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Continuing the Professional/Dynamic example: PPE FV ₹350 lakh (BV ₹500 lakh), contingent liability ₹5 lakh (BV nil), DTA on FV downward adjustments at 30%. FV net assets after DT adjustment is:
A₹625 lakh (book value)
B₹500 lakh
C₹516.5 lakh (= ₹625 BV − ₹150 PPE down − ₹5 contingent + ₹46.5 DTA)
D₹470 lakh
Answer & Solution
Correct answer: C. ₹516.5 lakh (= ₹625 BV − ₹150 PPE down − ₹5 contingent + ₹46.5 DTA)
Book net assets ₹625 lakh − ₹150 PPE downward FV adjustment − ₹5 contingent liability = ₹470 lakh. Net FV adjustments ₹155 attract DTA at 30% = ₹46.5. Net assets after DT = ₹470 + ₹46.5 = ₹516.5 lakh.
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