rs.6 Lakhs, which it depreciates based on SLM method
over its useful life of 6 Years, with no residual value. At the end of the 3rd Year (01.04.2007), it sells
the asset to Lessor Ltd, at the Assets Fair Value of Rs.2,80,000.

The terms of lease are –

 Tenor 3 Years
 Annual Lease Rental Rs.80,000 Plus 5% of Turnover.
 Expected Turnover for the next three years Rs.10 Lakhs, Rs.12 Lakhs and Rs.16 Lakhs.
 Residual Value guaranteed by Lessee Ltd at the end of the lease period is Rs.50,000.
 Lessee’s incremental borrowing rate is 12%.

Required – (a) Balance Sheet Extract as at 31.03.2008 and (b) Journal Entries for the above
transactions for the first year.

61. IND AS 17 – Sale and Lease Back

ABC has Laser Cutting Machine whose total useful life is 10 years, cost Rs.10 Crores when acquired
on 01.04.2009. The Company has been charging Depreciation at 12.50% per annum on diminishing
balance basis. On 01.04.2012, the Company had liquidity constraints, and decided to sell the Machine
for Rs.7.50 Crores, when the Fair Value was Rs.8.00 Crores.

The same asset was taken back on lease on an Annual Lease rent of Rs.2 Crores for a period of 4
Years. The Asset’s total useful life was estimated at 10 Years. If the Incremental Cost of Borrowing is
15%, advice accounting for Financial Year 2012–13, assuming lease back results in – (a) Finance Lease;
and (b) Operating Lease.

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7. IND AS 2 – INVENTORIES (AS 2)

62. Ind AS 2 – Inclusions in Cost

Comment on how the following items will be considered in the valuation of inventory of a trader who
imports goods and sells them to various customers across the globe –
(a) Trade Discounts on purchase; (b) Handling Cost relating to imports; (c) Salaries of accounting
Department; (d) Sales commission paid to Sales Agents; (e) After sales warranty costs; (f) Import
duties; (g) Costs of purchase (based on supplier’s invoices); (h) Freight expense; (i) Insurance of
purchases; (j) Brokerage commission paid to indenting agents.

63. Ind AS 2 – Valuation of Inventory

Case A – V Ltd purchased goods at a cost of Rs.50 Lakhs in October 2017. Till March 2018, 80% of the
stocks were sold at various prices. The Company wants to disclose Closing Stock at Rs.10 Lakhs. The
expected sale value is Rs.11 Lakhs and a commission at 10% on sale is payable to the agent. What is
the correct value of Closing Stock?

Case B – Cost of partly finished goods as at 31st March is Rs.300. The unit can be finished next year,
after incurring further processing cost of Rs.200. The finished goods can be sold at Rs.520, subject to
payment of brokerage of 5% on Selling Price. Determine the carrying amount as at 31 st March.

Case C - A Ltd deals in the following products, which are neither similar nor interchangeable. At the
time of closing of its accounts on 31.03.2018, the Historical Cost and Net Realisable Value of the items
were as follows –
Inventory Units Cost NRV
P 5000 25 26
Q 10000 12 10
R 12000 15 18
S 3000 22 22
T 8000 9 8
Determine the value of closing stock for disclosure in Financial Statements.

64. Treatment of Abnormal Losses

A Ltd ordered 15000 Kgs of certain raw materials at Rs.100 per unit. The purchase price includes
Integrated GST of Rs.6 per kg, in respect of which full Input Tax Credit is available. Freight incurred
amounted to Rs.85,000. Normal Transit Loss is 4%. The enterprise actually received 14,300 Kgs and
consumed 11,400 Kgs. Determine Cost of Closing Stock, and extent of abnormal loss expensed off.

65. Valuation of Empties / Bags / Bottles

A Leather Goods processing Company buys certain chemicals and oils in huge quantities in barrels.
On an average the Company receives 5,000 Barrels per month. The barrels are not returned after
usage, and are aggregated and sold once in every four months. Can the Company show these barrels
as part of their closing stock? Advice.

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66. Valuation of Waste and Scrap – By Products

Case A - In a production process, normal waste is 5% of input, 5,000 MT of input were put in process
resulting in wastage of 300 MT. Cost per MT of input is Rs.1,000. The entire quantity of waste is on
stock at the year end. State with reference to AS, how will you value the inventories in the above
case.
Case B - During the production of the main product BA, a by product CA is also produced. The cost of
conversion is Rs.4,85,000. 1,10,000 Units of BA and 6,000 Units of CA arise from the process. CA has
to be processed further at Re.1 per unit after which it can be sold for Rs.4.80 per unit. Calculate the
cost of conversion of BA and CA.

67. Ind AS 2 – Joint Product and By Product

A Ltd is in the business of manufacturing Product X and Product Y. During the manufacturing process
a by product “K” emerges. From the following details, calculate the value of closing stock in hand of
A Ltd as at the given date –
Cost upto Split Off Point -
a. Material Costs 3,00,000
b. Wages 1,80,000
c. Processing Charges (Outsourced Cost) 1,30,000
d. Factory Costs (Both Fixed & Variable) 1,00,000

10,000 units of Product X and 8,000 Units of Product Y was manufactured from the above process at
the split of point. In addition, 4,000 units of Product K also emerged. The following are particulars
relating to X, Y & K –
a. Market Price of X is Rs.60 per unit; and Market Price of Y is Rs.50 per unit.
b. Market Price of K is Rs.20 per unit, provided a further cost of Rs.10,000 is incurred.
c. In addition, there was some scrap generated which were sold for Rs.6,000.

As at the end of the year, 300 Units of X, 500 Units of Y and 50 Units of K were in hand. Ascertain
the value of inventory.

68. Inventory Valuation – Special Cases

The closing inventory at cost of a Car Component Manufacturing Company amounted to Rs.122.50
Lakhs. The following items were included at cost in the total —
(a) 400 units of Gear Knobs which had cost Rs.600 each and normally sold at Rs.1000 per unit. Owing
to a defect in manufacture, they were all sold after the Balance Sheet date at 50% of their normal
price. Selling expenses amounted to 5% of the proceeds.
(b) 1000 front bumpers of a Car, which had cost Rs.2,500 each. These too were found to be defective
in design and shape. Remedial work in April cost Rs.300 per unit, and selling expenses for the
entire batch totaled Rs.10,500. They were sold for Rs.3,000 each later in May.
(c) 50 Units of OVRM of a particular car model at a cost of Rs.1,500 per pair. The car model was
removed from the production line five years back.

What should be the inventory value as per AS 2 after considering the above items?

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69. Ind AS 2 – Inventory Valuation – Fixed Overheads

Determine the cost per kg of finished goods from the following details – (per Kg of Finished Goods)
c. Material Cost Rs.200
d. Direct Labour Rs.40
e. Direct VOH Rs.30

Fixed production charges for the year on a normal working capacity of 2.50 Lakhs Kgs is Rs.24 Lakhs.
Closing Stock of Finished goods is measured at 5000 Kgs. Actual Production during the year was 2.40
Lakhs Kgs.

In addition, the Company incurred Warehousing Charges of Rs.1 Lakh per month for storing Raw
Materials (on an average 10000 Kgs were stored in Warehouse at any given time). The Company also
had borrowed OD specifically for the purpose of manufacturing the finished goods, on which it had
paid Rs.7 Lakhs as interest. Would your answer change if actual production was 2.55 lakhs Kgs?

70. Valuation of Inventory

From the following information pertaining to Z Ltd, you are required to calculate the value of raw
materials and finished goods at cost. Also determine the value of closing stock when the NRV of the
finished goods B is Rs.800 or Rs.600.

Raw Material A
Closing Balance in Units 1000
Cost Price including GST 400
GST (CENVAT Credit Allowable) 20
Freight Inward 40
Unloading Charges 20
Replacement Cost 300

Finished Goods B
Closing Balance in Units 2400
Raw Materials Consumed Rs./Unit 440
Direct Labour 120
Direct Overhead 80
Raw Material A is used for production of finished goods. The total fixed overheads for the year was
Rs.4 Lakhs on normal capacity of 20,000 Units of B.

71. Ind AS 2 – Provisioning

Sun Ltd has fabricated special equipment (Solar Power Panel) during 2017-18 as per drawing and
design supplied by the Customer. However, due to a liquidity crunch, the customer has requested
the Company for postponement in delivery schedule and requested the Company to withhold the
delivery of finished goods products and discontinue the production of balance items.

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As a result of the above, the details of customer balance and the goods held by the Company as work
in progress and finished goods as on 31.03.2018 are as follows –
a. Solar Power Panel (WIP) Rs.85 Lakhs
b. Solar Power Panel (Finished Products) Rs.55 Lakhs
c. Sundry Debtors (Solar Power Panel) Rs.65 Lakhs

The petition for winding up against the Customer has been filed during 2018-19 by Sun Ltd. Comment
with explanation on provision to be made of Rs.205 Lakhs included ion Sundry Debtors, Finished
Goods and Work-in-Progress in the Financial Statement 2018-19.

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