Financial Instruments Ind AS 32,109 107

very Easy 16 22mks

Ind AS 32

t te
2 Fixedtodd 3
compountdd
1 d Fixed
gefinitions Financial
Test Instruments
Financial B Financial C Financial D Equity
Instruments Asset liability

Ind As 109
I I
Classification 2 classification 3 Classification 4 Initial measurement of
of of FA FL
Financial Financial
Asset
liability
A BusinessModel
Test
B CCFC
test Item Is per
as Fair

8 A Fairvalue B Fair value C Compound

I
Transaction Transaction Financial
Paice Price Instrument
pre Existing
pygmy
t t
wittansition 2 Kith 3 Conversion
Transaction or
cost cost Early
settlement
of CFI

5 SubseqtuentMeasurement 6 Accotinting of 7 Reclassificationof FAU FL

of FA UFL Equity
Instrument
 I
8 DE Recognitionof sealtda 9 De Recognitionof
FA Financial lials
I
AlEntity Substantially B Entity Substantially c Entityneither
transfers Risks Rewards Retains all transfers nor
Risks Rewards retainsRisks2
Fall Partial Rewards
De Recagn De Recogn
Not Retained
Retained control
control

2Biga
124
10 14m12s
123
VII I I Derivatives
10 Modification ii Regularway 12 Impairment B
purchase or tr Id
A Incase of B Incase of sale of
Borrower lender FA

10 a IQ
20
n th y Jay
ÉMÉ 5 16 Financial Guarantee
bedded HedgeAccounting
Derivatives
 Ind As 32 FI Presentation

includes
Bank Bar
I Definition
cash

1 Financial Asset It is any asset EquityInstruments ofanothed

that is entity eg Incestin Reeco EqShares

Contractual Right to receive

cash Drs TR
eg
contractual Right to receive
Eg Instruments of anothed

entity Leg Inustin ComDeb

ContractualRight to receive
any other financial Asset
Contract to exchange FA FL under
Potentially Favourable conditions

Examples
Fa not FI.tn Reference
particulars or

Cash 2 Bank Bal FA

Trade relables FA Cli

Inventory not a FA
PPE Not a FA
Loan Advances Given FA C i

Investin Eq shares of Infosys Hd FA

Insist in Bonds FA i

Invest in'dciniertible Bonds Jut cash FA c Ci

Prine Egshares FA c it
Retcon
pix r
Inst in Pref shares FA Cci
Prine r
 Gold a contractual Right X Not a FA

Inustin Gold Bonds I Inte FA Ci

Prepaid Expenses You will receive Goods Not a FA

service a nut cash

Prepaid Exp Refundable in cash FA c i

service refuse

FA Cli
Interest Relable

Miwner FA c i
Security Deposit given.gg
Lyford't
Rent agreement

Bills Relable FA Cli

Trade Retable cap Birenable FA c Ciii

Income Tax Refund Statutory Right

Not in scope of F I

Inst in Subs 5.11 Assoc s Not in Scope

Ind AS 110 111,28
 D Contractual obligation to
Definition of Financial lials deliver cash
It is
any liab eg coff
that is Contractual
obligation to
903 paan
Afshat delivery any other
g g
Relshare T Relshare I FA

After 3months wins s 210,000 Contract to exchange FA Fl

under potentially Unfavourable
we check their position conditions
Every Month
simonth price
ya s Akshat Favourable FA
Pan unfavourable Fl contract todelived own eq
shares in variableMo fie F2F Not
my
Eales
Def Ref
Particulars Flag
Trade Payables Fl a lil
loan taken FL a Ci

Outstanding salary future of cash delived FL a i

Advance Income future service deliver FX Not a Fl
Addrefund fi
Advance Income contract cancelled FL a
to students
Jut cash
Ci
Debenture Issued Fl a
Prine Casa

Issue Own Eq Shares FX Equity

Convertible DebIssued It Ignore

Prine Egshares own TX Equity

Convertible Pref SharesIssued Diy Ignore

Rin EgShares our Equity

as
Pref SharesIssued FL a Ci
2 Prine cash

u
 Trade Payable caskBiasirenagie
giving FA to
FL acid
tyg

Income Tax Payable statutoryobligation not in scope of F I

Provisionfor Bad debt Not a Fl

CIndAS 37

Security Deposit accepted FL a lil

off own Eq shares deliver Equity

Compound Financial Instruments

Single Instrument CFL t Equity

I'É Debentures
6
Comestible Compulsorily
Redeemable
C
C
Payment PrineRepayment Jat Payment pinup Payment
Joy He
Cash Own Hq Shares
cash cash
u v
u v

E Justaiment
r
Issued Pref shares
u

Redeemable Convertible compulsory

c s
g
Dividend Dividend Princip
Princip He
inandatory own EqShar
c s
H
Discretionary cash Cash
mandatory He
H Equity
no obligation
me
If nothing FL E
we will distribute
mentioned
only if Co earns a compoundFinancial
profit cash Justorument
Hota FL Ft

say Debenture Convertible

same logic for
pref share

a
Conversion conversion
at the option at the option of
of the holder Investor Issued
a s c s
Princip
Jut Princip Tut
He
Issued at its own will cannot He Issued at its own
cash avoid paying cash cash will CAN AVOID
In Hi paying
cash
Equity

t
Holder Investor Inst in compulsory Conn Deb of Rel ltd
E e
Conetan Jat Pad
CashReceive Eq shares of Rel Hd
He I
0
Cle

Note
Only applicable from the
compound financial Justaument
Point of view of Issued

For Holder There is No concept of CFI Holder Only FA

Fixed to Fixed Test

Eg Issued Conn

De t
Compulsory
I
Jut Princip
Cash Out Equity shares
I
FL
provided it meets
Ethno
fixed tofixed test
Con Eg Shares
Deb H
H
No of Deb Mo of
to be converted
eqshares to be issued
Day fixed
Day Fixed eg 5000 eq shares
eg800 Deb
If FL F Test is Not met then Princip will be Fin

If Lia le
nothing is mentioned always
assume F2F Test will be met

Def of Equity
2 conditions Both should be met
L

Co will issue FL F Test is

met
own
equity shares
 IndAS109 F.IS Classification Measurement

classification
if
Fin Asset fin liab Equity

Achtytoffatpl aNewcases Inttifmt

Etr Futpe

Classification of F A
i
FITOCI FITPL
Acra
Fair value Fair value
Amortised
through other through
costpaquad comprehensive profit9105s
Income

125 NR

Had
Business Model Test Entity specific test
Hold or Trade
Entity as a whole
Trade

met
Soutractual Cashflow characteristics Test CFC test Notmet
FA FA
Instrument
It Princip
gap Princip Gtain loss specific
Test

a.nu Teamer
these 2 cash flows
He
Then CCFC met
 Inst in Debentures Case Jut r Cermet
IF nointention Prine
of selling

Tt
Case not met
Prine r
thinking of
sale Captain loss

eg Inst in zero coupon Bonds cafe met

Princip r
I 1 I 1 I 1
PrineptJut
Day o o o o 150
100

Jut Cees
egg Inst in Eq Shares Div r
µ Not met
Prine Recovery only on
In case of eq share sale
loss
cafe Neved Met cap Crain

Ofa force Fc test If intention is to earn only promised

Cashflows on FA
then CCFC met

Teg If prefshares
1 1
40 to to to to to promised
Invest 100 cashflows
100
 Business Model
d
Trade
Ied
CFC
Idygtade cute not
read
He
c
hot met FVTPL
net mit hot met
u Jatt Pr u

Actin PL FitoCI R FWIW

Alternatively
irrevocable option
to use FUTOCI HR

OI mainly given for Incest in Eq shares

where bydefault cc Fc is neved met

classification of Fin liab

He

only Acra Except in few cases given by Ind As for FL

we IseFUTPL

eg Dedivatives Financial Guarantee Discussed later

 Initial Measurement of FA FL

Acrninethod
Ak Itd Borrows from Dena Bank 7100 crores lot for syrs
Borrowed FL lender FA

I Borrowed CFL
480 I 2 3 4 8 Total Jat Exp
inflow
looer o 10 10 Cio 10 50
11007

inflow 100
Total
Total outflow
Jut Exp so

Alternative way of giving loan

value
Face

Ak Itd Borrows from Dena Bank 100 or 81 coupon Tut

Issued lot disc

Borrower Akita FL
YO I 2 3 4 5 Total Exp
inflow o o o o o
90 too

Total inflow 90
total outflow Chef
Total MetExp 50
 In reality 8 siof dikhane ka Jut hai coupon
off a Tut comboof
Cozy f Disc 4 Pants Effective Interest
OTginal Rate EIR

As per As Borrowed Akita

Zayd CIB Ale Da 90 er

Disc on Issue Ale Da lo er This wont apply in Ind AS as

to loan fed an incr discount is nothing but Interest
which should be booked aced
arent Jut Exp All Da 8 coupon the period of loan
TO c 1B Tat

Ind AS Accounting FA Fc
H Fair Value
Day
ACM Method
yr end measure Amortised cost

what is Fair value

e s

where transaction is at where transaction is at Normal Term

off Mkt teams i.e Apart of cases given in off mkt terms
Hi
O 9
any Pre exist
where there is
Assume
relation between Borrower Lender Fair value Day Net cash
inflow outflow

It is a
compound Fin Inst ie Fair value transaction
price

If Fair value is Based on level I input

Fair value
Pregame of Future
cash discounted Mkt Rateof
flows Jut EIR

Steps to solve
StepI Cash flows

step Fair Value of FA IFL

EffectiveJut Rate Combo of Coupon Jut A Disc Premium
step
Either given directly or find this using interpolation
Step Loan Amoatization Table cat

step cash flows FL Borrowed

48 cash flow
100 less lot disc
o 90 inflow
1 5 8 a outflow coupon Jut
p
5thyrend Coo outflow Prine outflow

Step Fair value of Fin liab Neither any pre exist

why relation
Fair value Transaction Price Assume Nor CFI
Day inflow outflow

Fair value 90 crore

EIR
Step Compute
FV P of future sashflow Eep
Day
cash flow

290 crores PY of FCF EIR GC

 Case Assume x 9
arend FCF DF 91 PY 8 X AT
1 8 0.917 100XD.Fof5Myr 91
s I

3 8 0772 100 0.650

4 8 0 708 96.12
5 8 0 650
100
Antuity any
factor

Case Assume 2 111

DX AF of 54ns 11 1 7
1007 DF of Star 111
8 3.70 106 0.593
88 91
approx

By using interpolation
9 96.12 790 X 11 91
96.121 188.9

97 t
x 21
g
97 1.701
10 70 approx EIR
Steph Loan Amortization Table LAT FL
Jut couponJat Prine Amonised
Bogokingits
Fair value go.to cost
ur
op Tut EIR Repayment cis
90 9 63 8 91.63
2 91 63 9.80 8 93.43
3 9343 10 8 95 43
4 95 43 10.21 o 97.69
5 97 69 10.45 8
1007
9 apprgyay

501 Total Tat

Booked

J E CIndas
CCB Ale Da 90
DAD To Fin liab 90
C Fair value

9rad Jut Exp'Ll De 9.63

TO Fin liab 9 63

Tried Fin liab Ale Da 8

TO CIB 8
 CF
Egf
St cash flows FA Fu of FA
as Cash flows ECR
hn
ssooo7 4d8 cat
1 3 5000 inflow coupon
p.a ÉTotalow f sooo
3rdyr end 57500 inflow Prine
50k 151 Prem Total inflow 72500
Met inflow 17500
gut Income

step Fair value of F A

Fair value Transaction Price
Fair Value 55000

Step
FY EI py of FCF Elk
Daul
cash flow
55000 PV of FCF act

De IT
5000 X AF of 34ns 111
57500 X DF of 3rdyr 111
54262 approx

I 161
5000 X AF of 34m lot
57520 X DF of 3rdyr lot
 55635
approx

By using interpolation
107 t 55635 55000
x 111 107
556354 54262

10.467approx EIR

Steph LAT loan Amortization Table FA

name
fair
Income specif
yr opn Jut EIR 10.461 Repayment Cls
I 55000 5753 50007 55753
2 55753 5832 5000 56585
3 56585 5919 50007
4 Approx
57500
Adj
17500
He approx
Total Fat Income

FA
EE

Day FA Inst All Dd 55000

TO CIB 55000

Erlend FA All Da 5753 I

To Int Income PLL 5753

Carlene
4r end CIB Alc Da 5000
TO FA Alc 5000
 Fin Ciab Ddb Issue
Egg off
Cash flows Fe TP
stepI Day ex
Y CF Trust me CIB Alc 90K
90000 inflow 75000 outflow 85000 to FL 90k
1 5 8000 a outflow
p coupon qtr cost
5thyr end 1,001000 outflow Prine FL All Pa 5000
TO CIB All 5000

Étotal inflow
90000 FEf 8s000

5000 40000 100000

Netoutflow Ep 55000
doupon capitalize Pau
tr cost big TriostDirect1
in liab less
iii 5000
160
iii 10000
ti
from
liab

Asset Da Bal
DirectExp tr cost capitalize yay
ChpYa Bal Asset
Add
Step Fair value of FL

90000 45000
85000

Step EI
PU of FCF EIR
FYCDyD

85900 PY of FCF act

Fu after
of
adjTr Cost
 D lot
8000 X AF of 54ns 101
X
47100000 XD F of5thyr lot
92418

2C 121
8000 X AF of 5 yrs 127
47 100000 X D F of sty 121
85581

DC 131
8000 X AF of Syn 137
47100000 X PF of 5Myr 131

82414

By using interpolation
121 855814 85000 X 13 12

85581 C I 62414
12 18 approx SED
Steph CAT F LI Fairvalue
Exp Pay

ur Op Jut EIR 12.181

Repayment Cls
I 85000 10353 8000 87353
2
3
y
5
55000
IE Dayd CIB Alc Do 90000
TO FL Not 852g

Dan Tr.co 5000

FlyepI so

Uriend FatExp 10353

tape 10353

Yrlend FL Alc 8000

TO413 8000

If in above example we solve from F A point of view Assuming Tr Cost

of 5000 was incurred by the investor as well

II
St cash flows CFA

facto Dad
outflow 45900 outflow FA 90000
est tr cost
to al 90000

Step F X of F A
Fu Tr Price Tr Cost FIFA 5000
of FA TOCIB 5000
goooo t 5000
95000 Day FA 95000
Imy Summary for Transaction Cost

For FL For FA
H
Deduct Tr Cost Add To cost to FA
from FL on Day on
Day
ie FX of FL Tr Price t Tr cost i e FY of FA Tr Price Tr Cost

what is EIR coupon Ft

off
Disc f
e
u Prem
V Tr Cost
If these is No Disc No Prem Mo Tr Cost then Coupon EIR
Illus 39 A ltd Fin liab

Step Cash flows ff.LT

Ur tow
0 10888 9soft 9500 Metinflow
1 5 tooo
p a outflow coupon
5thyr end 10000 outflow prince

so
ie Ir.c.s
10000 CI 500

9500

ER
Step
FV PV of FCF EIR
980 PY of ECF act

JC 11

1000X AF of Suns 117

H 10600 X DF of 5th yr 111

9630

x 12
1000 x AF of syn 121
10000 X D F of 5thyr 121
9279
 By using interpolation 111 963049500 X 12 11 3
9630 fi 927g
11.371approx

Steph CAT FI Fairlane Exp

spay
EYE Repayment
trend open It cos
1080 10007 9580
3103 x2 9500
3103 3 9580 1089 60007 9669
XY 9669 1099 1000 9768
YS 9768 1111 1000 9879
X6 9879 1123 1000 0
z approx 100007
adj
5000 coupon
5500
500 Troost Of

Extra Part Journal Entry

OFI

01 09 X1 CCB Alc pd 10000

TO Loan FL 10000

tr.CO FLAlC Do 500

TO CIB 500

31031 JutExp Pll Alc Do 1080

TO FL Alc 1080

31 03 2 FL All Da 1000
TOCIB 1000
 Illus 40 LDR
Step cash flows CF I
Cash flows
9g arcost
10000 inflow f 500 outflow 9500
1 2 Jut A Prine ashtowstable tways preparewhenever
coupon Carne
quaterly n'tutyeary princip is paid in
Installments
lame
wn CashfluwsTabielIutcoupantfFugn.l
Qtr Ended Face value Iut 12t.p.a Repayment Cls
31 per Prine Jut
qtr
30.06 x1 9500710000 300 300 10000

3009 X1 10000 300 2500 3007 7500

31 12 X1 7500 225 225 750
3103 X2 7500 225 12500 225 5000
30.66 X2 5000 150 150 5000

30.09 X2 5000 150 25007 150 2500

31 121 2 2500 75 75 2560

31 03 3 2500 75 2500 75

step Fair value of FL

Fu of FL Tr Price H Ta Cost
10000 A 500
9500

step ElRCGiien7 166ot.p.a i.e 4 15

per qtr

I
 who
Step CAT CAnme Otry step
Otr Ended OpnstairiwIut Eirl4.15p.gtr Repayment cos
3006 1 9500 394 300 9594
30.09 x1 9594 398 2800 7192
31 12 X1 7192 298 225 7266
31 03 2 7266 302 2725 4842
30.06.72 4842 201 150 4893
30.09 2 4893 203 2650 2446
31 12 2 2446 102 75 2472
31 03 3 2472 103 2575 0

II Not asked

OFI
01 04 XI CIB Ale Da 10000
TO FL 10000

I OU XI FL Tr cost
Tocci go

30.06 1 Jut Exp PIL Alc 394

Tote 394

30.06 x FL Alc Dd 300

TOC 13 300

off step amo Dit step ft

apnd I apr Jul
Fate Fair
Yaupon
Value
fer
1h
were Prepared when PrinPaidin Inst
 Acra method
Pre existing Relation Between Borrowed lender
He

Fair Value I tr Price

Fair value Present value of future cashflows ELI
Example
Mesina
Etd granted a loan to its employee of 10.00.000

51 p a Repayable after sips in bulletedrepayment of Princip

Interest to be InterestRate of similar loan is
paid Annually Mkt
lot Showing Accounting treatment from the point of view of Akita

Akita Mom
employer employee
1
Relationship

SOI Ale Hd FI

step Cash flows FA

Yr
10.00.0007 outflow
1 5 500
0p.a inflow coupon
5thyr end 10,001000 s inflow prince
 Fair value of FA Fu Pu of FCF EIR
Step infatuate Relationship
of Tut
50KXAFofSgrs l01
H1OLxD.F of5th yr lot É Day Alex
810961 approx loan toEmpCFA7Alc8104617
FYaw PrepaidEB.E
Alc Dd 189539
wasted no To CIB Ale 16,001000
oversans
step Difference Between
thrupat
Fair value Transaction Price
10100,0004 810461 Pll 37908
artery
Prepaid EB 37908
189539
prepaid EBE aloft over 189539
54
period
df

Steph ER 101 Given

CinktJutrate

Steps CAI SFA Income great

EikRepaymentcis I
ar opnCFairvalue7Jut
810461 81046 500003 841507
2 841507 84151 50007 875658
3 875658 87566 50000 913224
4 913224 91322 50000 954546
5 954546 95454 50000
10,0010007
 É
Loan to Emp FA Aledo 810461
Dad aloft over periodof loan lie syn
Asset Ale De 189539
Prepaid EBE
To CIB 10,00000

attend FA Ale 81096

to Tat Ine 81041

Uriend CIB Ale Da 50000

TOFA 50000

9rlend PIC 37908

TO Prepaid E BE 37908
189539 Suns

steps to solve in case of Pre existing relation

Summary

CF
step
Fair value of FA Fl compute Poffo
step EIR
step EX Diff Btw Tr Price FX

step Elk Akt Rate of Int Given

step CAT
 Illus 33 LDR

OE Sec Dep Jut free

Day lessee givesto lessor

Tenant Owner
after the lease ends
Oh Isser lesson refunds the lessor
Deposit to lessee s FL
pg

Relationship

CF FA A Hd
Step
Ur C F
o 10,0010007 as outflow
1 5 coupon of gutfree
5thyr end 10,00000 inflow Prine

Step Fair value of FA relationship lessee lessor Fv PVof FCF EIR

10 X D F of 5th yr 121
IOL X 0.567427

5,67 427

Step Diff Btw Tr Price Fair value

10,00 000 C I 567427
9325730 Prepaid Lease Rent aloft over the periodof lease
i e Sars
 EIR 121
step

Step LAT FA ptneome pretend

4 ended
Opn Fair value Jut ÉÉ Repay'm
31 03 X2 567427 68091 635518
X3 635518 76262 711780
XY 711780 85414 797194
X5 797194 95663 892857
y 892857 107143 10.00.000

JE A Hd FA d
oroux see DepCFA Alc Dd 567427 116 leases
IndAS winner
932573 gym
Prepaid LeaseRentAle
Roon'sset
to CIB Ale 10.00.000 R
efigy.se
31031 FA 68091
TO Int Ine 68091

310312 Repayment MIL

31.03 X2 PIL Alc Dd 86575

TO Prepaid L R 86515
432573
54
 last Yean Hint CAT Dekhkasentry magoo
3103 6 FA 107143
TO Fut Ine 107143

31 03 6 PIL 86515 Bhamatjaana

TO Prepaid c R gag

31.03.46 CIB All 10100,000

TO FA 1900,000
 Illus 116 LPR Relationship Parent a Subsidiary

step cashflow 21111ft

Yr CF
o 16,66 09000 outflow
1 5 0 100 immaterial Ignore
stays end 10,0000,000 s inflow Prine

TP Fil PVofFCF
E l0crxD.F
Step Fair value of Fin Asset Relationship Fal
of 5th yr 127
Too x 0 56743
5 67 43,000
E

IndAS109
Steps Diff Btw To Price A Fairvalue Dayang prepsnares g gyu
1900100,000 C I 5 67143,000
Inistin Subs All 43250
9,3257,000 TO CIB ION
Inst in Subs
IndAS110
parent helps subs d
EIR regnd
Step 127 Given
Do Nothing

Income Receive
Step LAT FA
t
arend opn Fairvalue Jut Elk Repayment as

31 03 73
HI
Xy Y
X5

46 10,0 00,000
J E Zita Parent Ind's
910411 FA Instin Pref share 5,6743,50
trend Do Nothing
Inst in subs 4,32 57,000 Indaspio
TO CIB 10,0000,000

31 031 2 FA 8009160
Intgne 6809160

BALE HI
31 31 3 FA
Tegart Ine

3 31 4 FA
TO Jut Inc

31131 5 FA
To Tut Inc

31 31 6 FA
To Jut Ine

C B
31
311 10,00109000

TOFA 10,00109000
Illus 122 LDR Relationship Employer Employee Dee end
Pointof view co employer p

step CI Cen
Yo CE
o 164outflow
1 5 Prine Repay in 5 install Yuen OF Table

com Cash flows table Repayment cus

ur Face value Jut cotton Prine Jut
20 1 16100,000 80000 3200007 80000 12,69000

64000 320000 664000 960000

2042 1280000
43 960000 98000 1320000 48000 640000

XY 32000 320000 32000 320000

640000
5 320060 160007
320000 16000

FY of FA Relationship Fu TP
step
Fil PV of FCF EIR lot
Ur FCF WMD DF lot Py
2041 400000 3.21 801
x2 384000 3 22 6919
73 368000
Xy 352000

XS 336000
1406272 approx
 Diff Btw Tr A Fair value
Step Price
16,001000 El 1406272

193728
Prepaid EBE aloft over periodof loan lie Sans

EIR lot
Steph

CAT FA Income Receive

Step
ur end
Opr Fair value Jut 1121101 Repayment as

20 1 1406272 140627 400000 1146899

X2 1146899 114690 1384000 877589

43 877589 87759 3680001 597348

XY 597348 59744 352000 305083
XS 305083 30508 336000
409 apprgy

II In the Books of

yitd ae
oi X1FACloantoemp
Prepaid EBE Alc
AlcDa 1406272
DQ 193728
Indas 109
Indasigewloff over periodof
loan
TO CIB 16.001000 i e syrs

31 12 71 FA Ale Da 140627
TO Jut Income Ale 140627

31 12 71 CIB Alc Da 4,00000

TO FA 4,001000
31 121 1 Pll 38746
To
prepaid EBE 30746
193728 San

Vote Only Yr I entries were asked

Extra Part
In exam sometimes Year lend ie 31 121 1 Bls Extract Pll Extract maybe
asked Bls Extract as on 31 12 1

31 121 1
NCA

Other Income Fin Asset

Loan to Emp
Iat Income 140627

otherffaidEBE
i

Exp iii

EBE 38746
CA

gig ay 269310

38746
Prepaid EBE

were for Bifurcation of Caramon Curr

all Prefaid E BE OI Ur land 1146899
Graph
w off
I 193728 38746 154982
is
If cakentnon Cun Blf or trend 2 Cls

2 154982 38746 116236 269310 077589

ur lend Yr Lend
154982 cos cis
Curtice Blf 114689957 8775893
38746 116236
154982611162363
 Question 4 LUR
Ct CFA
stepI
ar
o 15 outflow
1 5 an

WHO CF Table Repayment

ur apnCFacevalue Jut Prine
Tut Cls
31 03 2 15,001000 90000 300000 90000 1200000

3 1200,000 72000 300000 72000 900000

XY 9 00,000 54000 3000007 54000 600000

6,001000 1300000 36000 300000
45 36000
X6 3,001000 18000 300000 goooo

StepI Fair value of FA EIR

40 CF DF lot PX
3103 2 390000
3 372000
Xy 354000
45 336000

Xo 318000
1354602

DiffBtwt.P KEY
Step
145398 Prepaid EBE Cutoff over period of loan ice Sans

step EIR not

 gnome Receive
step LAT FA
Intthot
Opr Fairlawn
ur ended Repayment Cls
1354602 135460 390000 11.00.062
313 X2
3 1100062 110006 1372000 838068
XU Jay
45
XG

JE Extra

old FA loan to
amp
1354602
145398
Prepaid EBE
TO CIB 15,001000

3110311 FA 135460
TO Int Ine 135460

3110312 CIB 390000

top 390000

311312 PIC 29080

TO Prepaid Ep 29080
145398
54
Note The treatment done by accountant is incorrect as the loan

will be recorded Fair value i e 1354602 2 not at face value

of 1500000

Int Income in Pll will be Booked EIR on Fair value i e 135460

 Bls Extract 31 03 X2 PIL Extract 3103 2

I Assets OtherIncome
Iat Income 135460

Ifn asset
loan to Emp 838068
Exp
ther NCA EBE 29080
Prepaid E BE 87238

a
Fin Asset
loan to Emp 261994

other CA
29080
Prepaid EBE
loan
1100062
and Prepaid E BE A CB1f
ur
Opr w off ca
Ey
195398 129080 116318 261994 838062
2 129080 87238 1100062
116318
f 838062
3
y
5

off Irrespective of whethed employee is required to stay in seavice

or Not Prepaid EBE will be w off owed the period of loan
 Summary of types of Relationships their Accounting treatment
No ones fromlessor pointof view
µ
Lessee lessor security Deposit
CIA Ct
lessor
nice CIB Alc Dd
Prepaid LeaseRent Me Da To Fin liab Sec Dep
To CCB Alc to Advance leaseRent IIc
Ind As 116 aloft over the period
IndAs 116 cutoff over the
period of of Sec Dep
Sgposit

its given by parent to subsidiary

loan

Parent helps
Subsidiary
CED CED

IE JE
FA Ale Da CIB Ak Dd
Inst in Subs Dd To Fin liab
TO C1B To Cap Cont fromParent
He
Id As110 ur end Do Nothing Ind AS 110 Yr end Do
Nothing

48 Subsidiary helps parent loan

given by subs to Parent

FA Al to 413 Ale Da
On Distr peep zo To Fin Ciab
TOCAB 100 TO Div Income Pll
by
v
Day deduct from other Trf to Pll
Eg Referees
Appropriation of profit
 Neverasked
1 in exam
helps
Employer
He employee
CFA CED

Ita loan to Emp Ale Da CIB

Prepaid EBE All Da To Fin liab
TOCCB To Advance Salt flick
w off ie'dthe
periodof wloff over the periodof loan
loan

Discussion 2 Ques will come in Ind AS 20 Govt Grant

Gout helps co

granted by Gout
an to co less than mkt Jutrate
Fever Fin liab
Asked
EE
CIB Ak Dd
To Fin liab
To GovtGrant
He
Ind As 20 Treatment will be as Ind AS20
per
Illustration 36 WR
xyz ABC
has
Relationship Parent a
Subsidiary

case Loan Repayable on Demand

Relation FY PY of FCF Elk
FCF Notavailable
U a
Tenure
n n
Elk
FY TP As no other option left
Xyz Parent 4 FA ABC Subsidiary FL
EE
and FA 1 8 All Da 10,001000 113 All Dd 10100,000

TO CIB 10100,000 TO FL tomato 1600,000

CaseB loan 34ns EIR cot Coupon at Gutfree loan

step cashflows
C F

Y LOL
1 3 0 coupon of

3rd 161 Repay Prine

Fal of FA FL FY PYof FCF EIR

Step
lol X D F of 3rdyr lot
751315
Step Diff Btw T.PE F y 7 42 parent Instinsubs
1010010006 7751315 2486 ABC subs Cap Couthfrom Parent

step Elke lot

Step CAT
ar Opn Fair value Jut EIR Repayment cis

I 751315 75132 826447

2 826447 82645 909092
3 909092 90909 10,001000
i approx
ay
IE Xyz Parent

Day FA Ale Da 757315

pay fÉÉ Da 10100,000

Inustin Subs Ale 248685 TO FL Alc 751315

TO capCouth 248685
É
TOCLB 10,001000
BI o E

artery FA Ale Da 75732 artend Jut Exp 75132

TO Jut Ine 75732 Top 75132

Yr Lend FA Ale Da 82695 Yr Lend Jut Exp 82695

TO Jut Ine 82645 TO FL 82645

Ur Zend FA Al Dd 90909 Yr Bend Jut Exp 90909

TO Jut Ine 90909 TO FL 90909

ar3end CIB 101001000 483end FL Ale Da 10,001000

TO pg 16,00 000 TUB 10,001000

Scenario Refer Ques Bank

Consolidated Financial statements loan treatment

He

Inter Co Transaction loan Eliminated

 Question 8 LDR
He
Almost same as illus 36
Case same as above illus 36

me as illus 36
75131,59
Case Find Fy
Given Fy 810150 use this always ICAI se No Panga

MI askedonly for lur

ur open gut cut Repay cos
I 810150 81015 891165

012 Note Lat of 3

yrs wont match as Fair value of 757315 was Not taken

É
Kk Parent FI 4K Subs FL

ay FA Ale Da 810150 Day C 13 Alc Dr 101001000

Insist in Subs Do 189850 TO F L 810150

TO CIB 16.00.000 To CapCont 189850

artery FA 81015 Yid Jat Exp 81015

TOFut Ine 81015 TO FL 81015

case same as illus 36

CFS same as illus 36

cohere subs hops Parent

4K FA KK FL
H
ubsidiary
will treat
Day parent will treat Day Diff as Dividend
Diff as Dividend Distr Income
I FA It
Div Distress Cliffe
To Div Income
TU CIB
 what if Fair value is Based on Level 1 input TT
HIIdn.is

FY I T P
H
compute FY DU of FCF ECR

Diff Btw TP R FY
T to Pll irrespective of any relation btw 2parties

Illus 29 lessee FA See Dep

Step Cash flows FA

Yr
o 10000 outflow
13 of coupon
3rdyrend 10000 inflow

Step Fair value of FA FY PV of Fa Eir

10000 X D F of 3rdyr 71

8163

Estep Diff Btw Fair value tr price

10000 8163
1837

cenario l FI is Based on Scenario 2 FV Not Based on Level I

Level I input input relation lessor lessee
He
Diff tot to Pll Diff Clefsee
prepaid lease Rent Rosset
IE FA Alc Dd 8163 IE FA Ale Da 8163
PIK ALDO 1837 aloft a Prepaid Lease Rent Da 1837

10000 04983M CIB Alc

To UB ACC TO 10,000

EIR 71
Step

CAT FA Receive
Step Income
ur Opn Jut 77 Repay as

I 8163
2
I 4a w

10,000

Question 12 CPR FA MAY

FY level I input FY Pll of FCF EIR

step Ct CFA
Yr CF
0
1204 outflow
1 5 12Lp a inflow coupon

shy end 120 inflow prine

compute F v as it is Based on level input

I
µ
FY
StepI Fu of FA PV of FCF EIR
12L x AF of
Syn 127
4712014 DF of gMyr 121
111 35 lakhs
Step Diff Btw TP AFV
120 A 111 35
8.65 TH to PIL FA Da 111.35
PIL DA 8.65
TOCIB 120

EIR 121
Step

Step LAT HI
 Issued pointof view
Compound Financial Instrument Flt Equity

Eg4 CASE A Option with Holder

Cluessolving issued the Deb with conversion
I
Jointofview 10 Deb
Issued Ed Savings in Tat
get Prine option 141 107
I Holder
He

camp
III
step cash flows FI
98 Cashflows
0 25L inflow
92 5
1 5 p a outflow coupon
5tharend 254 outflow Prine
as this is CFI
mate F
Step Fair value of fin crab ex pv of pop t
It
2 54 AF of syn 147
252 x DF of 5thyr 141
2156692

step Diff Btw F P R FV

25,001000612156692
343308 Equity Component Bls other Equity
ur end Do Nothing
 EIR 147
step
Step
cAtCFinliab
Opn Fairvalue
JfEEirGumRefaymentcis u
I 2156692 301937 250000 2208629
2 2208629 309208 250000 2267037
3 2267837 317497 250000 23,35334
Y 23 35,334 326947 250000 24 12,281
5 2412281 337719 250000 25,00000 Before
repayment
to holder

CFinliab
JE
CCB All Dd 25,09000
Day
AT
TO Fin Ciab cot Deb 21,56,692
No furtherAlding on Yrend
To Eq Camp lotDeb 343308
O E

trend Jut Exp Alcoa 301937

TO FL 301937

Greed FL ALC DS 250000

TO CIBAIC 250000
 BIS Extract ur 5 end Before Holder Exercises Any option

Éatias
EI
other Eq Egcomp 343308

lick
1 Clot Deb 25100,000

Case Holder Exercises Cash option Case Holder Exercises Equityoptio

Fl Alc Do 25,061000 FL All Dd 2500,000
TO CCB 25,001000 TOE9Comp 25,00 000
Eq Comp Bal 343308 25,001000
O E All Da 343308 28,43 308
Eqcomp
TO Ret Earnings o E J 343308
EqComp Ale Da 2043,308
TO ESC Facevalue XX

TO See Prem Blf XX

OR

FL All Do 2500000

Eq comp Do 343308

TO ESC XX

TO See Prem XXX

Eg4 Case B Option is with Issued

off
lot Deb
Safingsing
Tat
He
Inc Issued Ie
FL t
Hy

Cashflows FL mandatory cashflows

step
Yr CF
0
251 inflow
1 5 12.5Lp a outflow coupon

F thyrend 2 0 payment avoidable issued's options

F v of Fe PV of FCF
Step Eg
2.56 AF of Sqn 141
858270

Step Diff Btw t.ph Fx Egcomp

25 00,00047 858270
1641730

EIR
Step 147
 step LAT CFC
Yr Op Jut 141 Repayment as

I 858270 120158 250000 728428

2 728428 101980 250000 580908
3 580908 81257 250000 411665
4 411665 57633 250000 279298

5 219298 30702 1250000 O

zero coz princip was treated as

equity

Day CCB Alc DO 25,001000

TO Fin CiabAle 858270
TO Eq 1691730

4 I end Int Exp Ale Da 120158

TO FL 120158

Yrlend Fl Alc Do 250000

TOCIB 250000

Bls extract Ursend Before issued exercises option

BIG
Asset

ÉÉÉEq
Eqcamp 1641730

Yet all
Option Issued
pays Cash 25L

Eqcomp Ale Da 1641730

Ret EarningsAle Blf 858270

TO CIB All 25,00 000

Option Issued gives Eq shares

Eq Comp Ale Do 1641730
R E Blf All Da Bal Kum pad gayatoh
TO Esc Facevalue
To See Prem
TOR E Blf
Balbach gaya ton

Compound FinancialInstrument with transaction costs

5 81 for Deb option to convert Holder

Eg off
s

Jef Prine Holder savingsinJut

As I
2 FL Equity

step a CFI
Yr CF
0 80000 Inflow
13 6400 a
p outflow coupon
3rdrend 80000 outflow Prine
 12
Step Fair value of FL Prof Fct ER

6400XAFof3yn
12t H
80000 X DF of 34ns 127
72314

step Eqcomp Diff Btw FY UTP

80000 E 72314
7686

Step EIR 127 MktRate without Tr Cost

Step Allocate Tr Cost to FLA Eq

7231480000
µ 2000
Fl 72314 1808 Deductfrom Fl on Day
gooo
Deduct from Egan Ea Ca Bal
s
Eg 7686 192 Day Trcost Da Bal
2000 7686 i less
80000

Revised FY of FC after T C 72314171808 70506

value of Equity
n n 7686 C I 192 7494

LAT FL
Steps
Fairvalue
ur Open cost Jut 121 Repayment Cls
yoggaffertr 8461 6900
I 72567
2 72567 8768 6900 74875
16400
3 74875 8905 774607 80.000
 New EIR th Because in Mkt fat
Step
why
FV PV of FCF E
u

70506

se 191 Assume 2 121 Assume

6400 XAF of 34ns 147 6900 X AF of 34ns 121
4780000 XD F of 3rdyr 141 4780000 XDF of 3rdyr 121

68856 72314

Interpolation 127 4 72314 470506 14 121

72314468858
13.051approx New EIR including tr Cost

Step CAT FL New EIR

ur Opn Jut 13.051 Repayment cos
I 70506 9201 6400 73307
2 73307 9567 6400 76474
3 76474 9980 6400 800002
9 approx
Before holder exercises
adj cash leg option
SIE BISExtract DayD

Day CCB Ale Da 80000 Asset

TO FL 72314
TO Eq 7686 E

tr cost
Ets
other Eq Ey Comp 7494
Dard FL All Da 1808 7686 192
Eg Ale Da 192
TOMB Alc 70500
2000 772314,18087

Fair
f
value
after Tr Cost

CFI without tr Cost Summary CFI with Tr Cost steps Summary

CF step CF
step
Step FYof FL Mof FCF EIR Step FY of FL Old EIR

step Diff Eg Step Equity Diff

Step EIR Step Old EIR
Step LAT
AStepsAllocatnoft.CItE step
NewElRCaftert.c
LAT FL New EIR
step
Illus 121 LDR
OFu PrefShares Comp Cont

step cornrows c u s

yay tgif saiga

1s.oo.toBinyiwjs 1
5150 00p.a outflow coupon
stay end 15,00000 0

of old EIR 157.3

step Fair value Fin cab
150000X AF of 54ns 154
502823

Step Diff Btw t.pa.tv Eg comp

15100,000 C I 502823
997177

Step ER Coca est

Step Allocation of Ta cost Between FLU Eq

FL 10056 30000 5028231500000
30000
30000 997177
19944 1500000
Eq

Revised Fair value of FL after T C 5028234 10056 992767

n u
Eg 997177 a 19944 977233

Step New EIR 15.86 Given

H
incleffectof TrCost
 will makemistake
here
step Ut Fc faigyfff.fi pay
r
opn It É Repayment cos
31.03 2 492767 78153 150000 420920

V3 420920 66758 150000 337678

XY 337678 53556 150000 241223

X5 241223 38260 150000 129493

46 129493 20538 150000 o
3
APPLY

Jovanal Entries
oiloulx CIB Alc Do 1500000
TO FL IOT CCCPS 502823
to com s

Lanasopass
combined J E

Flit FL Alcoa 10056

Eq Alc Do 19944
TO CIB All 30,000

31 31 2 Div Exp All Do 78153

NFL 78153

31 31 2 FL Alc Dd 150000
TOCIB 150000

31 31 3 DIV EXP All DO 66758

TO FL 66758
 31 31 3 FL Alc Dd 150000
TO CIB 150000

31 31 4 Div Exp All Do 53556

TO FL 53556

31 31 4 FL Alc Dd 150000
TO CIB 150000

31 31 5 Div EXP All DO 38260

TO FL 38260

31 31 5 FL Alc Dd 150000
TO CIB 150000

31 31 6 DIV EXP All DO 20538

TO FL 20538

31 31 6 FL Alc Dd 150000
TO CIB 150000

MAConversion fromPret to FL o
Eg 9971771119944 977233
Fg

3113116 Eq Comp Ale Do 977233

5000015000
TO ESC
g shares x 7107
to see Prem BH 927233
Illus 117 LDR
Off Bonds

Fut brine option savingsinTut

Holder

IL I Mint
part
Eq
of Ques

Cash flows
step
Ur CF

g I er inflow
18 outflow coupon
Glp a
8thvend Ier Coettlow Prine

step Fair value of FL PV of FCF EIR

1

6 LX AF of 8yrs 81

F Ier X DF of 8thyr 81
88,50 672

Step Diff Btw TP RF y Eq comp

1 00,00 000 788,50 672

11,49 328

Step EIR 81
 oftheOues
ended Jut ElkYr
Step 5LAtCFLJgpgpairyaeuePant
Repayment Closing
30 06 2 708054 6.001000 8958726
V3 8958726 716698 1600000 9075424
XU 9075424 726034 600000 9201458
V5 9201458 736117 600000 9337575
X6 9337575 747006 600000 9489580
XI 9489580 758766 600000 9693347

78 9663347 771468 1600000 9814815

9 9814815 785185 600000 1,0000,000

Day
01107 X1 CIB MC Dor 1,001001000
TO FL Alc 88,50672
TO Eq 11149,328

At the end of 483 30 0644 opt for conversion in shares

Before conversion FL 9201458

Eq 1149328

ICAI IE FL Alc Dd 9201458

Equity Camp AIDS 1149328

TO EqShave Cap All 1,03 50,786
Since Face value missing
tot fell Bal to ESC
 Early Settlement of Compound Financial Instruments
u

Quest LDR OFA 81 ConnDeb

Cf Fl
Iit Prine
holder savingsingut

step y Equity
Ur
0 500000 inflow
1 5 Goooop a outflow coupon

5thyrendC500000prine.soattlo Step
FairvalveofF.L PV of Fa Elf
40000 XAFof5yrs 127 H 5 00,000 X D F of5thyr 121
427904

step Diff Btw T PMF x Equitycomp

72096

Step EIR 127

Step cat CFI

trended Opn Fairlane Jut 121 Repay Cls
31.3.20 927904 51348 Goooo 439252

31 3 21 439252 52710 40000 451963

313 22 451963 54236 goooo 466198 Eady

settlement
 0104 22
Early settlement of CFI
01 04 22 Bls extract
Payment 525000 Asset
J E 01 04 22
Egged
Eq comp Ale Da 72096 0990419 O E Eg comp 72096
FL Ale Da 466198 Amt
To CCB 525000
TO PIL R E 13294 lift 466198

Bifurcate Btw Fin liab Equity

Not in Ratio of CA But in ratio of
Payment 525000 Fair value

c s
Paid for F L Paid for Equity Blf
Revised FY 491204 5250004491209
f FL 33796
1.4.22
WMD
u v

JE EE
FL Alc Dd 466198 CA
C c.A
EquityAleDe 72096
Pll Ale Da 25006 TO CIB 33796
TO dB 491204 to RetEarnings 38300
Blf
I
Lieb Blf tot to Pll Eg Blf trt to R E
com Calm of Revised Fair value of Fin tab on 01.04.22

FI PV of Remainingfuture cashflows EIR 97

90kt AF of Lyn 91 1.4.22 dgiven
SIX DF of 2ndyr at
Do 313.20 21 31322 31323313.2
991269 31,3
1 I 1 I
k hole 4012 LAY 4011 4011
Satin r r r u
arena FCF Df at pu
An remain
513.23 90k 0.917 4th sty
19313 24
4g 0.842 5ha 2ndyr

off Aga
CA FV

Phone I IOK 21000

Calculator 5K 9000

SajeetpaidAK 225000
Iphontefalculata r
21K 4K
 Illus 84486 67 Com Pret
c

got Dix Erin

ftp.II
step I Holder inJul

ur
0 1000000 inflow
1 3 60000
p a outflow coupon
3rdyrend 101001000
prine

ECT
step Fu of Fl Pv of Fa
924061

Step Diff Btw Fr ATP Eg Camp

75939

EIR 97
Step

Step MI re
ur ended opn dat 91 Repayment cis
my
30.06 x2 92206
3
XU

Illus 86
Early settlement of CFI on 30thJune x3 Ci e After Lyn
Payment 11.06.000

C A of FL 972476 30thJune x3

Eq 7 75939 30thJunex3
 Payment 11,001000

Paidfor FL Paid for Equity Bip

RevisedFY 1099,524 90476
f Flan

30thJuneX YentdngC10.60000XD.Fof1yr
5t.J
Re
p Er

EE FL Ale Da 972476 JI EquityCampAle Da 75939

PILAR DO 37098 R E Alc Dd 14537

TO1113 10 09,524 TOMB Ale Da 90976

Illus 126

Note Option to convert missing Always Assume that option is with the
holder
Come loan

step CI
at
F
ftp.ne aninop

q
1 4
600000 inflow

doo0p.a outflow coupon

theft
4thgrand 600000
print

step Fu of FL Prot Fa Eli

561962

Steps Eg Diff
38038

EIR lot
Step

Step CAT re
ur ended
Opn gut 101 Repay Us
31 03 X2 561962 56196 148k
ng
x I

Xy

Xs

In 1st yrInt charged to Pll should be 56196 2 not 48000

Ko has charged 98k as fin cost in Pll they need to charge extra 8196
56196
fin cost in PIL 448000
IE
lYN C 1B Ale 600000
TO FL 561962
TO Eq 38038

Bls Extracts Also can be

given

Owes 13 How
Same as illus 126
ICAI did notgive Curr Mon Curr
Bifurcation
Mote In Bls extract in this Ques a
But we can
give the Bifurcation

Illus 125 Come Deb

step C F c n
Idt Prine savingsin
yr k got
Fe sot
0 50100.000 inflow f Iq
Eq FL
1 4 300009a outflow coupon Premium
4thyrend 27500000 252 101 prem at lot
H
Prine x sot Fc

Step Fu of FL
3LxAFof4yrs coi.H27 szxD.F of 4th yr lot

2829247

Step Diff Fg 2170753

Step EIR slot

Step cat Chico not askedin

ques

OI
Dad CIB Ale Da 50,001000
TO FL All 28 29,247
TO Eg All 21.70.753
 8 De Recognition of F A

e
s
Fue De Recognition PartialDe Recognition
He He
Discussed Below
D Contractual cash flows fully
received from FA
2 Trf Sold the FA
Hi
FA CoA 100
120 Diff trf to Pll if
Soley any
413ACC129120
TO FA 100
TO PIL 200
Partial De Recog of FA
cede A I I
Case B servicefees case C
H H
3Definition 3 Definition Notmet
C u
Amy I met hint first last case A caseB
I
I Sale of fifty gap service service
Aking of Partial y
fees fees
De Recognition Alding of Partial full a
De Recog
PastDe Recognised
carrytaut FuuDe Recog c.A
DiffBtw Sells Price CA Part Retained Recognised
Trf to Pll again CX Fair value
Part Retained Diff
Bls Caray's
Aunt
 3 Definition Points for Partial De Recog eg Inustin Deb FA Itincip

Paat transferred comprises of specifically identified cashflows

Leg sale of Tut Sale of Prin
strip strip

Part tf comprises of fully proportionateshare of the cashflows

eg Sale of 401 Gut Prine sale of 30 Jut 4 35 Prine

Part trf comprises of fully prop share of specifically identified cashflow

Leg sale of 40 of Sale of 30 only Prine
only Jut

intermediary
as an
alsocharge acting
will feesfor
off seance
saveat Jatstrip Lucky
Ya to lucky
Inustin Deb
Rel ltd payment t
I t c f W
for syn 1 IL t
thÉI
Lucky
2 IL a coatget
lucky
3 IL x
a
g
my
ys
IL X
y
Iot
Sale of hot Jut any 3rd Saleof first 2yrsof gut
1st PartialDeRecag
Saleof 1007 Jut any caseA Sale of lastLassof Jut
p g guy and
say Saleoffirst201 Tat
Saleof 1007 Prine only 1st
Saleof last 407 Prine
Sale of 10101 print Jut FullDe Recog He
Noneof the 3 Def Points
case BJ
Egg sea ltd Rg133277

of CA Btw RaatDe Recognised PastRetained

Step Allocation
Bifurcate in FY Ratio Step 2
Total 21 10,00 000
I
1 179532 243 A
lot pain 23694 0
PartDe Recognised paat Retained
47 Fut 97601
825468
14 2
174532
lol x 1
3341
0
21 sea 53237
174532
for ÉgÉÉJ
851

of Part De Recogh Part Retained

Step Fair value
Total FY 12 23,960

I 1
Fair value of PartDe Recag Blf Fil of Past Retained Given
1223960 213620 101 Drin 29000
1010340 41 Jut 119460
excl Senfees
184620 65160

21 Servicefees 65160

213620

step Bls Extract AfterPartialDetecog

EE ne Da 9.90.000 FA Retained ca
179532
TO FA Part 825908 Patni 23694
De Reeg
Jut 97601
To Pll Ale Gain 169532 seavice
53237
Asset

I
 I

Ege Case B Assume Sea Ltd Retained Hint lot Prine first 91 Jut
H Esea icefees
Not falling under 3 Def
i it is case B E Service fees

Step step Same as above

Step É

CIB Alc Da 9.90.000

cot Pan Da 29000
41 Jut
21 SeanAssefa 65160
119400 Lex Fair value

TO FA full 10,00 000 C c.A

TO PIC BH 203620

BlSExtaaetAfterDe
Reco EI.ClantRetaineaD
F.N
107Prin 29000
44 Jut 119460
21 SeanAsset
65161 213620

Diff Btw case A Case B

Partial De Recopa Fall De Recog
PastRetained cA PartRetained F.v
 De Recognition of FA
I É

am
payment ÉÉ
Imf Aish
Factoring Factoring Factoring Laon
with full without with Partial

Recourse Recourse Recourse Bharat

H I
Risk Co Ak Co no
Retain Risk I
retained
Alding Dad H
Dois IOC pay 9L
CIB All Pg
Atami PILCBIF All Da
TO Dds Coc

or
CFA

Risk Retained with Akita

NoDe RecogofDdsonDay

CIBAlC9 T0DoxFin.li
ab 92
Eg7 Pg 3328 Factoring with Payal Re course

Dad CB Ale Da 450000 Bls

Pll AK Da 50,000 DISH
TO Des FA J C'A 5,00 000 Asse liab 2012 CIA 20K

cat
Continuing Involvement in Asset All Da 20,000 2146
To Associated liability Alc 20,000

Dad PIL AK Da 5000

To Asse liaby All 5000

Das paid 990000 lossoffactor io

CA supto20k Risklo.J

Asse liable Ale Da 25000

Cast
PILCBID Alc Dr 5000 Drs
paid920000
loss offactor 80000
TO CIB 10,000
TO CIA 20,000 Co Risk20,0003

Das Paid 500000 loss of factor o Asseliaby Ak Dor25000

EB PIL Al Da 15000
Noentoux
Asse liab All Da 25000 TO CIA Alc 20000
TO CIA All 20000 TOMB ACC 20000
lossReversal s
To pie ofDay 1
 Initial measurement for FA UFL for Fair value method
Refer FR DigestPg33.21

Subsequent Measurement of Financial Asset under all methods

Irrevocableoption
FI in EgShares FA
Refassifiable
Inuit
Padticulads Acan Filton Futon MR FITZ
Initial measurement Fair value Fair value Fair value Fair value
To.Éost Tr Est Tr Yost

Tr Cost Adato Fv Addto Fll Addto Fll Pll

Subs rheas Amortised Fair value Fair value Fair value

every ur end
Cost CAT
cus
Bal

Pll Asper plc Asper Pll Cashwhen ppl

Jut Div Income on FA Elk Dix is
EIR gree'd
coz
Eq Shares Nofixed Div Rate
Unrealised Gains loss o R Oc Nr Pll

Realised Gains 1095

PIL PIL Pll
On sale of FA

Reclassified Notreclassified
Treatment of Previous topic
to Pll Trf within
unrealised Gains loss Other Equity
booked in Oct Discussionof
pam i e it willbe
donein Ind tf to Retained
AS16
Eadnings
 Subsequent Measurement for F L Equity

Fin liab Equity

Particulars Acn
Default flatbed
few cases
anemia
by Indas

Initial Measurement Fair Value Fair Value Diff Btw TPGFvof

FL
tÉost Eg Comp tr cost

Tr Cost less from FL Pll less from Eg Comp

Subs Meas Amortised Cost Fair value Not Remeasured

GLATCU Bat it stays on
Initial

Jut paid PIL Ep PIL exp Dpidid

Appropriation
of
profit
IssfromotherEg
Unrealised Realised all PIL other Equity

equity Ésiitifacomered
MCIB
Conceptual OFA

Eg Pret shares issue

e
Equity CEI
FL
He d
E
FL
other Eq He EE
1 EIR Dix
He

PIL
 Ones 2

step Cash flaws FB

ur CF
IOL
1 3
Gok p a outflow coupon
3rdyrend 1017 outflow Prine

i Prine Value of Bond 101 X D F of 3rdyr lot

757315

i'c Present name of Tut payments 80K X AF ofBars lot

198948

ii Fair value of Bond on Day 198948 4757315 PV of FCF EIR

950263

TournalEutor for Jut

UI
as open Jut lot Repay as
31 3.17 98263 95026 80000 965289

IE arent Jut Exp 95026

The FL 95026 IMI IE 9
Retired
FC Ale 80000
RUB 80000
Ques 10
Pref shares Redeemable
I Fl
Ft Di Exp pic
Prine Fe

cash flows Fe
step
CF
Y 480000 inflow
1 3 pa19200 couponoutflow

3rdyr end 720000 prine outflow

prine redeemed prem

Step Fair value of FL Noddation No CFI No level I input

FY TP
480000

Step EIR 181

Steph AT
ur Jut my Repayment as
31 03 46 980000 86400 crazy 547200

Accountant
pref Share Eg Incorrect
Dix Tut Eq CR E Da Incorrect
311031 6 Rectification Entry
To PSC Eg 980000 ca

Pse Eg Alc Dd 980000 Da Tut Div R E 19200

He
Jut Dix PII Alc Ds 86900
Forrectifying this I reversed i

TO Tut Div
RE Alc 19200
TO PSC FL Ale 547200

Record correct values

Ques 17 CPR
Off PrefShares Convertible option holder

u v

Dividend Prine option Holden Savings in Tut

Ii He
p
Nan cumulative
FL Eg
Not Mandatory
He
Not a FL

Step cash flow mandatory FL

ar CF
o 100L inflow
1 5 Notmandatory

shy end 1002 outflow

FY of FL
step
LOOL X DE of 5Myo 71
71,29 862

step Diff Eg
28 70,138

EIR Ft
Step
Step CAT FL pay
ur Opn It Repay Cbs

31 03 72 7129,862 499090 7628952

43 7628952 534027 8162979
XU 8162979 571409 8734388
V5 8734388 611407 9395795
XG 9345795 659205 1.00.00.000 Beforeholder
chooses cash
sharesoption

JI
011641 1 CIB Alc Do 1.0909000
94 Oops e 71,29862
To 41 OOPS Eg 28170,138

31 31 2 Jut Exp 499090

TO FL 4 095 999690

31 31 6 FL 41 CPS ACDA 1.06.06.000

TO CIB 7,001061000

311316 9 095 Eg Alc Dd 28,70 138

TO R E 28,70 138
 Modification

104ns 10or 10 9h
Rn Akitd
loantaken Chetan loangiven
H I
FL FA
Ur
i r

2 r
3 r
4thyr s Repayment X

repayment schedule change

Jut tot 87 modification
RemainsTenure
Ears byis Alling
EMI tr r

Borrowed
 Modification Alling
In case of Borrowed FL
Dateof Mod
Check whether modification is substantial o ng
step

CA of old FL on Date of mod 7 Plot Revisedfuture cashflows including outflow

of Tr Cost
Old EIR X 100
CA of old Fl on Date of moan

less than 107 Mod is Not substantial

pay
y equal to lot or s anodd s substantial
Ignore more than not
thesign

CASE CASE

Mod is Not substantial Mod is Substantial

c.A
step Adj Tr Costfrom old F L stepdoidFlDeRecog
less from CA of oldFL F.V
MewFlRecog He
PVof Rex For
Tr CostAdjfrom CA New Eir
step New E p s
Repaymentsch change Given

Step Tr Cost if any on Moon

step CAT after Moon tot to PIL why Assume it was

incurred on old F L
ar Op Repay cy
catof old FL
ti ti g
step CAT afterMod
New
ur Opm EIR repay cis

NewFL
Fairyawe
2
 Pg33.94 QB
Example No 2

Itoupon lot
Normal Accounting Before Modification Elk Disc x
I 2 Prem X
lot
Ltr Cost X
step cash flows CFI same
as
coupon
Ur
0 lol inflow
1 10 IL a outflow coupon
p
10thyrend lol outflow prine

step Fu of FL NO CFI Norelation No level I input Ft T

10,00 000

Step Diff Btw FY GT P

Step EIR 10

Step CAT FL Tiu Date of inodn

send Opn Jut 101 Repayment as
31 12 0 16,001000 IL IL lol
3112 X1 IOL IL IL lol

3112 2 10L IL IL lol

31 12 3 101 IL IL lol
3112 4 101 12 IL

CA of old Fl on Dateof
Mod i e on or 011 5
 Mod of FL 01 01 X 5 ga
modification Alding Borrowed

Step Check whethed Mod is Subs or not

nnodnGPYofReTFICinT.FI.cost7
CA of old FL on Date of oidEIR.x 100

CA of old FL on Date of mod

IOL E 10,43 474

x 100
101

4.351 Not Substantial as it is less than 107

approx

and Pr of Revised future cashflows find Tr Cost old EIR

q
I
oil'd xs
311219

IF
n
1,00000
50,000
tr cost

161 X D F of 5thyr 101 Prineoutflow

t zero couponoutflow

41 SOK X Def of
Day Tr cost outflow Day Dateof nod

whyAdd T C in FL Oru
161 X 0.621 t 50K X I Thisis Not FY of FL
Here we are computing PY ofRevised futureoutflows
10434740 where Tut Prine Tr Cost All age outflows
 Moan Not Substantial T C treatment confuse

Step Adj Tr Cost from old FL Fuof Rex Fairvalue

EE FL Ale Da 50,000 Future cash Adjof
outflows
10 CIB 50,000 y
Tr Costoutflow
th
Always
Prin2Intoutflow Deduct
TrCost
011011 5 Revised c A of old FL Add

IOL F SOK
950000

New EIR 0101 Xs

Step on
ayy
Tr Cost
Adjustfrom CA
Repay Sch change
Fx PV of FCF EIR
Étoooo Yet

D ILY 21 107
1614 DF of Sthyr 121 161 X D Fof 5thyr lot

907883 993474

Interpolation 101 9934744950000 12 107

993979 f got883
11 027 approx
 at after Thad Date Newer
step
ur end Op Tut 11.021 Repayment cis
31 12 5 104950000 104690 A 1054690
X6 1054690 116227 A 1170917

XY 1170917 129035 7 1299952

X8 1299952 193255 C 1443207

9 1443207 159041 16L

2298 approx
adj

Example 1 WR JYoupon lot

Namal Accounting Before Mod EIR Disc x
I 2 Prem X
107
CamelTrcost x
step cash flows F
Tapan
ur
O lol inflow
1 10 IL a outflow coupon
p
10thyrend lol outflow prine

step Fu of FL NOGI Norelation No level I input Ft T

10,00 000

Step Diff Btw FY GT P

Step EIR 10
 Step CAT FL Tiu Date of inodn
send Opn Jut 101 Repayment as

31 12 V0 16,001000 IL IL lol
3112 X1 IOL IL IL lol

3112 2 10L IL IL lol

31 12 3 101 IL IL lol
3112 4 101 12 IL

CA of old Fl on Dateof
Mod i e on or 011 5

Mean Alding Borrowed

Step Cheek Mod Subs or NOT

CA of old FL on Dateofnnodn
PYofReTFICinTFd.Cost7adEIR.x
100

CA of old FL on Date of mod

10,001000 1 11 13,158
X 00
10100,000
11.32 moon is Subs
approx more than 107

and PV of Rey Fa indirecost Older

9 i i i i i
01 01 75 31 121 5
satis es

r Cost 1,001000
sine
15L
 AFof Furs lot
Coupon 50K X

lot.foutflow
Prine
Tr.CostHILxD.F
t IS2xDFof7Mqr
ofDay
11 13,158

anodd substantial

Step De Recog and FL Recognise New FL

I Firxanes
Amt
carrying

011011 5

Old FL Alc Da 10,00000

IE
TO New F L 958097
D Pll 41903 Fairvalue oiloilxs
I
PY of Rev FCF New EIR
ii
com Fu of FL
sokxAFof7yrs
1it Ct715LxD.F
of7Myr lit
958097

Steps Tr Cost Chenmoan issubs Tof to PIL

PIL Ale Da OFU Tr Cost incurredon
1 00,000
old loan Assume
To CIB 1,001000 1
Old loan Tr Cost Pll
Bahar
H
onlycasewhere tr Cost not adj
with FL ButErf to PIL
Step CAT After Moeen
ur end Opn Mare Jut it Repayment as

31 12 115 958097 105391 50000 1013488

76 1013988 111484 50000 1074971

XT 1074971 118247 50000 1143218
78 1143218 125754 50000 1218972

49 1218972 134087 50000 1303059

20 1303059 143337 50000 1396396
2 1396396 153604 50000
1500007
 Illus 124 LDR Mad Ones borrowed

No chelation No CFI Nolevel Iinput Fu of FL T.PE T.C

Before Mod

Step Cash flows FL

48 CF TC
a 50.00.00.000 inflow 158,70,096 outflow 49,41 29,904

1 5 um As prine is getting repaid in Installments

and Cashflow table Repayment cis

Wended Opr Face value gut 1,94 Prine Tut

31 12 1 50,00 00,000 5,5000,000
10100,001000 5,501001000 40,0 00,000
2 90,0000,000 9,40 00,000 10100100.000 4,4000,000 3000100,000

X3 30,00 00,000 3,3000,000 10,0000,000 3,3 00,000 20,0010900

4 20,0000,000 2,2000,000 10,0000,000 2 20100,000 10,0000,000

XS 10,0000,000 1,10 00,000 10,0000,000 1 10,00000

step Fair value of FL

TPE T C

50100100,000958 70,096
99,41 29,904

FR 11.57 Given
Step
Til Date of Tnodn
Step LAT sure
ur ended Opn Fair value Jut it Repayment cis
31.12 1 49,4129,909 5,6824,939 15.50.00.000 39,5954,843
3112 2 39,5954,843 4,55 34,807 14her 4,4000,000 39,7489,650
olsPrneCFae vawe7 40cr.C3112 2 only If repayment
EI notes why did we take only Tutpayment on 31121 2
Co approached the Bank on last day i e on the date of Repayment This
indicates that co did not have funds to make the repayment of 31 12 42
But Ques mentions that Jut repayment was done i we took
repayment of
only Jut on 31 121 2

Modification of FL 311121 2 Borrowed

Check whethed Thad subs or not

Minot.com'd
Step is
CA of old Flon Date of inod f PV of Rex FCF incl Tr Cost old EIR

CA of old Flon Date of Mod

39,7989,650 A 95,15 22,791 13 591 moan is

X 100
subs
3974 89,650

can Cash flow table For Revisedfuture cashflows

Repayment
Facevalue
urended 0pm ofolsprine Jut 157 Prine Jut
3112 3 400 Ger hor Ger 36er
XY 36er 5 her Hcr 5.4W 32in
Xs 32er 4 ter Ger 4 ter 28W
46 28 er 4 her Kew 4 der 24er
7 24er 3 Ger Cher 3 Ger 20er
Xo 20er Bor hor 3G 16W
16k 2 her Cher 2.4W Ker
xq
Ker 1 our Ger 1.8W 8W
20
for der Leer 1 der her
2
22 her O Ger Cher o Ger Ocr
H
Revised FCF
 Revised FCF Present value old EIR New Eir
Ur Revisedfuturecashflows DF 11 51 DF 157
31 12 3 loer
Xy 9 her

Xs 88 er
V6 8 Ler

7 7 Ger
X8 For

Xg 6 her

20 5.8 er

21 5 Ler

22 4 Ger
111 45,15 PV 40 Cr
22,791
why hoer
when coupon EIR
Face value Fair value

step De Recog old F L Recog New F L

31 121 2 Old FL Alc Dd 39.74.89.650 caddying Amt

PIL All DQ 25 10,350

to New FL All 4010909000 Fair value

p Rey fee NEER
TeamsRevised
Jut coupon 157
Step Tr cost Pll
Modise Noprem No Trc
nine
Jut coupon EIR
Step cat Catternnodn
ar ended opnffairniaff Jut ÉÉ Repayment cis
31 12 3 your Gor 10W 36er
He

only asked till here

 Hint Alwaysrefer int a pass J E
µ
Journal Entries till 31.12.73
Ol Ol XI CIB Alc Dd 500
TO FL SOW

11011 1
Fly pale
Do 58,70 096
58,70096

31 121 1 Int Exp All Da 5,6824,939

TO FL 5,6824,939

31 12 X1 FC Ale De 15 Ser
TOC B 15 Ser

31 121 2 Int Exp All Da 9.58.39.807

TO FL 4,55 39,807

31 12 72 FL Alc Dl 9,4000,000
TOC B 4,4000,000

31 12 2 Old FL Ale Da 39,7489,650

n'Idn PIL Alc Da 25,10350
J E TO New FL 40,00100000

31.12 3 Jut EXP Ale Da 16g

TO FL Ger
31 12 X 3 FL Ale Da 10W
TO LIB tour
Modification

In case of Lended F A ÉIÉcannot changein mini

Mod of FA Foaaowed ka
step
CA of old FA Con Date of mod 100 ka calculation is tended
tep

J
ka full accounting
PV of Revisedfuture cashflows old EIR 110
tep
1 by 10 in FA

IE FA Alc Dd 10

SI Increase Decrease in FA Trf to to Pll 10

c s
PIL Rare cases
Max Based on relation
cases
leg If relation is of Employer
He
Employee

Adjagainst Prepaid EBE

Hi
EE FA
TO Prepaid EBE
step
CAT after Moon
Ill Is 123
 Illus 123 LDR
landed FA Pre
existing relationship Employer Employee
Fy TP Ty PV of FCF EIR

Before Mod
cash flows FA

step
Ur
lol outflow
I 258000 244212 1611

Ones
3
230000 48min
Y 216000
5 208000

F of FA Fv Pv of Fct EIR Relation

step
ur CF DF 121 PY
3112 1 258000
X2 244000
X3
230000
XY 216000
X5 208000
843878 approx

step Diff Btw Fx at P

10.00.000 E 843878
156122 PrepaidEBE w off ones the period of loan i e over Sy

step EIR 12
Step CAT Till Date of Tnodn 3112 2
Jut 121 Éepaynient
Trended Opn Fairvalue cis

893878 101265 2580007 687143

244000 325600
31 12 x2 687143 82457 2000007
n prepay

need Accounting 31 121 2 lender FA

step ca of old FA on Date of moan 325600

Step PV of Revised FCF Old EIR 358673

on Date of inodn

WII PVof Revised future cash flows

I
311121 2 31112173 4
311121
9h 216000 208000
ur CF DF 127 Oden PV
I 3112 3 216000

2 31 12 4 208000
358673

Increase in FA JE
Step
Min FA 3586736 7325600
33073
IE 31 121 2 FA Alc Dd 33073
TO PIL Prepaid EBE 33073
of Relationship
why not PIL coz
step cat after Mod
ur Opn Melanie Jut 127 Repayment Cls
31 12 3 358673 93041 216000 185714

31 12 4 185714 22286 1208000

ouanal Entries FA wheel co Books

01101 X1 FA loan to Emp Alc Dd 843878

w offered Sys asonaloilal
Prepaid EBE All Da 156122 Tenure of loan
Syr
TO CIB 10100,000

311121 1 FA Alc Ds 101265 Prepaid EBE

to Fut Ine 101265 ur Opn aloft sun cis
31 121 1 156122 31224 124898

31112 X1 CIB Alc Da 258000 31 121 2124898 31224 93674

TO FA 258000 31 12 72 Mod 33073 60601
f Ag
fromthisdate wloffoner
3TT12lx1
EBE PLL Aicpa 31224 remaining tenure 24ns ayes
new Balance
Tenure
30301
Prepaid EBE 31224 31 121 360602
aloft over 5 yrs 31 121 4 30300 303007

31 1272 FA Alc Da 82457

TOFutIne 82457

31 12 72 CIB 444000
TO FA 444000
alongwith prepayment
31 12 72 EBECPII Ale Da 31224
TO Prepaid EBE 31224

31 12 72 FA 33073
Alc Dd
inldnj.E.TO Prepaid EBE 33073

311121 3 FA 43041
To Tut Ine 43041

CIB 216000
TO Fg 216000

EBECPIL 30301
TO Prepaid E BE 30301

311121 4 FA 22286
To Int Ine 22286

CIB 208000
TO FA 208000

EBECPIL 30300
TO Prepaid E BE 30300
 regret Fa No relationship

step CF CFA
Ur CF
0
Ler outflow 10h outflow 2 ler
1 2 Ot coupon
2ndyrend 2

4crCinflow Step
Noddation NO CFI No level I input
F.v of pot
Caddie in caseof Fa
F t c
of FA
Ty
Lert 10h

ECR 6.97 Given

step

till Date of moan

Step cat
wend Opn Jut 6.91 Repay Cls
31.3.18 2.10.00 000 14,49000 2,24 49,000
planDate
nod Alding lender FA
31.3.18

Step CA of old FA on Date of Mod 2,2449,000

Step Pll of RevFCF Old EIR 205,79981
2 Lux D F of lyr 6.91
in FA 18 69,019
step Decrease in FA

IE PIL All Da 1969,019 Moderation pie

TO FA Alc 18,69019

step at Catter moan

op Iut 6qy Repay

5,3g 405,79gg 14,20 019 2,20 00,0007

J E

1 4 17 FA Alc Dd Ler
TOMB Ler

14117 FA Alc Da 10L

He TOUB lol

1 3 18 FA Alc DO 14 49,000
To Tut Inc 14149,000

31 3 18 PIL All Da 1969,019

III TO FA Alc 18.69.019

31 3 19 FA Alc Da 14,20019
TO Tut Inc Ale 14,20 019

31 3 20 CIB All Dd 2 20,001000

TO FA 2.20.00.000
Ques 19 WR Mod FA Relationship Employer Employee
Before Mod

step OF CFA
Yr CE
o 5 outlaw
1 3 0 of coupon

3rdyr S2 inflow Prine

FY of FA FV Prof Fa EIR Relation

step
5LXDFof3rdyr
431919 5j e
Step Diff Btw FY UTP
5000004931919
68081 Prepaid EBE aloft over tenure of loan
ie 3yrs

Steph EIR 57

Step 5 CAT till Date of Madh

Yr ended Opn Jut 57 Repayment Cls
31 31 2 931919 21596 453575

32
31
3 953575 22676 976191

Dateof nod
Moan Alling lender FA 311031 3

Step CA of old FA s 976191

Step PVof Rex For Old EIR

E i i 1 I
1041 1 311031 2 31131 3 3131 4 31 7
gingdate 35,4 31
3yrs u

2.517 D F of4th yr 2 51
Inf PY
205676
51

680817dam
Step u in FA us aloft
47619142056763 27055

JI Ply Prepaid EBE Ale 270575

TO FA All 270575
He

Asper ICAI PIL 270575

TO FA 270515

step cat latter noun

ur ended Opn MAN Jut 51 Repayment cos
31 31 4 205676 10284 215960
XS 215960 10798 226758
6 11338 238096
226758
47 238096 11904 250000
 J E Conly asked for initial Recog Mod Entry

on ou x1 FA Ale Da 931919
Prepaid EBEAKDI 68081
TO CIB 5,001000

Ideal Entry
Aster AI Pk 27055
31 31 3 Prepaid E BE Alc Dd 270515
TO FA 270515
To FA Ale 270g
 Regular way purchase sale of FA leg Sharespurchased sold in stock
market generally takes 1
Trade date Settlement for settlement 121
Date shares order
Alding
É t 03 04 23
placed on
01104
232
settledon
03 09 23
NoteDoo has option to record the sale purchase
on Trade date settlement date
2 Co should follow the opted method consistently

Illus 105

Off Assume was deducted on 09 011 1

money
How much money was deducted
lol ofcourse the price which was
no.ge quoted on the date of
placing the order will be
deducted 102

CASE A Co chooses trade date Accounting FA will berecordedon Tradedate

oilon X1 FA Alc Dd 101

To DX Payable FL 102

09 01 41 Payable Ale Da 101

TO UB 10L

outa X1 FA
He
Fair value u

19454 Futon R NR FVTPL

300kunrealised FA Alc DA 05 FA Alc Dor Ost
gain To PIL 0.5L
To OCCRIMR 0.5L
CASE B Settlement date Alding FA recorded on settlement date

oil on Xl No
entry

04 01 71 FA Alc Da lol
TO UB Ale 10L

04 011 1 FA
Adn Filton R NR FITPL
FA Alc DA 05 FA Ale Da 0.5L

To OCCRIMR 0.5L To PIL 05L

 AM ApplyImpairment provisions
Impairment of FA
v
Fxtocek me Imploss if any Erf to Pll

Trf to Pll
Imploss Fut pl s not read to As loss already
applyImpairmentpron being trf to PIL

Computation of Impairment loss lossAllowance

v

2 Methods

12 month Expected credit lifetime Expected credit

loss method loss method
12month Ecl
lifetime ECL
Hi
FA risk is less FA disk is mode
i e timely
repayment are lie timely repayments are not read
see'd I No risk less disk
i Risk is higher

OE losses expected from FA in off losses expected from EA during

upcoming 12months are computed

the full life of FA is computed

loss Bifurcation in case of FA measured at FuTock

Egf FA CFYTOCI Book Value 100

H by Eto
Fair value go
cancer
3 77
Aven Fair value loss Given
Imp loss
É ILC pic Alc Dd 3
Fuloss Oct AleDa 7
TO FA AK 10
 Illus 50 text Book

Illus 57 total loan Ca 500000 2000 loans

as anger'tient TH
Group 1000 C 4200 200000
GroupY 1000 CU 300 300000

total Gross
Default hunt
loan
Cross
c a
Aof
Default loan
P of 1095 lossRate
Given
111 1 100
Group X 4 200 800 600 0.3
81 100
y 600 950 0015
300 3888100

Illus 52 Text Book

Quest 151031 1 FA FUTOCI R 1000

To CIB 1000

31 31 1 IL PIL ALC Da 30

Floss OCI R DQ 20
TO FA AIC 50

CA 31 3 1 FA 950
011041 1 Bank Ale De 950 SalePrice No Profit losson sale
TO FA 950 C e.n
sale of FA
offoulx Reclassification of
previous lossfrom Oct to PIL
PIL All Dd 20
TO OCI R 20
 Derivatives 718 appreciate depreciate
Hi

730 gg
Defn lol

Value changes due to an underlying

No od little investment initially N

Future settlement

Alding for Derivative contract

measured
through FXTPL
 Illus 118 LDR

alo X1 Noentay
Bls 313 1

31 3 X1 s PIL Ale Da 25000 DFL 25000

TO Deaivativefinancial liab DFL 25000

30106 X1 DFL Ale Da 10000 135 30 06 x

TO PIL lossReverse 10000 DFL 15000

zola x1 DFL All Dd

DFA Alc Dd 12000 Bls as at 30.09
TO PIL AC 27000 my DFA 1200

to sell Mkt price

31 12 41 CIB Alc Da 820000 766 8 13 20,000
Gross Settlement
Pll Ale Da 52000
To CIB 20000 x 768 8 13.60.000 Purchase promised rate
TODFA Reverse 12000

Being Derivative contract settled

hint Met 1095

25000310000 27000 52000 40000
2681 E 8661 x
20000
 Illus 120 Option
I e
written putoption Can but
He
Right to right to
Obligation to Buy
Buy sell
Holder writer
He Holder whiter
Rightto obligation t o
to sell
Bay Right Obligation
to
to
sell Bay

Olla X1 no
entry

3103 71 Pll Ale Da 25000 BIS 313

DFL 25000 DFL25000

BIS 30.06
30 06 41 DFL AIC DO 16000 DFL 15000
TOPIC 10000

30109 X1 DFL ALDS 15000 131530.09

PIL 15000 DI

31 12 41 CLB Alcoa 20000776618 1320000

PIL Ale Da 40,000

TO CIB 20000X 7681 13.60.000

 Embedded Derivatives

Guns Bay
eg Gangan us
co Kachra
Seth
g
Indiana v

Payment in 7
3rdcurrency

I
Derivativeportion

Embedded Derivatives
te te
Hoftontract Derivatives
contract

whether they are closely aerated

co purchasesfrom Indian co purchasesfrom

moan YES no us co a payment is in
us co Upayment is He
3rdcurrency
either in For No needto separate
do separate Alling
of Host contract
Alling 2 derivativecontract
 Illustration 100 LPR
Embedded Derivatives Not closely related
he v
Hostcontract Derivative contract
I
Buy salad Panel Cusp
To settle in
H
Delivery after 6months
i e 301061 1 BY 27 No rate fixed on
ABG Books E Day toBuy
9
we could have
locked the Bay
oilon X1 No
entry price on Day for
30.06 7651
30106 X1
Gm fund rate
Salad Panel Alc Dd 73250 million
Record 3250 million
Rate
To Payable All
Day Delivery 50 M X E651
Dayforward Derivative's Alling
rate
alot x1 No
2851 entry

OFF 301061 1 PIL Alc Dd E 50m

why DFL
we could have locked TO DFL E 50m
Buy 7651 But we
50 M X
did Not 2651 7661
now we have toBury
E 661
loss of F1 301061 1 DFL Ale Da 50m
TO Payable 250m

301061 1 Payable Ale Da 3300 50 M X E 661

I3
not pass
this poop me 3zoo
3250 50
 Illus 119 LDR Embedded Derivatives

v u

Host contract Derivatives contract

r
Sen Equipments
after 6months to sell
to
ie on 301061 1
why sell on sale ofequip we wi
u
receive 2 I will sell
Day Delivery find it as
my currency is E
rate Sale Book 7551 we could have
locked the sell
price at 7551
oiloilxi Mo
entry
I Day 6mfeed
date
301061 1 Retable Ale Da 5501
TO Equipment Ale 550h Dedicative Accounting
101 X 7551
oiloilxi No entry

C
31103 X1 PIL Ale Da 71002
why loss
DFL FIOOL
we could have locked
LOL x 451 755 8
the sell price at 7551
adaate finddate
But we did Not 30.06
30.06
now the rate is
30.06 1 DFL Reverse E cool
451 IOLX
DFA E SOL
55 76
TO PIL FISOL

30.06 X1 Retable Ale Do 2501

TO DFA ESOL
301061 1 CIB 6001
Ent to Reable ooo
10 x 601
550 50
Illus 102 waited 3 line concept
p
Embedded pedixative

Host contract Derivative Contract

He

Purchase machinery to Bly

On 31 121 1 we could lock
He Buyprice
Day Del Day Fuld Rate 767181
But we didnot
76781

EE oglog x1 Noentay
mm
30 09 71 DFA 3.00.000
31 121 1 machinery PPE Alc Dd 678L TO PIL 3,001000

TO creditors 678L 8101 767.5 767.8

101 767 8 8
31121 1 DFA 500,000
TO PIL 5100,000
101 X E 678 67
8,0 000 El 3,09000
He He
Ason date already
Booked

31 12 41 Creditors Alc Da 8,001000

TODFA Remorse
800,00

Extra Entry Creditors All Da 670L

TO CIB 670L
 How to differentiate Btw Derivatives Q Emb Derivatives O
i Frying
Nohost contract Host contract
3rdcurrency

Kum
to Risk mitigate Dubai payment
Hedge Accounting Nikhil after Gm
T
v

Cashflow
hedge
Irwin
I classes
Here we will hedgefuture incoming cashflows

s
Alling
1
Hedge contract Remeasured through on Cr

Ones 14 CUR
Cash flow Hedge
I
4
Host contract Hedge contract
Hi
Del Day SpotRate ts

Sell Inventory afterGm

4epgIts.a
i e 30109 Hedging Done
v

ai 1041 1 No Because on selling Inventory

entry
we will receive sell to

30 091 1 Bank Traderelable me p pyo convert into E

To sale ofInventory 77200
Rexfrom op
100 X 7721 79 Asper ICAI
 Hedge Contract Adding

oilouta No
entry Yeh gain
agar hota
toh bhi after 3 months
301061 1 s DFA Hedgecontract 720027197 hoga i e on 30109
To PX Oct R72002 2197 discount
gainby3m
100 X 76 7791 2200 7197
Gt a i e l 57 1 015
p per qtr

301091 1 DFA Hedgefuture's contract 2303

TO Oct R 7303
100 x 76 271 750067 19,7 7303
d
ason Already
Here've date Booked
took
7711 instead
doneby
of272 as
ICAI

301091 1 Bank Ale De 500

TODFA future contract 500

51700 76
30 691 1 OCI R Alc DS 500 760
0error
TOPIC Alc 500 conceptual
Extra
Reclassify
gain of Oct R to PIL spo
Rat
sque
He
pm
Doesno
77000
match
IFTow to differentiate Between Embedded Derivatives Hedge Aleing
C u

Host contract is not Host contract is hedged

hedged
3rd currency involved No 3rdcurrency involved

Difference in Accounting
I
to o
Embedded Derivatives Cashflow Hedge Accounting
to u d 1
Host Host Hedgecontract
Deaivaticentray
Delivery after Gm 1
Gm feed Price is not locked DeliveryDay Price is locked
Day
rate Remeasure thru pie spotRate Remeasure thmocI

Settlement Date
Reclassify OCI R
to PIL
 Financial Guarantee Formal concepts concept notes

loan Prine locrore

Vikas Itd Dena Bank
a 18Y.p.a Tenure 5am
É
guarantee loan
Vikas's
Guarantor for

gut without guarantee

127 Jut with guarantee

Fin Guar Alling

H
Akita gave guarantee
Aiding is done in the Booksof AKHdfor this Fin Guarantee

FG is Booked at its Fair value on Day

gutwithout
guarantee
Benefit toVikas
ar Jut 181 Jut 121 Savings
D py

I 1 den 1 der O Ger

2 lifer Iker O Ger

3 1 Ber ther O Ger

y lifer l her O Ger

5 1.8er ther O Ger

1,8763,026
 Initial Measurement FA Fitly
J E in the Books of Ak Hd

and
PIL Alc Dd 1,8763,026
TO FG 1,8763,026

If All charges commission to Vikas

CIB Ale Da XX
To Pll Comm XX

Assume in above Vikas Subs

eg Ak Parent n

Day
PIX Inustin Subs 1,87 63,026
TOFG 1,8763,026

Yet No commission in this case as in max cases parent wont charge

commission to Subs
Subsequent measurement of F G i e on Each trend

Higher of
PLAT
nwhyhighe
Amortised Amt of FG on yr end Amt as per pomozy
Aan convertism
He
Jidr liab
zyadahat
Princip Ant Ocr X 50.00.000 snow that
x
ProbfDefault It
Always given in given
Ques

Fountain Notional y dueto

guarantee

ur open It ER M Repayment Yas

I in zoa 3377,345 60100,0007

In reality the above Jut Repayment is not occurring this is all

notional Just to compute the values

In Saks Moas Mort in

end FG All Dd 26,22 655
FG will be trf to Pll
TOPIL 26,22 655 He

18763,026 y 1,6140,343 irrespective ofrelationship

 Illus 127 LDR

Relation Parent Subs

Fair value of F G on Day
ar It without Guarantee ht.P
I 1,10 000 80000 30000
IutyithIuaranteeCmsavinarsDi
2 1,101000 80000 30000

3 1,10 000 30000

73311

In theBooks of Sunita
II
PI Inst in Subs Ale Da 73311
I
01041 1 Moon

TO FG 733

3131 2 FG 21936 BIS 3103 2

TOPIC FG 73311
21936 12193635375
73311 57378
131 3 FG 21375 BIS 3103 3
TOPIC 21375 FG 57375
5137 5630000 121371,30000
31 03 72 311031 3
Subseq Meas
a
Amortised Aunt Cantasper Aan 51375 27026
Prine Hut x Prob of Default 10000 30000
IOLXIT IOLX 37

CAT
ur open Jut EI Repaysamings
as
3103 2 733 300007 51375
8064
3103 3 51375 5657 30000 27026
31 03 4 27026 op wont change not asked for3rdyr
Ques 6 LDR
BIS Extract 31 312 PIL Extract

If Assets Finance Income

Fin Assets Gainonfutrateoption 5250

Jut Rateoption 15250 Futon 61 Deb EIR 12000

6 Deb 1530g
Instin Eq Shares 187500

Interest Rateoption
Day FA Option Alc Dd 10.000 Greed FA 5250
TOMB 10,000 313 2 TOPIC Gain 5250

61 Deb

Day FA Alc Da 150000 Fur apn gut É Repay cis

TOMB 156000 1 150000 12000 9000 153000

Greed FA 12000
TO Fut Ine 12000

CIB 9000
Lend
RFA 9000

Shares Purchased Futplleutougy'd

01 10 3131 2 Inustin Eg shares 12500
11 Inustin Shares FA Da 175000
TO CIB TOPXIOMROEY 12500

50000shares x 73.53 Solex 3 75 3.5

so Notshown
ICAI in extract
above
 Small conceptual Ques Just 1 Read
FI 150 ques
CAR Class write a Practice
151St

FI Concepts Focus on Relevant concepts only

Revision lecture Not able to recall

FI any

FI
Earp