FINANCIAL INSTRUMENTS

No statutory No Constructive
Financial Instruments contract between two parties

it Financial asset in Financial liability on Equity

al Investment in shores Debentures Bonds a Ordinary on Pmet she issued
6 Loans Advances given 6 Bonds on Debentures issued
9 Trade Receivables 1 Loans Adv Received

5 Trade Payables
Definition
FA Fl Gooligation
it cash t
x
ii Inv inEg shames
iii contractual right to receive cash on another Contractual obligation to deliver cash on

Financial Asset another Financial Asset

heG Receivables Inv in convertible Instrument 919 Payrolls issueof convertible Instrument

il Exchange FA on Fl under conditions that Exchange FA on Fl under conditions that

are potentially Favourable and potentially Unfavourable

Eg Forward contracts options which the Eg Forward contracts options which the
Potentially favourable i.e D F A Potentially Unfavourable lie DF L

Liability present legal on Constructive Obligation

Financial liabilities i Present contractual obligation only And

ii Fl for one party f FA pom another party
 B Sheet Cragati
Equity Assets

Ordinary Shame Capital Equity Property Plant Equipment X Ind as 16

Immedeemable
Pref Shames Equity Intangible Assets a Ind As 38
Debentures Nonredeemable Investment Property X Ind as 40
Equity
Contract assets x Ird As 115

Liabilities Inventories x Ind As a

Redeemable Pref Shames issued FL
Debentures Redeemable FL Investment in Equity Inset FA
FL Inv in Debentures Bonds ele FA
Deposits
hoon Grom Banks FL Trade Receivables FA
Trade Parables FL Deposits made FA

Advance received from customer x Advance paid to supplies Employees x

x other Prepaid Expenses X
contract liability
Womanly Obligation A Gold other Jewellery X
A
Deferred Revenue Gold Bonds FA
Income taxes
hstatutory obligation not x contractual fright to receive
contractual
7 Goodsservices and
notcash on
another FA
Contractual obligation to deliver
Goodsservices and
notcash on
another FA

Following items the not FA on FL

1 Prepaid Asset 2 Advance from customers
4 Warranty obligations h
Income taxes hstatutony
5 Deferred Revenue 6 Contract assets contrast Liability
7 Advance paid to supplier born goods services
 FINANCIAL ASSET
Financial Asset Instrument of OFF monkey terms
measured at Fainvalve
Eg h FA initially
Talat ad Provides loan of E 5000000 to one of its employees for 5years
61 interest payable every year marketinterest rate 12

on it and I I I
DVoffashInflow 300000 300000 300000 300000 300000
3918570 5000000
Financial
meet the 124
Mgr period
the
Amortised over iesyne
Loan to Employees FA 3918570 ofloan

Prepaid staffcost othen asset 1081430

To Bank 5000000

If No Future Economic Benefits then E 1081430 Changed to Pll

Financial Asset
Initial Measurement 260Hours

Transaction of market terms transaction at off market terms

I I
transaction Price Determine Fair Value of F A

IF Fain value based on level I input otherwise

I i Recognise as an asset
Dibb recognised in Pll ii Pll
 If Tmanlection at off market terms and Fhim Value not determined
based on level 1 Input

EG Entity provides I 1000000 loan to its Employee of 51 interest bom

B years but market mates are 127
Of 11 2nd grid
Presentvalue 50000 50000 50000
1000000

Loan to Employee FA DM 831872

Yay
DM 168128
Prepaid Staff Cost other Asset Amortise over the
TO Bank 1000000 Period of loan

Ef Suppose in Above it is holding company which provides loan to its

subsidiary company
hoon to subsidiary FA DM 831872 No amontisation
Investment in Subsidiary other Asset DM 168128
To Bank 1000000

Ef Are ud took containers on lease for 3 years These containers are returnable
atthe end of Cenvice contract often 3years It provides security Deposit of
2 10000 Amount refundable often 3 years when contract terminates Deposit
do not commy any interest and market mate of interest is 71
Got Presentvalue of Security Deposit 910000 x Pule 71.1379yn 7 8163

Security Deposit FA Pm 8163

Rou Asset omen asset DM 1837
TO Bank 10000
 0th 1st 2nd Bnd
x x x
Present Value 8163 10000
Ty
Security Deposit FA 8163
point
Prepaid lease RentfothenAsset
1837
TO Bank 10000
Classification as Equity on Financial liability
C Redeemable preference shames Debentures with mandatory Dividends Interest

Classified as Financial liability

2 Non Redeemable Preferenceshames Debentures with Discretionary Dividend on

interest classified a Equity

3 Non Redeemable Preferenceshames Debentures with mandatory Dividends Interest

Compound Financial Instruments

Note All FA Fl and initially measured at Fain Value

FA Fl
5 Contractthat settled in Entity's 5 Contractthatmay be settled in Entity's
may be
own equity instruments and is own equity instruments

A non derivativebon which Entity is on a A non derivativebon which Entity is on

a

receive variable no at
may be obliged to may be obliged to deliver variable d
no

entity's own equity instruments entity's own equity instruments

Into fixed number of Shares Into fixed number of shares
b b A derivative that will on may besettled
A derivative that will on may be settled
other thanby exchange of fixed amountof other thenby exchange offixedamountof

cash FA bon a fixed number of entity's cash FA bon a fixed number of entity's

own equity instruments own equity instruments

Fixed gon Fixed test Fails Fixed gon Fixed test Fails
Meaning of Equity
An Equity instrument is any contract that evidences a residual interest in
the assets of an entity after deducting all ofits liabilities
An Instrument Is an equity instrument if Both conditions are met

a No contractual obligation
it to deliver cash on another FA
lil To Exchange FA on Fl under conditions that are potentially Unfavourable

9 If instrument settled in own equity testt it is

lil Nonderivative that includes no contractual obligation to deliver variable
number of its own equity instt
Gil A derivative that will be settled only by issuer exchanging fixed
amount of cash on another FA pom a fixed number of its own
equity instt

19 Jagati etd issued 2 500000 Prest Shames to students Ltd Such Preet
Shames will be compulsorily converted into 50000 fixed no of Equity
instrument after 3 years
Issuance of E Pret Shane
500000 Non Derivative Contract
Contractual obligation To deliver biped no of 50000shames
Such Pring Shames will be classified as Equity Instruments

19 Jagati etd issued 2 500000 Prest Shames to students Ltd Such Preet
Shames will be compulsorily converted into 50000 fixed no of Equity
instrument after 3 years Also on the date of conversion students Id
Should Pay 2 215h as consideration for conversion into Equity shares
Issue of E 500000 preference 5h Non Derivative Contmeet
contractual obligation to deliver bixed no of 50000 own shames
 Consideration Fixed 2 100000
Fixed for Fixed test passes 7 Equity Instruments

Note However it Either consideration on No of Shames is variable

then it will be classified as FL

will be converted into Iquity Shares after 5 years Number of Shames

to ya issued will depend on market pricef Sh on the date of

convention ie Variable classified as Financial Liabilities
i No of shares issued on conversion 500000

After 5 years if MP becomes 100 7 No.atshames 500988 5000Sh

500000
250 7 a 1
250
200054
2800 7 1 1 I 5008080 62554

Caux
consideration noof Shames classification
Fixed Fixed Equity
Fixed Variable Fl
Variable Fixed FL
variable Variable FL

Eg Tagati old issued 10000 101 convertible Debentures of E 100 each

Interest lot payable every year Such Debentures converted after
h years Interest mates of plain Debentures without conversion
option is 127
label mandatorily convertible convertible at option of issuers into
50000 fixed
no of shares
0th 11 2nd and 4th
Financial liabilities 100000 100000 100000 100000
2303735 1000000 mandatory
converted into
Bank 1000000 427 Fixed no of
To come Debentures FL 303735 Shares

To cont Debentures Equity 696265

cases Mandatorily convertible convertible at option of issuer into variable no

of themes depending on Fain valve of stones at that date

0th 11 2nd and 4th
i financial liabilities 100000 100000 100000 100000 variable
939259 1000000
no of
snores
my Consideration payable
usingshares as
Bank 1000000
currency
To conv Debentures FL 939253
TO come Debentures fomenting 60797
Dhyan

loses May be converted into 50000 fixed no of shames of the option

of Holden
0th 11 2nd and 4th
I Financial Liabilities 100000 100000 100000 100000

939257 1000000

It obligation to paycash if Holden

thank 1000000 donot exercise conversion
option
to conv Debentures FL 939253
TO come Debentures Equity 60797
lakh may be converted into variable no of shares at the option of Holden
0th 11 2nd and 4th
I Financial Liabilities 100000 100000 100000 100000
939253 1000000

Ty
thank 1000000

To conv Debentures FL 939253

TO come Debentures fomenting 60797
Inner

Derivative contracts I options to buy or sell own equity shames Forward

contracts Future contracts etc
If consideration is FIXED and No of Shames is FIXED then it
is classified as equity

But if Either consideration on no of Shames anyone is Variable

then classified as Financial liabilities

Eh Fagot ad Writes put option to sell 10000 own Shares to X ud

after 5yeans bon 550 each Premium received 26 pen Shane
1 Derivative contract 93 Conditions net
2 Consideration is Fixed No of shares is fixed
i Such Derivative contract is classified as Equity Instrument
Journal other
Bank 60000
TO Derivative Equity 60000
Illustration 31 unit37

On 1st 2nd Grid

PresentValue 60000 60000 60000

924061 1000000

Dad Point of view fudhaan liya Gud Pointof view

1 value of liability component 924061 Inv in 61 PretSh FA 1000000

a a Equity component 75939 To Bank 100000

1000000

Bank He 1000000

TO Gf Convertible Pmef Sh FL 924061

To 61 Convertible Prof59 Equity 75939

Coupon 9 1 107

atheist Marketmate 9 4 131

 on 11 2nd Mt
100000 100000 100000
Pix of cash outflow 1000000
929165
Ty
Dud Journal
1000000
Liability Component 929165 Bank
Equity component 70874 To 61 Com pret FL 929165
TO Gt Conn Arlt Equity 70834

In Above d All Info Sama Except that Pact She will be mandatorily
converted into fixed no of shares at the end of 3rd year

0th 1st 2nd 3rd

100000 100000 100000
1000000
Present value of Cash outflow
236115 Ty

Bank 1000000
To cony Preference 5h FL 236115
To cony Preference 5h Equity 763885
 Initial and subsequent recognition and measurement
of Financial Asset

Financial Assets are initially measured at Fain value

Subsequently Financial Assets are measured at

ACM EXTOLE EXTPL
I Amontised cost method Fainvalve through Oct Fainvalue through Pll
I I Trading Ale
it contractual fash Flows that lil contractual fash Flows that In all other cases
are solely paymentofprincipal are solely paymentofprincipal Freel accounting is
and interestan principal and interestan principal applied
amount outstanding amount outstanding Ef Inv in Equity shares
AND Inv in convertibleInst
AND

it Intention to Hold FA till ii Intention to HoldFA till maturity x

maturity inorder to collect as well as selfofFA in case of No solely payment of

contractual cash Flows good opportunity Principal and interest

Fairyvalvemonitor nahi leanenge

Note Note Note

1 Transaction costare added to it transaction costare added to il Transaction costchanged

Financial asset Financial asset to Plo
iil Effective interestrate er is iit Effective interestrate er is iil No calculation of
calculated in case ofthanlection calculated in case of thantection Effective interestnotes

cost cost
lil Meneston Dividend Income iii oneneston Dividend Income inant oividend in Pll
recognised in plc recognised in Pll
Y Fainvaluechanges are in Fainvaguechanges recognised in Fainvalue changes
ignored in oct which is recycled on recognised in Pll
Disposal Dene
cognition
Inv in Debt Instrument Investment in Equity Instrument
I
left BM Test met Immerocable FITO CE
and classified of FITOLE I
H On disposal OCI balance is not recycled
ondisposal Oct balance to ple gut transferred directly to
is recycled to Plc retained earnings

In case of FUT Pl Alling Transaction Cost changed to Pll for both

Financial asset and Financial liabilities

In case of Acm on FYTOLI

i transaction cost added to FA
Hit transaction cost reduced bmom FL
 Equity instruments and initially measured at net proceeds Received
i e Amount Received transaction cost
Equity Instt and not measured often Initial measurement

Interest In Dividends Paid Losses Gains recognised in Retained Earnings

within Equity
Ef
Entity A issued 10000 107 Preference stones
of E 100 lech to Entity B
Dividend payable at thediscretion of the issuer Pref Shames are innedeemable
Transaction Cost incubined E 20000
BSheet
Equity
i dreference Shapes are classified as Equity Path 980000

Net Amount received noooooo noooo g goooo

Initial recognition
Bank Afc 980000

To lot Pref shares Kquity 980000

After I year if entity declared lot Dividend to Pref Sh holders
townnd Entry
Retained Earnings 100000

To Dividend Payable Baek 100000

Accounting of FA
without withtransaction withtransaction
Investment in lot Bonds 2100000 fan 2400lb Transaction cost lot Cost 8.867
cost
Transaction Cost 2000 FA 100000 102000 102000
1000 10200 9037
0th IE 2nd
IF 100007 nooo 100007

Pvr 100000 ooooo yoooo FA 100000 102200 101037

2000 100000 antenest 10000 10220 89528967
Fast
xp 14Receipt 4100007 1100007 1100007

I Eire f.gg y FA 2nd WIC 2h20 wie

 Accounting
of Financial Assets Acm FUTPL FUTOCE

1 Amontised lost method Acm Fain valve is ignored in Acm

Eg
Tapti ctd Provides 2500000 loan to ABLetd.Intenest 1oY.P.a payable by
ABCAd Principal repayment in B years Transaction cost 210000
Fainvalue of loan at 1styr End 508000 X those of Am No noteof
2ndyr and gooooo y f Fainvalve

Got Assumemarketrateofintereston similar loan is also 10

Case I without considering Transaction Cost
Of qr est 2nd Bd
500000 56000 56000 50000
500000
P.M 560000 Top
Journal Entry
Loans Advances FA 500000
To Bank 560000
how AlcCFA
InitialValue Interest lot Receipts closingvalue
117 500000 56000614 56000 500000
2nd 500000 50000 Pk 56000 500000
3rd 500000 50000 DIY 5500007 MIL
150000

Cases After considering transaction cost

Oh 1st 2nd 3rd
In 1500000 56000 50000 50000
rosy 1100007 500000
5100007
To Cat EffectiveInterest rate 9.2101
 At lot 500000 126561 1ft
HN
10000
510000 page p I 12656
At 94 5126561
10000 P 126 100001 I

7901
i lot 7901
EIB
9.210

Attentively toooo 2656

top a

pose
on 94 12656

toy Mofo 9 t 2101

9.2101 9 2101
Tawind Entry
loans Advances FA 510000 Pk Pll Diff
To Bank 510000
50000 46971 3029
50000 46692 33087
50000 46337 36637
150000 140000 10000
horn Ak FA
InitialValue gntenest 9.2101 Receipts closingvalue
1st 510000 469711814 500007 506971
and 506971 466921814 500007 507663
and 503167 46387461,74 5500007 NIL
140000 656000

crux
Financial Asset 510000
opening
140000
Merestduring years
4500007
El All Receipts incl Principal

Closing Financial Asset NIL

 1st 2nd 3rd
statement
of PK
Open Income
Interestincome 46971 46692 96337

Balance sheet Acm

Retainedearrings Bank 5000001 110000

50000 56000 550000

Pk 46971
140000
PIC 46692
46337 FA 510000
pp
140000 46971
Int Income 9.2104 ER

Goooo 4 Receipts 500007

FA
To pay 80000 FACitynand 506971

Tointinone
46971
M9nt.Income 9.21o1eR 46692
ely 40971
Receipts 50000
4th 5000
Jon Facadyrand 503663
ppg
9YRncome 9.210t.ER tend 46737
Receipts 5500007
NIL

Tourney Entries
amyer Loans Radu ra 510000
To Bank 510000

14W Loans Adv Con 46971 191 SingleEntry

To InterestIncome Me 46971 Bank 50000

Bank 50000 y To InterestIncome 46971

To hoarshadvCFA 50000 To loans Advances 3029
950000 469717
Lady Loans Adv FA 46692 1cal SingleEntry
To InterestIncome Mu 46692 Bank 50000

Bank 50000 TO Interestincome 46692

To hoarshadv Cra 50000 To loans Advances 3308

Body Loans Adv CFA 46337 1cal SingleEntry

To InterestIncome Mu 76337 Bank 550000

Bank 550000 4 To InterestIncome 46337

To hoarshadvCFA 550000 To loans Adv 503663

I Fain valve through Oct fatale Fainvalue changes recognised in Oct

In Case of Frou method FainHave changes recognised in oct but Interest
are dividend Income recognised in Pl
Eg
Tapti ctd Provides 2500000 loan to ABLitd.Intenest 1oY.p.a payable by
ABCAd Principal repayment in B years Transaction cost 210000
Fainvalue of loan at 1styr End 508000
M n a in a 2ndyr and 506000
501

Oh 1st 2nd 3rd

500000 56000 50000 50000
10000 500000
5100007
To Cat EffectiveInterest rate
il 9.2101
 hoansIadv.frA fnitidYatnegntenest
9 Z101 Receipts closingvalue
117 516000 46971 500007 506971
2nd 506971 46692 1500003 507663
3rd 503167 4638746337 5500007 NIL
140000 656000

Statement
of Pll 1st rod 3rd
Open Income
Interestincome 46971 46692 96337
Colson Disposal 23377
Recycling fork 2337
OtherComprehensiveIncome

Fainvategainfuss 1029 1308 23777

Futocemelmodl
Balance sheet
RetainedEarrings Bank 5000001 110000

50000 56000 550000

Pk 46971 eh
4669rem 140000
plc
46337cm FA 510000
pp
Pll 2337 Dri loss on Disposal Int Income Plo 46971

Pk 2337 On Oct meeycled to plc y Receipts 500007

on Reserve CA Altyn 566971

Fainildehain 1029 Fainvategain Oct 1029

re a a 1308 B C A city and 508000
2337 At Income9566971 9.21077 46692
creeping to CMH Receipts 50000
Pk Nev Carolyn 504692
 Fainvalue gain Oct 1308
506000

Athlone4507663 940171814 46737

Receipts 5500007

e of pd yr End 2337
A loss on Disposalforeleg 2337
Impairment
Nil

All Journal Entries are Same as Above passed in Acm except few additional
entries due to rain value change
Istyr
Loans Adv FA
To Fainvaluegain loci long
Fair value gain oct 1029
To act Reserve 1029

redy
Loans Adv FA 1308
To FainValueGain Oci 1308
Fain rave gain oct 1308
To act Reserve 1308

my Impairment
Entry

was on Disposal Pk 2337

To holy Indy 2337
Me
Oct Resonate 2337 Recycling to
anti
to Pll Recycling ore to pl 2337
 3 Fain Vale through PK FYTPL FainValue Change recognised in Pll

Transaction cost adjustment Financial Asset

In case of Acm Fyock Tmansaction Cost added to FA
in case of FXTPL Trading Purpose in a changed to Pll

Eg CAVIN HEIR is notcalculated

Tapti ctd Provides 2500000 loan to ABC ad Intenest 1oY.p.a payable by
ABCAd Principal repayment in 3 years Transaction cost 210000 Pll
Fainvalue of loan at 1styr End 508000
M n a in a 2ndyr and 506000

son
hep hobos Advances FA 500000 KAI
TO Bank 500000 Thatlost 10000

Transaction cost 814 10000 To Bank 10000

To Bank 10000 Pll toooo

TTancost toooo

tyreEnd
Bank All 50000
TO loans Advances 50000
horns advances 58000
TO Me 58000
CAofFA 15147 500000 50000 58000 508000
2ndym

Bank All 50000

TO loans Advances 50000
Loans Advances 48000
TO Me 48000
Badyn Bank 550000

To loans Adv 506000

to Pk 44000

Note 7 In case of investment in debt Instruments which solely Pays

Principal Interest And Business model is to Hold and sell Then FXtoe
offing is applied whene ace reserve is recycled to plc at the time of
Disposal on denecoguition

However in call of Investment in Equity Instruments where No contractual

obligation exit to pay solely interest and principal Therefore ACM Face
cannot be applied Here only exert method can be applied
ATABARDASTI

may Choose IRREVOCABLE option to apply FlToei method

However Entity
Here on reserve cannot be recycled to Plc and therefore transferred

directly to Retained Earnings on Disposal foenecognition

CAof inventories sold 400 390 156000

No concept of EIR
Investment in Equity Instruments Financial asset
E.gr On 1.7.2001 Tagati ad purchased 500 Eg Shares of Reliance ad Transaction

Price 2350154 Transaction cost interned E 15000

Fain valve Sh on 31 7 02 350 Dividend received 373 02 200007

313 03 390
430
On Israel 2003 Jagat ed sold 400 Shares at E 430154 74004
Show Alcing entries as Pen Fuel as pen Immerocable Fxoce
 FUTPL T.WSraddedtoFA
FYTOLI
BlSheet Bisneet
1 1150007 Bank 1750007 115000
Pll Bank 1750007 11500
Divided91420000
Koin 20000 8908417988dm 2898.7179 nooo
Guqin 20000
20000
offMsa FA 1701 175000 FA 1.7.01 190000
16000 4 Fx Inc
ofhoosh agresenye F vDec 150007

175000FYloss
5005
15000 175000
FA 71302 FA 31.3.02
20000 FXGary
5001 20000 FN Inc 20000
FY Inc PIC
FA 31303 195000 Profitably FAM7.037 195000
f CAofFASold 56000194005h 16000 CAof40054.5044560007
pago
39000 Tod toBE 1200001 FAT70.037 39000
1000

On Disposal oct ffd.to RIE insteadof Pll

No Recycling

ocean509pm
Journal Entries Every JournalEntries Fyock
17101 In in EgSh FA 1 701 Inning.sn FA 190000
To Bank 175000,0 To Bank 190000
Hol Transaction Cost Pll 15000 3117102 BankHe 20000

To Bank 15000 To DividendIncome Pll 20000

13102BankAfl 20000 313 02
Fr Reserve ow 15000
TODivided Raconeldly 20000 To inningsulfate 15000
20000
1303 Inv in Egm CFA Taxing sulfa 20000
7113103

20000 20000
To F NGain Pt To Fx Reserve oct
172000 1110103 thank 172000
10103 Rank
To Inving shIFA 156000 To In in Gish FA 156000

to Plc Profit 16000 TO OI pg

 0th 1st 2nd and 4th 5th
Pal x x x x x
1000000 567427 1000000

567927 my
C y 2007
Security DepositCFA 567427 Amortise oxen lease team

Prepaid lease RentCroundly 432573

To Bank 1000000

Security Deposit FA
opiate Int 121 Payments d value
1st 567427 68091 635518
2nd 635518 76262 711780
2nd 711780 85414 797194
4th 797194 95663 892857
5th 892857 107143 10000007
 15747 Security Deposit CFA 68091
To InterestIncome 68091

Bank
To Security Deposit CFA
LeakExp Pll Dept 86515
To Prepaid HellRent Rooney 86515

51h47 Security Deposit CFA 107143

To InterestIncome 107143

Bank
x
To Security Deposit CFA
LeakExp Pll
To Prepaid leakRent 86515

Bank All 1000000

To Sternity Deposit Fn 1000000

Definition of FA FL Continues
FA FL
4 To Exchange FA on Fl under conditions 9 To Exchange FA on Fl under conditions
that are potentially favourable that are potentially unfavourable
 EG On 1562001 Entity X purchased a call option to buy 10000 Shares of
RIL Ad strike price of E 13014 after 6months bmom Entity y
Premium Paid 2 pen share
On315 money 2001 when Entity X closes its books of accounts killed
Shane Paice becomes 136 130 136
On settlement date i e estang2001 Ruud share price becomes 142
fast necessary journal entries in the books of Entity X and Entity
Receivables
g
Entity X EntityY
Hey D F A 20000 Bank 20000

To Bank 20000 TO DF L 20000

paan

7191mm
DFA 40000 40000

To Pll yoooo TO D.pe noooo

Istaf D FA K 60000
To goooo 60000
pl D D Fe

t.netsettlement t.netsettlement
Bank 120000 DFL 120000

To D F A 120000 To Ban 120000

receivables

2 Delivery ofstones 2 Delivery stem

Inv in G Shares4100007142 1420000 this 9th 9100000152 1420000

To Bank910000 1301 nooooo To Bank 1420020

TO DFA 12000
Rink10000 1307 1700000

DFC 12000
To Ixing 1920000
 host 25000 15000
150001 80 12000nF
Aq
Profit 10000 o hoon
Profit 27000 poop
40000 1053 52000

0301 06 0 v0
and y go googol g
esta 20dg pdg and
1055 25000 Profit 10000 Profit 24000 1055 52000

rainxane Fainilake Finale

Finite Fairly 150007 12000 140000
20000 66 68
attorney 7 NoEntry
151
97 DEL 25000

17 d
My p.pt 25000 DFL Rd 25000

299 DFA 10000 RIM ofDFL 10000

306.01 10080
DFL
To PIL 10000 DFL Bd 15000

RevenshofDFL 15000 creation of FA non

May
15400 DFL Bd Nil
30.9.01 DFL
DFA 12000 DFA Bd 1200

To Pk 27000
and Reversal
ofDFA
12000 CorlefinotDFc 4000
pong signal.me
data plc 52000
Pk 52000

XP DFL 40000 TO DFA 12000

I To Bann 1360000
AssureDelivery
Delivery
1320000
to
Insein 4920009 617
A DFL 40000

TO Bank 200009 687 1760000

Tye I

0th 751 red at 4th 5th

320000 320000 320000 320000 320000
80000 64000 48000 32000 16000
Av ofcash off
1906272 400000 384000 368000 352000 336000
909 1827 751 683 620
0th Loan to Employees FA 1906272 Amortise oven
loan term
Prepaid StaffCost foal 19372g
TO Bank 1600000

1st hoan to Emp FA 140627

To Interest Frome 140627 Bank 400000
91406272 1017 To Int Income 140627
400000 TO hoartoCmp 259373
Bank
400000
TO Loan to Emp

staff Expenses EBE 38745

To Prepaid Staff Cost 38745
9Amomised Irie 193777

Amontised cost of loan to Employees

Opvalue Int lot Receipts U value
1St 1406272 140627 400000 1146899
2nd 384000 877589
1146899 114690
M 877589 87759 368000 597348
4M 597348 59735 352000 305083
5M 305083 30508 336000 Nil
30917
 incalactionatoffmentareering

Holdingco

Illustration 1 comp
1st 2nd and 4th 5h
fv X x x x x

56742686 100000000

1.9 P.v 0.567437

Other Noamomisation

holy Receivable FA Dr 56742686

Inv in Subsidiary Dr 43257314
TO Bank 100000000

Amontisation schedule

Year op value fat 127 Receipts a valve

I 56742686 6809122 x 63551808
2 63551808 7626217 x 71178025
3 71178025 8541363 x 79719388
4 79719388 9566327 A 89205715
5 89285715 10714285 100000000 X
Rowdoft
Myr holy Receivable FA 6809122

To InterestIncome ok 6809122

of holy Receivable 7626217

To InterestIncome ok 7626217

of holy Receivable 8541363

To InterestIncome ok 8541363

I holy Receivable 9566327

To InterestIncome ok 9566327

Whom Receivable 10714285

To InterestIncome ok 10714285

Bank 100000000

To Loan Receivable 100000000

Balance sheet
100000000
Bank 4100000000
PIC 6809122 Inv in Subs 43257314

Pk 7026217 Loan Receivable 56742686

Pk 8541363 Interest Istyr 6809122

plc 9566327 a Interest Udar 7626217
Pk 10714285 A a Man 8541363
H a guy 9566327
Gay 10714285 lobo
4 Payments sky 1000000007 101
Badge
NIL pappxEldff
 F
neatcompulsorily convertible

Fixedno ofshanes

Oh est 209 Md at 51 I 71 I
Presentvalue 600000 600000 600000 600000 600000 600000 600000 600000
gyppyr 1000000

A Bank
To Convertible Bonds Fc 8850672
To a a Equity 1149328

His stream of interest expenses on FL

Op Yall Interest 81 Payments
a value
1st 8850672 708059 600000 895874
2nd 8958726 716698 600000 9075424
3rd 9075424 726037 6000007 9201458
4M 9201458 736117 6000007 9377575
5th 9337575 747006 6000007 9484581
6M 9484581 758766 6000007 9643347
7h 9664347 771468 6000007 9414815
8th 9414815 785185 6000007 10000000
100000
 I IntenestExpenses 708054 Single Entry
To Cont Bonds FL 708054 Interest Expenses 708054
Cont Bonds 660000
To Con Bonds FL 108054
TO Bann 600000 TO Bank 600000

2nd Interest Expenses 716698

To Con Bonds FL 716698

Cony Bonds 660000

TO Bann 600000

3rd Interest Expenses 726034

To Con Bonds FL 726034

Cony Bonds 600000

TO Bann 600000

Cony Bondi Equity 1149328 DHYAN

Conti Bonds tick 9201458

To ordinary shrcapital 10000000

To securities Premium 350786

love
FA Ft
1 Financial asset i Interest Expenses Pla
to InterestIncome fold To Financial liabilities

2 Bank 2 Financial liabilities

To Financial Asset To Bank

 B Sheet
Equity
Convertible Bonds
1149328 Bank 10000000

Financial Liabilities
Convertible Bonds 8850672 ContRand 1149328
q
conubadflid 9201458
Interest Sf 708054
Payment 6000007 To shonecop 100000
estyears 8958726 To Sfdnemir
Interest Sf 716698
a Payment 6000007
andyear
9075424
Interest Sf 726034
a Payment 600000
3rdyear 9201458

Convertinto
Sheng

Cont Bonds Equity 1149328

Con Bonds FL 9201458

to share capital 10000000

To 5 Premium 350786
 cops Fixed

21071500000

SKUKAR MANGO

01 11 21 Bt I I
150000 150000 150000 150000 150000
FLI 50N O
10056
492768
Ty qq.pg.gg
ME
xx how 29 f cost netloar g
Liability component 50282h 660567 492768 Neel
Equity Component 997176 9994 9772324mg
1500000 30000 1970000
feceived

Bank 1500000 700007 DV 9470000

To CCP FL 492768
To cops Leg 977232
 Dhyan
FL
IY Int 15.867 Panel d be
492768 78153 1150000 420921

42094 66758 1500007 377679

337679 53556 241235
1500007
241275 38260 1500003
129945
14445 20506 4500007 all

Blstelt
Caps Equity 977232 Bank 1470000

Cops FL 992768
78157
1500007
420921
66758
1500007

337679
53556
1500007
241235
38260
150000
129495
2050620510
50000
NIL X
I Tutenest Eye
To CPS
all
FL 78153
Copsfeel 150000
TO Raya 150000

see Infenest Eye ML 66758

To CPS FL 66758

Copsfeel 150000

TO Maya 150000

53556
MY Inferior Eye ML
57556
To CPS FL
Copsfeel 150000

TO Maya 150000

it Infener Eye ML 38260

To CPS FL 38260

Copsfeel 150000

TO Maya 150000

UPS

51 Interest Eye Ml
To cops FL noooo
copsfeel 150000
TO Maya 150000

Remember this
Cepshaguity 977232 Entry ban Exam
To ordinary M G 50000
T s Prem 927232
 Clarita

at 1st 21 nd I I
FX 10000 1000 ooo 1000 1000 1000
5007 10000
T.cat
9500
T.IM ItYHYrY
connect
ICAl

At 114 9630 351 N 19.9

no 9500
151 9
1
a
At 124 9279 Bot 139 9
12
377
Tuition i EIR let 1.377
Bank nfc 9500 21177
TO hear Anon RBC 9500

subsequently
opening loan of 11.377 Payment a value
9500 1080 loool 9580
9580 1089 loool 9669

9619 1099 1000 9769

9769 1111 1000 9880

9880 11231120 11000
Astor frfenesteyp 1080

To how firm ABC 1080

homomom 1000
Are
To Bane 1000

vi imp

29 31 70 90

3019101,313102,401902,31 3103

assume marketroteam 3
Shakanhain

of esta andy Mdd had 5h9 Graf tag 8kg

10000 300 300 225 225 150 150 75 75
500 2500 2500 2500 2500
9500
EIR 16.601Pa

Oploan Int 16.67 Payments closing

1519 389 9 13007 9589
9500 49500 16.61 57
20dg 9589 401 99589 1661 93657 128007 7190
9dg 7190 301 97190 1667 9365 2257 7266
41h9 7266 297 97266 16.64 99657 2725 4838
5h9 4838 200 94838 16.61 93657 150 4888
bind 4888 204 94888 16.61 93657 2050 2442
 71h9 2942 102 42442 1661 1657 757 2969

gag 2969 101106 92469 16.67 98657 12575 NIL

gonged'M'Blsheet B Sheet
form Fc 9500
99500416.00
elatborsmen 1 5 389
f Payment 93007 7007
9589
70090
understanding
4 MAN 3mm 9589 16.101 9 57 yo
Payment 930042007 28007

7190 Blsheet
Affair 3mn 1710416101 9 7 301
fragment 92257 2251 Bisheet
7266

attorney 7266 16109 9865

297
Pagny 922514007 272s
4838

Continue yourself
 Hastration A
catcall 492 ABC
Loan to ARL FA 1000000 Bank 1000000

To Bank 1000000 TO loan from xyr 1000000

CFS 7 Anima Group transaction gets eliminated

Interest free loan

2ndcall Oman 11 21 B1
x x x
Presentlathe 1000000
751315
Thane lot

92 financial asset ABC financial liability Earth

than
hoon to ABC FA 751315 Bank 1000000
Inv in subsidiary 248685 To loan 751315
To Bank 1000000 To capital Cont from 248685
mega
hoon to ABC FA 75131 Interest Expenses 75131
TO IntenestIncome 75131 TO loan CRY 75131
padam
hoon to ABC FA 82645 Interest Expenses 82645
TO IntenestIncome TO loan 82645
82645 Cry
redyM

hoan to ABC FA 90909 Interest Expenses 90909

TO IntenestIncome TO loan 90909

90909 Cry
BredyM

Bank 1000000 hoan fl 1000000

To loan to ABC AA 1000000 Bank 1000000

 CFS 7 Intra group transaction gets eliminated

case

1.9.01 31.7 05

Assume 501 mandatorily gets converted into Fixed no

of shapes

0th 1st had zoned

him
300000 300000 300000 300000
Pil of cash off X 91 X 83 x 75 468
2821000 5500000
2750000

Manthey 95000000 504 1.104

I
Liability component 2821000

Equity Component95000000 28210007 2179000

 Journal
Bank 5000000

To 69 Debentures FL 2821000
To 67 Debentures Squity 2179000

CDR gooood Shares

01 1st se ne e
48000 48000 48000 48000
Pill of Cash off
xp y g y y X 68
560160
600000
X 68

Athyn thank 600000

To loan FL 560160
To loan Gquity 39840

Istyn Actual Connect Entry

Finance cost 56016 Coan FL 48000
TO loanCFC 56016 To Bank 98000

v
 But Accountant Entry is
Finance cost Pla 48000 hoon 48000

To loan 48000 TO Bank 48000

I Rectification Entry
Finance cost Pt 48000

To loan 48000

lift of loan of 1styr had 560160 456016 48000 568176

Commit
1947

Change in methods of accounting 9Acm FYToei Filth

Reclassification
of Financial Assets

An Entity shall reclassify Financial Assets only if entity changes its Business
model boy managing those financial Assets

Financial Assets

Investment in Debt Instrument Investment in Equity Instrument

A

FXTDL Irrevocable Frock on

Scope
of Reclassification
Nomedalsification
initial recognition
NoYedaification
 Before Reclassification is ignored
anyone
Blsheet
CAofBonds Acm 100000 Jocund

After Reclassification InvinMondyffytic 90000

BSleet ill 10000

Pll 10000 CAof Bonds Acm 100000 Inv in Bonds Acm 100000

CAof Bonds FITR 90000

Before Reclassification
Firildigned
Blsheet
lotofBonds Acm 100000

After Reclassification
BSleet Tamra
Ocf 10000 CAof Bonds Acm 100000 Bonds of Futoct goooo
I CAof Bonds FUTOCI 90000 Oct loss 10000

lossdueto To Bond atAcm 100000

Foci Mine
 IMY

MY

cases cases
loses KMPC to ACM fall hi FUTPL to FUTOCE

Fainvalve changed from 100000 to 90000 Fainvalue changed from 100000 to 90000
Pfe 10000 Pfe 10000

TO Bonds at FUTPl 10000 TO Bonds at FUTpl 10000

lossduetochange in tainvalue FUTPLY flossduetochange in tainvalue FUTPLY

Now
CA ofBonds of filth goooo CA ofBonds at FITR 90000
A A
Reclassify to aim Reclassify to Fyock
H I
Bonds at ACM 90000 Bonds at Frock 90000

goooo To Bonds of FXTPL 90000

TO Bonds of Fytpe
 u

Single Entry Single Entry

Bonds at ACM 90000 Bonds at Face 90000
1095 Ole 10000 1095 Ole 10000

TO Bonds of FUTPL 100000 TO Bonds of FUTPL 100000

KNOCK to FXTPL Frock to ACM
Dock Dock
To Bonds of Fry É 10000 to Bonds at FutocI 10000
90000
CA
ofBonds of FYTOCI
DM CA
ofBonds at FUTOCI Dn 90000

Reclassification Reclassification
After to even After to Acm
2 Bonds of FPC 90000 2 Bonds at Acm 90000

To Bonds at Fyock 90000 To Bonds at Fyock 90000

31 Pfe 31 Bonds atAcm 10000

to Oct 10000 p p 10000

OCIrecycled to ply 4042recycled to Bonds at Acm
 Recognition and Denecognition Financial instruments
of
Recognition
of FA

Gay Ttr Tts Ttt days

Example MastenSent
On Bothmonth soon Entity enters into an agreement to Purchase a Financial
Assets delivery on 2nd April 2002 bum 2 1000 which is the bairn value on that
date 1 Goutsecurities
On Bls date i.e 313 02 the tain eave is E 1020 and on settlement date
i e 2 9 2002 Gain value is E 1030
1 Pres Necessary Towing Entries in case of Derivatives alcing
2 Pots Necessary in case of Regular way purchase
Touring Entries
settlementdate when the asset acquired
of FA on trade date and
is measured at it Acm ii Futoce iii FITR

Derivatives Alcing
30 3 2002 7 No
Entry

31 3 2002 7 Potentially Favourable 91020 10007 20 profit

D FA
To Frygrin Pt so

2 9 2002
7 Favourable 91030 10207 E 10 Further Profit
DF A
To FitGrin Plc 10 7 DFA A 30

case I it settled wet in cash Call't it settled through

delivery
Bann 30 Iny in govtSecurities FA or 1030

TO DEA 30 TO Bank 1000

To DFA 30
 2 way purchase of FA
Regular

Trade date Accounting Non derivative Alcing Acm Extock FUTPLY

TRADE DATE ACCOUNTING

ACM FUTON FUTPL

II ingout securities ra 1000 it inauthorities ra 1000 II ingout securities ra ooo

to pay pop To Poyales e4 1000 To Poyalesley 1000

7113
BlsDate BlsDate Blsode
NoEntry Exchangeignored Invin houteecunities ra 20 Inv in houteecunities ra 20
To Oct Reserve 20 To Pk 20
040h Settlement de 02104 settlementdate 02104 SettlementDale

Royally 1000 Invin houtcecunities ra 10 Invin houtcecunities ra 10

1000 To Oct Reserve 10 To PIL 10
To Hank
Payables 1000 Payables 1000

Bisheet To Bank 1000 To Bank 1000

Payoffs 1000 FA 1000
Dismal
pan gooo ou 20410 Muff 1000 1k720 10 alley 1000
no
Frigaint20 papules 1000
Royally pop pop 9030
10007
11 t 10
L 9070 oil
Ban 10007
Bank 10001

I a
cave cave

FA 1030 FA 1030
1000 To Bonn 100
To Ban
to oet 30 To Pk 30
 settlement Date Alcing Non Derivative Alcing However FA will be meaguiced

Raetia at settlement date instead of trade date

ACM FUTOCE FITR

3017
No Entry 304 No 304 No
Entry Entry

3117 Blade 3113 Bls Dae 3113 Blade

Fairvaluecharge to 20
Nointry Fainvolvechage
To act Reserve 20 To Pll 20

02109 0409 OHoh

Invinhoutsecurities 1030 Envingourseannities 1030
To Bank 1000
To Ban too
To Fainilduchall 20 To tainilauchale 20
Inyingoxt securities 1000
10
To Bank 1000 TO del Reserve pple to

OR OR

faxingoutsecurities 1000 faxingoutsecurities 1000

TO Bank 1000 To Bank 1000

thin Gortsecuripies 20 thingortsecuripies 20

To FainvalveGain 20 To FainvalveGain 20
toxin got securities 10 toxin got securities 10
To act Reserve 10 To Pk 10
 Tabelladealing
Act Frock EXTAL
financial
Financial meet soooooo meet 1000000 financialmeet soooooo

To Paynesfro 1000000 To Paynesfro 1000000 To payoalesfro 1000000

Finorcidney Financing
Payam 1000000 50000 met yoooo
To Bank 1000000 To oet Resende 50000 TO Pk 50000

Payday 1000000 Payday 1000000

To Bank 000000 To Bank 000000

Settlement date alie

ALI EXTOL FUTA

I No Entry Ye No Entry 11
Notify

I 41 41
Financial asset 1000000 Financialneed 1050000 Finaeidreet 1050000

To Mark 1000000 TO thank 1000000 A Bank 1000000

To act Reserve 50000 To Pk 5000

 STRATEGIC DEBT RESTRUCTURING

Substantial modification

1 Extinguishment Accounting 2 Modification Alcing

if lot test is passed Extinguichmentating if lot test is failed Modification Alcing

is applied Revisedterms
ofcashFlowsdiscounted is applied
using old EIRwhichis compared with
cA ofold liability

EXTINGUISHMENT ACCOUNTING MttestPassed MODIFICATION accounting

I Derecognition
of Existing liabilities I Anybees on costincurred is netted against
2 Recognition of new liabilities existing liability 4Any payments made is
Revisedterms cashFlowsdiscounted using NewEIR
of assumed as discharge ofold liabilities
Anydifference is debited foredited to Pll t New EIR is calculated
Any bees on lost incurred is changed to pp

Crux Chuy
in measure cA
of old liability atmodificationdate in measure cA of old liability atmodificationdate
2 If 101 test Passes Apply Extinguishmeof Afling 2 if not testFails Apply modification Alling

3 Extinguishmental 3 Modification Alc

a Anypayments madereduced from CAofoldbibb
ca
of old liability demecognised Fainvalueof
new list recognised Difference in Pll 6 calculate New EIR

lot felt should be faced

Amontisation schedule
of Fl ap.net greenest Payments
d Bdaa
17am2000 1000000
1192001111144 1000000 100000 1000007 9000000

11am 200212049 1000000 100000 100000 7000000

17am200113MW 1000000 100000 1000007 9000000

Jan 2004 1000000 100000 100000 7000000
thy
Tay 2005 sty 1000000 100000 1000007 9000000
31.4.2007

i CA of FL of gray and on Bls 1000000

15hm 20057 Bondholders agree to a modification

Xyz
1ststep To check if 104 test passes on not
smergesent 61 71 81 I 11 II 121
50000 50000 50000 56000 50000 50000 50000
µ
1500000

HPyeslntrqreof.gr 1013158 9 FEi.e.to

costtobeincurred 100000 town ton testing purpose foretoffarison
1113158

Increase in Liabilities 1113158 1000000 113158

i f increases 113158 100
1000000

11.321 Clot test Passed

therefore Extinguishment Alling is applied

Master
1 old CA of Liabilities is demewquised 1000000

I New Liability is recognised at Fain Vale 2958097

seeBelow
 catgnewlichicity
smergesent 61 71 81 I 11 II 121
50000 50000 50000 56000 50000 5000050000
1500000
PageantValue
958097 a TEE
Tonna orchid
Ir Old Financial hid 1000000

To new Financial him 958097

neverrecognised
To plc 41903

2 Pfe T.CH 900000

To Bank 100000

Suppose
if softest Fails Apply modification alcing

CA
of old liability a 1000000

legal fees Assumed payment for dischargeofold vid tooooo

f Aof old liability gooooo

on it and ont I I 1 I
900000 50000 50000 80000 50000 50000 80000 Soooo
can
1500000

coffers
 If softest tails

17am2000 1000000
1192001111144 1060000 100000 1000007 9000000

Isan 700212049 1000000 100600 100000 7000000

17am2001 Myr 1000000 100000 1000007 9000000

Jan 2004 1000000 100600 100000 7000000
thy
Tay 2005 sty 1000000 100000 1000007 9000000

CAof FC of shy Ead 1000000

Thn 20057 Xyz Bondholders agree to a modification

5mergesent 61 71 81 I 11
X X X X X
1600000

Present lane
of CIF 99347
gym
legal othercostto
be incurred 50000

1043474

i Increase in Liabilities 1643474 1000000 43474

f increase 43474 100 4 357 1101 test Failed
goooood
 Modification accounting

1 Any bees on cost incurred i.e 250000 reduced from old liabilities
old Liabilities 50000
TO Bank 50000
i Revised c A of old Liabilities 1000000 50000 950000

2 New EIR is calculated

5mn 61 I 81 I 11
X X X X X
fA I 950000
1600000

New Thy
At 109 993477
At 11 949522
At 10.991 949949 4 ie Approx 950000

uploan Int 10997 Payments of loan

GM 950000 1044051814 1054405
7m 1054405 1758791014 1170284
8h 1170284 12861411117 1298898

gin 1298898 1427499014 1441647

pom 1991647 758737 116000001
158353614
 Debt boy Equity swaps

each
56cm

noon

When Equity Instruments are issued creditor

to a

1 An Entity Shall measure them at Fain value of Equity instruments

issued

2 IF Fain Have Cannot be reliably measured Equity instt shall be

measured to reflect Gain value of Financial liability extinguished

Any difference recognised in PK

501
eA of Financial liability Go on

213nA settled through Equity Inett land not settled but modified
it f A of 213 lief 609 cut fest
FainHave 56480 7017 CA 11137 309
hen P v ofrevisedelfusingold ER 25cm
Profit Plc
Die in Lick 5cm
 I I Y Dec 530 100 16671 7101
W
E hey recognised a gain in statement
Extinguishment Aline

of Profit on loss
1 CA of old lid Denewgrised 309
2 Fain valve of new Leaf 28cm
Profit pls 2cm

Old Financial hiof 30cm

To New Financial Lid 28 em
TO Pk 2 G

E 2am recognised as gain in statement

of Profit on loss
 G htimes soon

Assumemonketmate ofinterest ally

ShankarManao

Assume
of 2ndyr End onlyinterestpaymentmade

01 it and Bt I I
109 109 10cm 10cm local

5.5M 44m 3.3cm 2.29 lien

n
50100,00100
trim
Ison 494129904
sat EIR given 11.5

IN
IR Bank 494129904
To Loan FL 494129904

Amanfisation schedule

Opiloc Thf 11.57 Payments d.com

Atgm 56829938 15150100,0001 395954832
494129907
14140,510007
2nd 395954842 48534807 397989650
OnlyInterest
paymentmade
CA
of loan of Ady and 397489650
 cot test

2nd and 3rd 41 12 1 71 I 10h

II 121
hen hen hen hen hen hen hen hen hen
hen

69 5hey 489 424 3by Ben 2yen 1.841.2in obey

10 9.9 88 8.2 76 f 6.9 58 5.24.6
22,790
us s old EIR 1157
at
caged
Mitter
i Increase in herb 451522790 397489650
59033171
i fine 54037171 0100
3974890
17.591 9710 7
lot test paned
i we should Apply Extinguishment Acing

1 9 A of old hid denceoquised 397489650

in Pll
2 new twin value
I difference
2510350
New hoof of 40000000

t
say
p y
hen hen
E
hen hen
E e
hen hen hen hen hen hen
e

5hey 489 424 3by Ben 2yen 1.841.2in obey

if I

69
10 9.9 8.8 8.2 76 f 6.9 58 5.2 4.6

affirm a Pulled at moneetray

ist
98775062
311140 56824938 1cal
InterestExp
To loan 56824938 Interest Exp 56824938
1994299 m

hoon 15150,001000
J TO Bank 155000000

TO Bank 15,5000,000

711202
InterestExp 45534807 1cal

4398954842 11
577 To Bank 44000000

loan 44000000
Y To loan 1534807

To thank 44000000

3112.2002
Old CA of loan 397489650
PfeCloss 2510350
To New loan 400000000

31 1203
Interest Exp Pt 60000000 1cal
TO loan 60000000 Intenestepp 60000000
4409 X 1577 loan 40000000

To Bank 100000000

loan 100000000
TO Bank 100000000
 grid him
16000 Sooo
200000 200000
 1st 2nd and
Amy 4th 5th
200000 200000 200000 200000 200000
16000 16000 16600 16000 8000
42000 28000 14000 X

Pip 258000 244000 230000 216000 208000

843879
121 market mate of Interest

Amortistoxfyns
Initial Recognition 1 tanto
156121
Othyn loan to Emp FA 843879 54ns
porepaid Stott lost 156121 31224
To Bank 1000000

Amantisation table

Op loan Int 127 Receipts 1 loan

Istyn 843879 s 1258000 687144

2nd 82457 zygoo 525601
yr 687144

My 71.12.01

Loanto Emp Cfa 101265

TO InferestIncome Pic 101265 Bare 98000
Mann 258000 100 To Infincore 101265
To Loan toEmp 258000 Toron 156735

Employee BenefitExpert 71224

To Prepaid stafflost 3124
1561
p
2nd 31.12.02
Loanto Emp CFA
There
TO Inferestincome pic 82457 2h40m
PAIN 82457
MAN 244000
To Loan toEmp 244000 To Loan 161543

Employee BenefitExpert 71224

To Prepaid stafflost 3124
115614ns

AtIndyand 7 C A of FA 525601
lot of Prepaid Asset 93677

After Prepayment 200000 on 31.12.02

of
2ndgrand 42
By
9 16000 Inexut 8000921 477 x
1 100 200000 200000 X
216000 208000

Px 358673 9 127

At 2nd yr End Adjustment of Prepayment Amount

Bank of 200000
TO loan 4525601 3586737 166928
To prepaid staffcost 33072

Revised CA loan FA 358673

of
a a a Prepaid StaffCold 93673 330727 60601 Camonfise in
2475
FA Amonfisation Schedule

OP FA fat 14 Receipt 4
2160007
My 358673 g 185714
9mW 185714 22286 2080007 Nil

32dg 71.12.03
Loanto Emp CFA 43041

TO Tnfegest Income Pic 43041

Monk 216000
To Loan toEmp 216000

Employee BenefitExpert 30700

To Prepaid stafflost 30300

1609hm

hay 31.12.04
Loanto Emp CFA 22286
TO Tnfegest Income Pic 22286

thank 208000

To Loan toEmp 20800

Employee BenefitExpert 30301

To Prepaid stafflost 70301
Unit 3 Illustration 34 Imp

on est 2nd me
AmfReceived 1000000 60000 60000 60000
1000000

pry 929061 I ride 97

Bank Afl 1000000

TO FL 924061
To Equity Not remeasured
75139
AmonfisationSchedule

op Dagny Arlon
83165 947226
130min02 924061 goooo
600007
2003
947276 8560 972476
YIomine
972976 87524 1060000 X
Faimilate
C7 horn of 30thjune 2003 972476 1009523
of
Equity is a y 75979 90577
1100000
 Indy and mdynand

Repayment option 60000

1000000
1060000
Finale of liability
1009527
1 amatmenuetrate 51

i out of 21100000 paid for Redemption

Ant paid for Liability 1009523
4 Equity 90477
Tunnel
Liability Equity
I 972476 Equity
hickility 75979
14538
Pll 37047 Equity

TO Rank 1009523 To Ban 90477

A
Signum
Y
Eqity 90977
pay goy

Merged Entry

Liability 972976
PK 37047
Equity 90977
TO Bonn 1100000
 Derivatives
Examples
of Embedded
Ef 1
Entity x issues Bonds to Entity 7
However the Payment
of coupon and Principal component of the Bond is
indexed with the deice of the Gold
Hybrid Instrument

Debt Instrument Gold Price

Chords issued payments linked with Gold
by Entity x
I A
Non Derivative HostContract Embedded Derivative

E9.2
Entity X issues a redeemable biped interest mate debenture to Entity Y
Amount of interest and Principal is indexed to the value of Equity instruments
ofEntity X
Hybrid Instrument

Debt Instrument Equity Indexation

Redeemable fixed interest rate Payments linked with Equity

debenture issued indexation

A
µ
Non Derivative HostContract Embedded Derivative
 Hybrid Instrument

Non Derivative Host Embedded Derivatives attached

Contract

Conversion option warrants

Financial Asset Acm even Irvolt settlement in Foreign Currency

Financial liabilities Acm Fuera etc

Charity 9No Remeasanement severe accounting only
Nonfinancialitems Excertony Contracts Frocelacm cannot be
9f convertible Bonds Delelnhall
applied in Derivatives ageing
machinery tools 427
Note
separationof Attached Derivative Contract from Non Derivative Host contract is
not regained if futile method is applied in Non Derivative Hostcontract

Nor Derivative HostContract

closelyrelatedand
mom ng
futility No separation is
Derivative contract furn requited

nor Derivative Hostcontract

Notclosely related and
my my Acm
of DerivativeMom
y
separation
ManDerivative Hostcontract is
Derivative ContractCreepy requited

not In call of Financial asset if Embedded Derivatives is attached then Instt

is not paying solely interest and principal hadtherefore only Frere Alling
is done Also in fall of Attached Derivatives only Frede method is applied
Therefore in call of financial asset Both are closely related and hence
separation is not required

separation is not required only if any allow conditions are satisfied

9Closely related
i Hybrid instrument measured at FVTPL

Characteristic and risk of Embedded Derivatives closely related

to Non Derivative Host contract
An Embedded Foreign Currency derivatives is considered closely related
to Host contract in below cases where separation is not mequined

1 Payments denominated in Functional currency of any substantial parity

to the Contract

I Cannency Routinely denominated in commercial transactions around the

world 4 Dollar commency Gon crude oil transactions 7

3 Relatively stable and liquid commency commonly used in local

business transaction on external trade

In all other calls Embedded Foreign Commency Derivative should be separated

from Host contract

Certain guidance on How to Cammy out separation are enumerated below

in detail
Hostcontract
1 Host contract 9sale on Purchase should be denominated in Functional
r c
currency

2 The F l is determined using forward exchange rate Delivery DateForward

rate at the date the contract is entered into

Embedded derivatives

3 The Embedded Derivative is a forward currency contract to Buy on

sell applicable amount of contract currency for the Functional commency
of the same Forward Exchange Rate
 The ebbect is that Fain value of Embedded Derivative is initially Zemo

h subsequent changes in Fain value of Embedded Derivatives recorded

in Pll

5 On Delivery of non Financial item Host contract is fulfilled and

Embedded Derivative is settled

A Foreign currency debtor on Crediton is recognised for the contract

amount translated at spotmate
The closing Cammying Amount of Embedded Derivative is added to
Fl Cammy ing amount of Host contract to give initial e a of Debtor
on Corediton

Trade Receivables 1014 60 6cm

To Revenue 5 59 7 Ordinary course sales

To otherFrome Ply 507 7 Derivative Profit

4 101loss 1.5cmProfit
Stan Indyn
 Illustration h

tell Squinpments

Entity B
Hybrid contract s entity An

Receive 1000000

manDerivative Holtcontact Derivative Connect

EseaForward
sellequipments Pay255000000 contract

IntimB entity IntimB

entity
I I
Receive 255000000 Receive 1000000 BuyForward
contract 255

Non Derivative Host Contract Derivative Confect

Miano t esta x

astmarchol A 3Istmanch
Me tea
TO D Fil 1cm

nothjured 10Th DF c reverse ten

Trade Receivables 8.5cm D FA 59
To Revenue 5.5cm To Me 1 59

Boman
Trade Receivables 5cm

To DfA 5cm
 Impairment of Financial Assets
s changed in Pll
An Entity Shall recognise a 1055 Allowance born expected credit loss on
the following
a FA measured at Amortised lost on FITO CI 9Except Inv in Equity Instt
b Trade Receivables on lease Receivables
e loan Committment on a Financial Guarantee Contract

Recognition of Impairment loss not required if

It is a Financial liability on Equity Instruments
a

6 FA measured ht FITPL 4 Ef Tuxin DebtInstrument measured at FITR

in Equity instrument measured either at FXTPL on FYTOLI
9 Investment

A what is Credit Loss Allowance

Present value
of contractual cash Flows less Present value ofcash Flows Entity expects
dueto the entity toreceive discounted using original EIR

Loss Allowance to be provided one of two types

i lifetime Expected credit loss ii 12months Expected credit loss

X

a Trade Receivables flease Receivables other FA whose credit risk not

b other short term FA increased significantly
c Credit risk increased significantly

Hate when contracted payments are more than past30days dhe there is
rebuttable Presumption that CREDIT RISK INCREASED SIGNIFICANTLY
Credit risk impaired significant increase in Credit risk Nosignificant increase in creditrisk

Neryhigh risk moderate to thigh risk

low risk
Lifetime Eel Lifetime Eel 12months Eee

Intereston Net FA Intereston Gross FA Interestan Gross FA

An Entity may use Practical Expedient when measuring Expected credit loss on
Trade Receivables
I
Calculation Ecl ban trade Receivables using a provision matrix
of
Entity would use its historical credit experience to measure 12months ECL
on lifetime Eel
Example Specify Fixed provision rates depending on number of days that
a Trade Receivable is PAST DUE
If Provision if not past due
21 Provision It less than Bodays Past due
31 Provision I Between Bodays to go days past due
hot Provision 7 Between godays to 180 days past due
E9
Am 1st 2nd Bnd 4th 5h
Amount Due 7 500000 500000 500000 500000 500000
5000000
Amount Expected to

bereceived 7 400000 400000 400000 400000 3500000

100000 100000 100000 100000 2000000

I Expected Creditcost
I 16923787lifetime Ece THEIR ft
Lossgiven default

lifetime Expected Credit loss oof 1692378 Assume credit risk increased
significantly

ii 12months Expected credit loss 9259h Assume credit risk not increased
1100000 1 og y significantly

On it Probability of Default is 51 over next in months

I 12 months Expected credit told 57 of 1692378
84618

9 Investment in lot Debentures 500000 17 years

Tmancaction lost 30000 hence method

Oh 151 2nd 2nd

400000 50000 50000 50000
30000 500000
830000 Ft EIR 7 6851
 Opening Yate Interest f6857 Receipts closing value
530000 40730 500007 520730
520730 40018 500001 510748
510748 39252 5500007

Year I host Allowance 20000 FainHave 450000

Toward
Lil FA 40730 tin hose allowance Pll 20000
To Interest Income OCI 50730
TO FA 70730
Gil Bank 50000

To FA 50000

earn 1055 Allowance 15000 Fain Vale 1051 35000 total

Towner
Lil FA 40018 Hii Loss allowance
Pll 15000
To Interest Income 40018 Oct 20000

TO FA 35000
1 Bank 50000

to FA 50000

lamb No loss All recovered

Lil FA 39252 Hii Pfe 70730
To Interest Income 39252 TO Oct 70730
Recycling dot to Pk on Disposal Denecognition
ii Bank 550000 Bank 550000
ji aliii
To FA 444270 ToFA 444270
ToOct 70730
TO Ple 105730 To Pk 35000
 1Styear BlsheetCistynGod
5300001 50000 50000 550000
Pk Interest740730Cistyn Bank 7
loss Allowance 7 20000 estyn FA 530000

HIM 7.6851 40730

at F y loss 50730 estyn F Receipt 500007

2ndyn 520730
Me greenest 7 94018 2ndyn FainHaveChange 70730
bold Allowance
7 15000 Anduin Rre A Cistyn 450000
a 40018
Mr 76857.04520730
FU 1051 20000 Odin 4 Receipt 1500007
440018

Indy Fl Fll Change 350007

Rrc A 2ndyn 405018

Pfe Interest 9 39252 3ndyn

Denelopritiont 105730 Badan 479nt f 685f.an 510748 39252

Reclassification from
Oct 7 70730 E Receipt 550000
105730

def 4 70730 Denecogaition 105730

NIL

When Financial Asset Credit risk has increased significantly Catenate Interest
on Gross FA

When Financial Asset Credit risk is credit Impaired Catenate Interest on net FA
Gabler deducting impairment loss
i
 Determining whether credit risk has increased significantly

a Significant increase in Credit risk on other Financial Instruments of same Borrower

2 Significant change in operating results of the borrower Ef Declining Revenue marginsetc
Significant change in Expected performance and behaviour of the borrower
Reduction in Financial support from parent Entity
r Adverse change in Business Financial on Economic condition expected to cause
significant change in Ronnowleris Ability to meet its debt obligation

Significant change in value of collateral on Quality of hind parity guarantees on

CreditEnhancements
significant adverse change in Regulatory economic or technological environment

of the borrower

hold Given Default is the amount of money a lender losses when a Bonn oven
defaults on a loan often taking consideration any recovery represented as
a percentage of total Exposure at the time
of loss
 Recycling to PN
BSheet Fon Understanding

Ptu hoss Allowance 7 307 Bank 1000 950 1507

pye OctRecycled to PK 7 20 1000
FA
50 50
14 Reduction
Oct Fain value loss 7 207 950
20 9501
Recycling
a saleof FA
NIL NIL

On Denecognition ON balance of 2 30 Dr recycled to Pll

 astylar Indy 3rdyr
Cash flow baled on Ilf interest 110000 110000 110000
e 81 1 80000 80000 80000

Differential 30000 30000 30000

Presentvalue PV 111 Bank 73320

73320 TO DEL73320

Other Investmentin subsidiary 73320

To Financial Guarantee DFL 73320

Amortisation table Antill

73320 8065 1300007 51385
51385 5652 30000 27037
27037 2974 130000
Istyn
12m Expected Credit loss It of 1000000 10000

l A of liability 930000 xfulfa fat 2yns 513859Higher

Liability should be recognised 51385

Reduction in liability 73320 51385 21935
Journal
Financial Guarantee 21935
TO PIL 21935

2ndyr

12m Expected credit loss 3 30000 Higher

of 1000000
CA of line 300007PuefA elf lyn 27037

I Liability should be recognised E 30000

i Reduction in liability 51385 30000 21385
Journal
Financial Guarantee 21385
To pye 21385

3rdyear if Amount fully paid by subsidiary

Financial Guarantee 30000

To Pfe 30000
 F
Future seu

Derivatives

114101 No entry
I

3016101 DFA 197 Mapai's 30thjune zomsept

to the 197 q sea 1009 767
91008 2 1.0157 Buy 1004 742
Profit 2 200
3019101
D FA 303 iffy a
soggy
TO PIL 303
11009 5 1977

3019101
Bank 500
settlement
To DFAfrevense 500
 Hedging
Copper fledged item Hedging Instrument
1 401 No entry 114107 No Entry

3016101 No Entry 3016101 D F A Futurecontract

TO LEHR OLI Igy
3019101 Bank TR 7200
To Revenue 7200 3019101 DF A Futurecontract 303
TO CFHR OLE 303

3019101 CFHR OLE 500

To Revenue 500
at the time ofdelivery of
copper

3019101 Bank 500

TO D F A Futurecontract 500

CFHR Oct Cash Flow Hedge Reserve OCI

 Demecognition
of Financial Asset
Financial Asset is denecoquised if
it Right to cothFlows from Asset expires
payment of engine due amount on legal release of Debtor by Crediton

ii Entity transferred its right to receive cash Flows 9 Me at FA om

AND Factoring Agnangement

h shhh m risks a new with Non Recourse

Loiscussed in Hotel
iii Entity neither retained non transferred substantially all risks and
Mewand 4Discussed in Note 1227
AND
Not Retained control of the Asset transferee has right to sell without Approval
Discussed in note37

Note I E9 on Transferred substantially all risks and newand

1 unconditional Sale
2 sale t repurchase at Fain valve risk a reward Ha
3 safe Putoption call option that is deeply out of the money
Saleof FA
MM Abhishek Singhal
Caption
to pay Baek in momma
exercise price of F 150
Put Righttosell
thin lave 2220 and not effectedthat it
copyrighttoBuy Highlyunlikely that
it will Go below F 150 will go into money

Gale t Putoption deeply Sale of Fa Risk Reward

out of the Al
money penewquisetyth
 Saleof FA
Pmatik
That Abhishek Singhal
caption to
pay Back in 3 months at
exercise price of F 150

thinvalve 290 and notexpectedthat

it will go above E 150

Gale t call option deeply Sale of Fa

out of the H Rish Reward Hd

money Denecoquise FA

Note 2 Examples of when Entity retained substantially all risksrewards

i A saleand repurchase transaction where Repurchase price is Fixed Price
On Sale Price Plus lender's return Risk Rewind not transferred
2 Securities lending Arrangements
3 A sale of FA together with deep in the money put on call option
i e so ban in the money that it is Highly unlikely to go out of the money

h Asale of short term Receivables in which entity guarantees to compensate

transferee for credit losses likely to been
5 A fate of EA together with total return swap that transfers market risk
d
exposure back to the lofty 9914thation 707

In Aboye Calls FA cannot be denecognised

Notes
 Saleof FA
Pmatik Tafari Abhishek Singhal

l Safe of FA f Put option by Abhishek

option
Exercise price 150 chances of Pat
exercised
to be
Market price a 90
ie Put option deeply in the money

i sale of FA t put option highly expected to be exercised

Inotice that has retained dish rewards

2 Sale of FA f call option by Profile

behold
Exercise price 150 option exercised

Market price a 220

pm be

ie call option deeply in the money

i late of FA t call option highly expected to be exercised

i Pmatite target has retained risks and reward

Another Example 9Not Retained not thanetenned Substantially rich newand

Gate of FA t Put option by Abhishek

Exercise price 150 Putoption out of the money

market Price 1521148 y but not deeply

I
ftp.agtthom
Neither deeply in the money non deeply out
of the money
i Amalie Jagat has neither transferred non retained substantially all wishes

and reward
 To Dinecognise Pant
of a Financial Asset it it meets any below conditions

a the Pant comprises any specifically identified cash Flows lemon

a

Financial Asset say interest strip sold

Oh 1st 2nd 3rd Gm

FA 5000 500 500 500 500
5000

500 Krill FA lotchyme 1585 intereststrip

Tame of tnt 701

500 X MIF lot Smyn 3415 Principalship

5000

if interest off one transferred then FA to the extent of E 1585 will be

demecoquised

if Principal CIF are transferred then Fa to the extent of 3415 demecognised

b The Pant Comprises

any fully proportionate cash Flows from FA
say Sof elf sold
Of 1st and 3rd Gm
FA 5000 500 500 500 500
Too Yeo oo 5 7100
400100
Yooo
PU of Sof off
Tof too
400 X MFA 101,4475 thoooxrulf lot hmm
9000 to me denecogriced

FA of 2 1000 continue to be recognised

e the Pant comprises only fully proportionate share of specifically Identified

Cash Flows
 Say Entity transferred right to Got part of Interest strip
661 of Interest strip sold
01 1st 2nd 3rd Gm
FA 5000 500 500 500 500
soot
Hoo Yoo to
Pil of 601 Intereststrip
300 XAVIFA 107 Guns 951 Degecognia

Remaining E hong continue to be recognised

El CA 50000
of Financial Assets
Sale Proceeds
Cosy 30000 service change 500 1 met lesh 29500
Financial assets received 18000
Liabilities assumed 2500 29500
Ifor
250
Net loss 50000 45000 50 1 45000

Journal Banke 29500

FA gooo
Plegatis gooo
To CA of FA Good
To Liabilities 2500
 f A of Financial Assets 300000
I continue to
recognise FA
sold 607 2280000 Amt received in cash
But such sale of FA do not qualify for Denecognition

BfSheet
Sheep Financial Asset sooooo
360000 Aftincome
Other9g

Bank 280000
280000
FL
Mapp
Continuing Freeolvement Asset Refer Unit 5 911 12A 129 12C
 Bluet
FA
Shortterm
Receivables
959

CAoffrontteam Receivables
959 flashreceived loan

Remaining FA 90 unfaemengnisey CA 59 continue to

relegate

cosy 859 Cash sent

Denceosition No Denceogrition
Bear 859 Make A 59
hoston Denecog Pt 59 to guarantee hint 59
To short term receivables 909
fI A 5cm
To short term Reeqidh son
single calm
fIA Gen t.sn
Bank Goon
holdon Demecog rt 59
To shout team Receivably FA 95cm

To haematee hide 5Mt soy

 Bsheet
g cop toting 959 FA 9501
tell i Deneaf 190cm

Sen FA 5cm
host on Dental Pfe
CI A 5cm

Bank 85cm

Manik
To Abacided title M.su
c t.at
To Avoided riot Jay

C In 5.54
Baek Goon

hunch 59
To short term Rebirth 959
To Associated hid 5.59
Accounting ban Extinguishment of Financial Liability
B sheet
Financial Liability soooo FL 50000

Liability is discharged by
Payment of Cash 30000
FinancialAsset Hd 10000
nooo
 Other Asset Afd 3000
Liabilities assumed 20001
45000

i Difference alt CAof Fl Proceeds paid recognised in Plc

50000 95000
5000
Toward Alsheet

Financial aid Denecoquired On 50000 Ml 5000

Sup soooo
TO Bank 30000 hide 50000 Bank1900007
To FA 10000 50000 FA 71100007
Nt ola 4 7000
to other asset 3000
To FL 2000 hid 72000
too
To Profit loss 5000 700

89 Amount due to Abhishek Singhal 70000

Amt paid 90000

For melt E 30000 due to Abhishek hint is Efd to Pankaj Tapti

lion which Abhishek agrees and legally released its debtor Pnatice
Tafari
Amalia Tafari Guarantees to Pay Abhishek if Pankaj Tyagi Defaults
Fain value of guarantee 25000
Joanna
Financial hid 70000
To Bank 40000

To guarantee hid 25000

To Pll 5000
Secunifisation

In some situation Entity retains night to receive cash Flows but

it does assume contractual obligation to pay cash Flows to other Entities
Such Arrangements are often Pass through Ammengements

To qualify Transfer Below all Conditions to be met

1 No obligation to pay unless it collects equivalent Amounts
2 Obligation to remit any elf it collects without material Delay
7 Prohibited from selling on pledging the asset
4 Not reinvest except for short period in cash on cash Eg
Entitled to

and interest earned is passed to recipients

Entity a 13Sheet

FA 1009 trust Bsheet

Demecopik
CI 90g Participatory Goon Bank 90cm

FA fog atolls a Coen

NIL

FA 90cm
Bank 909