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Under Ind AS 101, a VAT DEFERRAL LOAN of ₹60 lakhs (interest-free, repayable in 5 years, with employment conditions) has a fair value of ₹37.26 lakhs at the date of transition. Under Ind AS 109 + Ind AS 20, the transition entry is:
ARecognise loan at fair value ₹37.26 L; expense the ₹22.74 L difference to P&L
BRecognise the full ₹60 L as the loan liability — government schemes are outside Ind AS 109
CRecognise loan at fair value ₹37.26 L; recognise the differential ₹22.74 L as share-based payment cost
DRecognise loan at fair value ₹37.26 L; recognise the differential ₹22.74 L as a DEFERRED GOVERNMENT GRANT — Ind AS 109 measures the loan; Ind AS 20 covers the grant element
Answer & Solution
Correct answer: D. Recognise loan at fair value ₹37.26 L; recognise the differential ₹22.74 L as a DEFERRED GOVERNMENT GRANT — Ind AS 109 measures the loan; Ind AS 20 covers the grant element
Ind AS 101 + Ind AS 109 + Ind AS 20 — government-related off-market loans are recognised at fair value (PV at market rate); the differential (below-market benefit) is a government grant. Recognised as deferred government grant on the liability side; released to P&L systematically over the period in which the entity satisfies the grant conditions. The entity must have obtained the original info at recognition date to apply this retrospectively.
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