MTP Oct 2020 ANswers
MTP Oct 2020 ANswers
MTP Oct 2020 ANswers
At origination
Bank A/c Dr. ` 10,00,000
To Loan from KK Ltd. A/c ` 8,10,150
To Equity Contribution in KK Ltd. A/c ` 1,89,850
During periods to repayment- to recognise interest
Year 1
Interest expense A/c Dr. ` 81,015
To Loan from KK Ltd. A/c ` 81,015
On repayment
Loan from KK Ltd. A/c Dr. ` 10,00,000
To Bank A/c ` 10,00,000
In the consolidated financial statements, there will be no entry in this regard since loan and
interest income/expense will get set off.
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*Specific borrowings of ` 7,00,000 fully utilized on 1 April & on 30 June to the extent of
` 5,00,000 hence remaining expenditure of ` 1,00,000 allocated to general borrowings.
The expenditure rate relating to general borrowings should be the weighted average of the
borrowing costs applicable to the entity’s borrowings that are outstanding during the period, other
than borrowings made specifically for the purpose of obtaining a qualifying asset.
Capitalisation rate = (10,00,000 x 12.5%) + (15,00,000 x 10%) = 11%
10,00,000 + 15,00,000
Borrowing cost to be capitalized: Amount
(`)
On specific loan 65,000
On General borrowing (` 3,75,000 × 11%) 41,250
Total 1,06,250
Less: Interest income on specific borrowings (20,000)
Amount eligible for capitalization 86,250
Therefore, the borrowing costs to be capitalized are ` 86,250.
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*Note: Capital reserve given in the Note 1 of the question is assumed to be brought forward from
the previous year. However, alternatively, if it may be assumed as created during the year.
1. Deferred Tax ( ` in lakh)
Deferred Tax Asset 700
Deferred Tax Liability 400
300
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The Liability under Customer Loyalty programme at the end of the year 20 20-2021 will be
` 7,39,493 – ` 5,54,620 = ` 1,84,873.
(e) In the year 2021-2022, the merchant will recognize the balance revenue of ` 1,84,873
irrespective of the points redeemed as this is the last year for redeeming the points. Journal entry
will be as follows:
Liability under Customer Loyalty programme Dr. ` 1,84,873
To Sales A/c ` 1,84,873
(On redemption of balance points)
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