LOGIC SCHOOL OF MANAGEMENT LECTURE SUPPORT MODULE CA FINAL PAPER 4 FINANCIAL REPORTING NEW SYLLABUS. #FS8: FV Gain — Investment in Equity Classified at FVTOCI 10| 30 ) Items that can be reclassified FV Gain — Investment in Debt Classified at FVTOCI -25| 10] Total Comprehensive Income | 95 | 295 ‘The following TB has been extracted from the books of A Ltd as at 31 March 2021 Particulars Debit Credit Additional Information: 1. Inventory at 31s March 2021 was valued at a cost of Rs 95,000. Included in this balance wer OUD TERT cost of 1S DOD wien was GamaTET AMO TET NRV of recta fort Prepare Financial Statements as 5 e year to 31% March 2021 = Building at 5% on Cost SLM ——— 6a, a Dla a aaa ot 30 come Tax of Rs 1,69,000 is to be provided aa year 2020-21 4. Land was revalued up by Rs 1,00,000 r Schedule IIl SflL. OBE: Sle cr Bs ever Wy BWM A qn0d, Roox NU ON LOGIC SCHOOL OF MANAGEMENT LECTURE SUPPORT MODULE FINANCIAL REPORTING NEW SYLLABUS. CA FINAL PAPER 4 Answer: | Balance Sheet as on 31st March 2021 | Assets Note ‘Amount Non Current Assets | Property Plant & Equipment 1 706 | Current Assets | inventories: 8 | Financial Assets | Trade Receivable 233) | Cash and Cash Equivalents 3 | Total Assets 1,027 | Equity and Liabilities | Equity | Equity Share Capital 270 Other Equity 2 465 | Non Current Liabilities | Financial Liabilities | Borrowings 100 | Current Liabilities | Financial Liabilities | Trade Payable 27 | Provisions 165 | Total Equity and Liabilities 1,027 | ‘Statement of Profit and Loss Particulars Note ‘Amount | Revenue from Operation. 2.165 | Other income a 16 | Total Income 2,181 | ExpenséS) | Purchases 1,260 | Gfianges in inventory 4 55 | Finance Cost, 25 | Depreciation/Amortisation 74, | Other Expense 5 545 | Total Expenses 1,959 Profit before Tax 222) | Less : Tax Expense 165 | Profit after Tax 57, | Eamings Per Share 0211 | T9|Page | CA AJITH ROHITH G FCA B.COMLOGIC SCHOOL OF MANAGEMENT CA FINAL PAPER 4 LECTURE SUPPORT MODULE FINANCIAL REPORTING NEW SYLLABUS. Other Comprehensive Income a) Items that cannot be reclassified Revaluation Surplus 100 Total Comprehensive Income 187 Note 1: Property Plant and Equipment Gross Block Depreciation Net Particulars Opening | Changes | Glosing | Opening | Changes | Closing | Book Value Land 380. 100 | 480 - - d 48 Building 100 = | 100 30 5 35 6 Plant and Machinery | __400 =| 400; 170 697 239 16 280 700/ 980/ 200 Taj) 274 706 Note 2: Statement of Changes in Equity for the year 2020-21 Reserves and Surplus OCI (NR) Particulars a ae RR Total Opening (01/04/2020) 80 235 20| 335 (Tcl = 57. 100 [157 (Dividend Paid = -27 =| 27 Closing (31/03/2021) 80 265 120| 465 Note 3: Other Income ‘Amount Dividend Income 15 Interest Income 1 Total 16 Note 4: Change in Stock ‘Amount Opening stack’ 140 Closing Stock (95-15+85) 85 Decrease in Stock 55 Note5: Other Expenses ‘Amount ‘Administrative Expenses 250 Distribution Expenses 295 Total 545 #FS9: CAAITH ROHITH G FCA B.cOM Sot Brash [Swos] —aA Melding LOGIC SCHOOL OF MANAGEMENT CA FINAL PAPER 4 LECTURE SUPPORT MODULE FINANCIAL REPORTING NEW SYLLABUS. April 2019 follows: Statement of Profit and Loss Particulars Amount 10,00,000 Total Revenue (a) 11,00,000 Expenses: (Ea 50000 (60,000) 1,75,000 30,000 90,000 Total Expenses (b) 7,45,000 Profit before tax (c) = (a)- (b) 3,55,000 Cee TordO2 Vino vas100" Deferred tax _ -\1e Total tax expense (d) Profit for the year (e) = (c) — (d) Balance Sheet Particulars ‘Amount Sy EQUITY AND LIABILITIES (1) Sbaishaldess Gunde EQuily (a) Share Capital 1,00,000 . (puRasanias 2 SurliS MARY STALE + 2ars00 He € (2) Non-Current Liabilities 1 /Page CA AJITH ROHITH G FCA B.COM3 \. oa SC Fee Locic scHoot oF Manacement CJAQS CAFINAL PAPER 4 LECTURE SUPPORT MODULE - FIVANCIAL REPORTING NEW SYLLABUS (a) Long Term Provisions (DBO) Ajo ww 2 00 (b) Deferred tax liabilities Cth a (3) Current Liabilities > Financial Cialo- (a) Trade Payables 11,000 (b) Other Current Liabilities 45,000 ae’ . (c) Short Term Provisions — ana 1,06,500 oun EV TOTAL 5,21,000 ~ ASSETS (1)_Non Current Assets (a) Property, plant and equipment (net) Ficorateh 1,00,000 0) Loans apsradwansee~ , 40,000 eter - “art CP Reanonmercencon SY Mavi, QS wire a — POW Gen - Non Current Assets 50,000 (2) Current Assets € (a) @vtwrentinvestment: y 30,000 (b) Inventories 2° Dav 80,000 (c) Trade Receivables oTe& 55,000 (d) Cash aps@aok Balances OL.C& 1,15,000 (e) Other Current Assets Psy Bom: 51,000 TOTAL 521,000 Additional information of Softbharti Pvt Ltd.: , ant J 1. Deferred tax liability of RSI/6|000"is) created duewtopfollowing difference: Difference, in depreciation amount as per Income tax and Accounting profit Ve PR sec 5 . 2. There is anly on€ property, plant an! Fees Pe. BLD Whose closing balance/as at 3 1st March, 2020 is as follows Asset description ‘e.| Property, plant and equipment | Rs. 1,00,000 | Rs. 80,000 ‘As per Books | As per Income tax 3. Pre incorporation expenses are deductible on straight line basis over the period of five years as per Income tax. However, the same are immediately expensed off IME BOD. 4 qCurrentitax\is\Calculated at 30% on PBT - Rs.3,55,000 without doing any 1 ‘adjustments related to Income @t—ahe correcticurrent tax afteridoinginecessary adjustments of allowances / disallowances related to Income tax comes to Rs.1,25,700. 5. After the reporting period, the directors have recommended dividend of Rs. 15,000 for the year ending 31st March, 2020 which has been deducted from WAOKBY, - OG ° WHOS 4740. i). 1LOGIC SCHOOL OF MANAGEMENT CA FINAL PAPER 4 Leetuae suPpoRTMOnULE Fplancia nepoRTING MEW SVCLABUS We hat dis dloguixe alone.” reserves and surplus SRE peyabT ETOAC has been grouped under “alongwith other financial liabilities cn financial stateMents for financial year_2019-2020 have not been yet approved oclL.——_ SOCIE. 12.You are required to ascertain that whether the financial\statements of Softbharti 'y Pvt. Ltd. are correctly presented as per the applicable financial reporting gy framework. If not, prepare the revised financial statements of Softbharti Pvt. Ltd. after the careful analysis of mentioned facts and information. Answer: If Ind AS is applicable to any companynthen Ind AS shall automatically be made applicable to all the subsidiaries, holding companies, associated companies, and joint ventures of that company, irrespective of individual qualification ot set of standards on such companies In the given case it has/Béen mentioned that the financials of Iktara Ltd. are prepared as per Ind AS. Accordingly-the results of its subsidiary Softoharti Pvt. Ltd. should also have been préparedvas per Ind AS. However, the financials of Softoharti Pvt Ltd. have been presented as per accounting standards (AS) Hence, it isjhecessary to revise the financial statements of Softoharti Pvt. Ltd. as per Ind AS after the incorporation of necessary adjustments mentioned in the question. The réyisédstinancial statements of Softbharti Pvt. Ltd. as per Ind AS and Division 1! to Schedule Il of the Companies Act, 2013 are as follows Statement of Profit and Loss for the year ended 31> March, 2020 Particulars Amount (Rs.) Revenue from operations 10,00,000 Other Income (1,00,000 + 20,000) (refer note -1) 1,20,000 Total Revenue 11,20,000 Expenses: a3 /Page CA AJITH ROHITH G FCA B.COMreer geege ce mam mancin nepon Zeneca Purchase of stock in trade 5,00,000 (Increase) / Decrease in stock in trade (50,000) Employee benefits expense 1,75,000 Depreciation 30,000 Other expenses 90,000 Total Expenses 7,45,000 Profit before tax 3,75,000 Tax Expense 1,256,700 Current tax 1,25,700 Deferred tax (W.N.1) 4,800 13,0,500 Profit for the year (2,44,500 OTHER COMPREHENSIVE INCOME Items that will not be reclassified to Profit or Loss; |__-Remeasurements otret dined benentpiang, | ae Cl Other Comprehensive Income for the period. 700 Total Comprehensive income for the period (2,45,200 Balance Sheet.as at 31% March, 2020 Particulars Amount ASSETS Non-current assets. Property, plant aAahequipment 1,00,000 Financiabassets Loans (Long-term loans and advances) 40,000 Qthernon-current assets (capital advances) (refer note-2) 50,000 Current assets Inventories 80,000 Financial assets Trade receivables 55,000 Cash and cash equivalents/Bank 1,15,000 Other financial assets (Interest receivable from trade 51,000 receivables)LOGIC SCHOOL OF MANAGEMENT LECTURE SUPPORT MODULE FINANCIAL REPORTING NEW SYLLABUS. CA FINAL PAPER 4 TOTALASSETS | —_ 5,41,000 EQUITY AND LIABILITIES Equity Equity share capital 1,00,000 | Other equity 245,200 | Non-current liabilities | Provision (25,000 — 1,000) 24,000 Deferred tax liabilities (4800 + 300) Current liabilities Financial liabilities Trade payables 11,000 | Other financial liabilities (Refer nate 5) 15,000 | Other current liabilities (Govt. statutory dues) (Refer note 8) 15,000 Current tax liabilities 1,25,700 TOTAL EQUITY ANDLIABILITIES | _5,41,000 Statement of Changes In Equity For The YearEnded 31* March, 2020 A. Equity Share Capital Balance (RS.) Opening Balance Changes in equity share-capital during the year 1,00,000 Closing Balance 1,00,000 | B. Other Equity | Particulars Reserves & Surplus | Retained Earnings cl | Opening Balance - | Profit for the year 244,500 | OCI for the Year # Remeasurement 700 | Gain DBP - Ind AS 19 | Total comprehensive income for 2,45,200 | the year | Less: Dividend on equity shares = | (‘efter nate - 4) Closing Balance 2,45,200 | | CA AJITH ROHITH G FCA B.COMLOGIC SCHOOL OF MANAGEMENT CA FINAL PAPER 4 LECTURE SUPPORT MODULE FINANCIAL REPORTING NEW SYLLABUS. # Exam Focus: As per Schedule III Division Il — (Ind AS Compliant) states that with respect to OCI (NR) relating + Re-measurement of defined benefit plans; and + Fair value changes relating to own credit risk of financial liabilities designated at fair value through profit or loss shall be recognised as a part of retained eamings with separate disclosure,of such items along with the relevant amounts in the Notes. Disclosure Forming Part of Financial Statement: Proposed dividend on equity shares is subject to the approval of thé;Shareholders of the company at the annual general meeting and not recogpizedias liability as at the Balance Sheet date. (refer nate-4) Notes: 1. Current investment are held for the pufpase of trading. Hence, it is a financial asset classified as FVTPL. Any gainyinits-fair value will be recognised through profit or loss. Hence, Rs. 20,000\(50,000 — 30,000) increase in fair value of financial asset will be recoghised”in profit and loss. However, it will attract deferred tax liability onjificreased value (Refer WN). 2. Assets far which thevfuture.économic benefit is the receipt of goods ar services. rather than the right'té'Teceive cash or anather financial asset, are not financial assets 3. Liabilitiesfor which there is no contractual obligation to deliver cash or other financial asset to another entity, are not financial liabilities. 4. Asperind AS 10, ‘Events after the Reporting Period’, If dividends are declared 'fter'the reporting period but before the financial statements are approved for issue, the dividends are not recognized as a liability at the end of the reporting period because no obligation exists at that time. Such dividends are disclosed in the notes in accordance with Ind AS 1, Presentation of Financial Statements. 5. Other current financial liabilities: 86 [Page CA AJITH ROHITH G FCA B.COMLOGIC SCHOOL OF MANAGEMENT CA FINAL PAPER 4 LECTURE SUPPORT MODULE FINANCIAL REPORTING NEW SYLLABUS Particulars ‘Amount Balance of ather current liabilities as per financial statements 45,000 Less: Dividend declared for FY 2019/2020 Reversal (15,000) Reclassification of government statutory dues payable to ‘other (15,000) current liabilities’ Closing balance 15,000 Working Note: Item 1B cA 1D pT @30% 80,000 1,00,000) 20,000] _6,000-D7L| 24,000 Nip) 24000 7,200-07A erm eeess 50,000[/ =-20,000[ _6,000-D71| O80 (Q300Q_NetoTL Ga00-07) 4100. #FS 10: Balance sheet of a trader on 31st Mareh, 20X11 is given below: Liabilities Assets Rs. Capital 60,000 | Fixed Assets 65,000 Profit and Loss Account 25,000 | Stock 30,000 10% Loan 35,000 | Trade receivables 20,000 Trade payables 10,000 | Other Assets 10,000 Bank 5,000 1,30,000 1,30,000 Additional information: (a) The Femaining life of Property Plant and Equipment is 5 years. The pattern of use of the asset is even. The net realisable value of Property Plant and Equipment on 31.03.20X2 was Rs. 60,000 (b) The trader's purchases and sales in 20X1-20X2 amounted to Rs 4 lakh and Rs. 45 lakh respectively. (c) The cost and net realisable value of stock on 31.03.20X2 were Rs 32,000 and Rs. 40,000 respectively. 87|Page CA AJITH ROHITH G FCA B.COMLOGIC SCHOOL OF MANAGEMENT CAFINAL PAPER 4 LECTURE SUPPORT MODULE FINANCIAL REPORTING NEW SYLLABUS (d) Employee Benefit Expenses for the year amounted to Rs 14,900 (e) Other Assets are amartised equally aver 4 years. (f) Trade Receivable an 31.03.20X2 is Rs 25,000, of which Rs 2,000 is doubtful Collection of another Rs 4,000 depends on successful reinstallation of certain product supplied to the customer. (Q) Closing trade payable is Rs 12,000, which is likely to be settled at 5% discount (h) Cash balance on 31.03.20X2 is Rs. 37,100 before deduction of interest paid on loan (i) There is an early repayment penalty for the loan Rs 2,500. Prepare Profit and Loss and Balance Sheet as per Schedule III Division INassuming case 1) Going Concem Basis case 2) Non-going concern basis. (Study Material) Answer: Balance Sheet as at $1 starch, 20x2 Particulars Note| Case1 Case2 Assets Non Current Assets Property Plant and Equipment, 1 52,000 60,000 Current Assets Inventories 32,000 40,000 Financial Assets Trade Receivable 2 23,000 19,000 Cashahd Cash Equivalents 33,600 33,600 Others 7,500 Nil Total Assets 1,48,100 1,52,600 Equity and Liabilities Equity Share Capital 60,000 60,000 Other Equity 3 41,100 43,700 Non Current Liabilities Financial Liabilities Borrowings 35,000 35,000 88 /Page CA AJITH ROHITH G FCA B.COMLOGIC SCHOOL OF MANAGEMENT LECTURE SUPPORT MODULE CA FINAL PAPER 4 FINANCIAL REPORTING NEW SYLLABUS. Financial Liabilities Trade Payables 12,000 11,400 Provisions — Prepayment Penalty 2,500 Total Equity and Liabilities 148,100 152,600 Profit and Loss Account for the year ended 31st March, 20x2 Particulars Note | Case1 Case2 Revenue form Operation 4,50,000¢ 250,000 ome lnsome ( Write-Back of Trade Rp, 600 Total Revenue 450,000 4,50,600 Expenses Purchases *4,00,000 4,00,000 +/- Decrease/(Increase) in Inventory 4 (2,000) (10,000) Employee Benefit Expenses | 14,900 14,900 Finance Cost 3,500 3,500 Depreciation and Amortisation Zz 15,500 15,000 Other Expenses 5 2,000 8,500 Total Expenses 4,33,900 4,31,900 Profit forthe Period 16,100 18,700 Note 1 - Property,Plant and Equipment Particulars Case1 | Case2 Opening Balance 5,000 65,000 +7 Adgition/Delétions Nil Nil Less Dépreciation (73,000) (6,000) Ciosing 32,000 60,000 Note 2 - Trade Receivable Particulars Casel | Case2 Trade Receivable Considered Good — Secured/Unsecured | 25,000 25,000 Less - Loss Allowance (Provision for Doubtful Debts) (2,000) (6,000) Closing 73,000 79,000 a9/Page CA AJITH ROHITH G FCA B.COMLOGIC SCHOOL OF MANAGEMENT LECTURE SUPPORT MODULE Note 3 - Other Equity - SOCIE CA FINAL PAPER 4 FINANCIAL REPORTING NEW SYLLABUS. Retained Earnings Case1 | Case2 Opening Balance 25,000 25,000 + TCT 76,100 18,700 Closing 47,100 43,700 Note 4 - Changes in Inventory Particulars Case1 | casez Closing Stock 32,000 40,000 Opening Stack 30/000 30,000 Increase in Stock 2,000 10,000 Note 5 - Other Expense Particulars Case1 | Case2 Provision for Bad and Doubtful Debts 2,000 6,000 Provision for Prepayment Penalty Nil 2,500 Closing 2,000 8500 #FS 41: Following are the financial statements of JSP Limited as per Sch Ill Division | — AS Compliant Financial Statements Balance Sheet (Rs. in lakh) Particulars Note ‘As at March, 2018 EQUITY AND LIABILITIES Shareholders' Funds: Shaté Capital (Share of Rs. 10 each) 2,000 Reserves and Surplus 1 2,500 Non-Current Liabilities: Long-Term Borrawings 2 4,860 Deferred Tax Liabilities 3 100 Current Liabilities: Trade Payables 400 90/P age CA AJITH ROHITH G FCA B.COMLOGIC SCHOOL OF MANAGEMENT LECTURE SUPPORT MODULE CA FINAL PAPER 4 FINANCIAL REPORTING NEW SYLLABUS. Other Current Liabilities 4 250 Short Term Provisions 310 TOTAL 10,420 ASSETS Non-Current Assets: Property Plant and Equipments 5,600 Deferred Tax Assets 3 300 Current Assets: Inventories 1,520 Trade Receivables 5 1,800 Cash and Bank Balance 1,200 Total 10,420 ‘Statement of Profit & Loss (Rs. in lakh) Particulars Note. Year ended March, 2018 Revenue from Operations 7,500 Expenses: Employee benefit expenses 1,750 Operating Costs 2,860 Depreciation 800 Total Expenses 5.410 Profit befare tax 2,090 Tax Expense (510) Profit atten tax 1,580 Notes td’Accounts Note 1: Reserves and Surplus: Rs. in lakh) Capital Reserve 400 Surplus fram Profit & Loss Opening Balance Additions 1,805 st /Page CA AJITH ROHITH G FCA B.COMLOGIC SCHOOL OF MANAGEMENT LECTURE SUPPORT MODULE CA FINAL PAPER 4 FINANCIAL REPORTING NEW SYLLABUS. Reserves for foreseeable loss 295 Total 2,500 Note 2: Long Term Borrowings: Rs. in lakh) Term Loan from Bank 4,860 Total 4,860 Note 3: Deferred Tax Rs in lakh) Deferred Tax Asset 300 Deferred Tax Liability (100) Total 200 Note 4: Other Current Liabilities: Rs. in lakh) Unclaimed Dividends 10 Billing in Advance 240 Total 250 Note 5: Trade Receivables (Rs. in lakh) Considered Good (Qutstanding within 6 montns) 1,565 Considereddoubtrul (due from past 1 year) 253 Provision fordoubttul debts (18) Total 1,800 Additional Information: 1. Share capital comprises of 200 lakh shares of Rs. 10 each. 2. Term Loan from bank for Rs. 4,860 lakh also includes interest accrued and due of Rs, 860 lakh as on the reporting date. 3. Reserves for foreseeable loss is created against a service contract due within 3 months You are required to CA AJITH ROHITH G FCA B.COM 92|[PageLOGIC SCHOOL OF MANAGEMENT CA FINAL PAPER 4 LECTURE SUPPORT MODULE FINANCIAL REPORTING NEW SYLLABUS. (i) Identity and report tne errors and misstatements in the above extract, wherever applicable (ii) Prepare the corrected Financial Statements as per Schedule III Division II (May 2019 16 Mark) Answer: Analysis of the financial statements: 1. Reserve for foreseeable lass for Rs. 295 lakh, due within 3 months, should'He a part of provisions. Hence it needs to be regrouped. If it was‘ also part of previous year's comparatives, a note should be added in theinates\to account for the regrouping done this year 2. Interest accrued and due of Rs. 860 lakh on term loah will be a part of current liabilities. Thus, it should be shown in “Other Financial Liabilities” under Current Liabilities: 3. It can be inferred from Note 3 that the deterred tax liabilities and deferred tax assets relate to taxes on income leviéd by\the same governing taxation laws, hence these shall be set off, in aceofttaftce’with Ind AS 12. The Net DTA of Rs. 200 lakh will be shown in the balanée sheet under Non Current Assets Balance Sheet as at 31st March, 20x2 Particulars Note ‘Amount Assets Non Current Assets Property Plantand Equipment 5,600 Deferred) Tax.Aéset (Net) 1 200 Current Assets Inventories 1,520 Financial Assets Trade Receivable 2 1,800 Cash and Cash Equivalents 1,200 Total Assets 10.320 Equity and Liabilities Equity Share Capital 2,000 3/Page CA AJITH ROHITH G FCA B.COMLOGIC SCHOOL OF MANAGEMENT LECTURE SUPPORT MODULE CA FINAL PAPER 4 FINANCIAL REPORTING NEW SYLLABUS. Other Equity 3 2,205 Non Current Liabilities Financial Liabilities Borrowings 4,000 Current Liabilities Financial Liabilities Trade Payables 400 Other Financial Liability 4 B70 Provisions 605 (Other Current Liability 240 Total Equity and Liabilities 1,48,100 Profit and Loss Account for the year ended31 st March, 20x2 Particulars Note ‘Amount Revenue form Operation 7,500 TotalRevenue 4,50,000 Expenses Purchases (Operating Cost) 2,860 Employee Benefit Expenses 1,750 Depreciation and Amortisation 800 Total Expenses 5,410 Profit Before Tax 2,090 Tax Expense 510 Profit after Tax 1,580 Basic EPS 19 Note1 ~Deferred Tax Asset Particulars ‘Amount DTA 300 Less: OTL (100) NetDTA 200 94/Page CA AJITH ROHITH G FCA B.COMLOGIC SCHOOL OF MANAGEMENT LECTURE SUPPORT MODULE Note 2 - Trade Receivable CA FINAL PAPER 4 FINANCIAL REPORTING NEW SYLLABUS. Particulars ‘Amount Trade Receivable Considered Good — Secured/Unsecured 1565 Trade Receivable with Significant Credit RisWCredit impaired 253 Less - Loss Allowance (Provision for Doubtful Debts) (18) Total 7800 Note 3 - Other Equity - SOCIE Particulars Reserves & Surplus | Total CR Opening Balance 400 225 625 +TCl Ni) 1.580] 1,580 Closing 400, 1805] 2.205 Note 4 — Other Financial Liability Particulars ‘Amount, Unpaid Dividend 70 Interest Accrued B60 Total 870 Note 5 ~ Provisions Particulars ‘Amount ‘Short Term Provision 310 Provision fopforeseeable Loss 295 Total 605 Note. Other Current Liability Particulars ‘Amount, Billing in Advance 240 Total 240 95 [Page CA AJITH ROHITH G FCA B.COM