Hans Ltd. is engaged in the business of manufacturing of automotive accessories with its registered office in Bhiwadi and is listed on the National…

Hans Ltd. is engaged in the business of manufacturing of automotive accessories with its registered office in Bhiwadi and is listed on the National Stock Exchange. It also owns a chain of retail stores across 15 different locations in the twin cities of Delhi and Noida. Following are the brief facts about the transactions entered into by the company for which accounting advice is sought by the Accountant of Hans Ltd. from you: (i) As per Company's policy, on 1 st April, 2023, Hans Ltd. granted 15,000 share options each to each of its 3,000 key employees. The options are due to vest on 31 st March, 2027 provided that the employees remain in employment as at 31 st March, 2026. On 1 st April, 2023, the directors of Hans Ltd. estimated that 80% of the key employees would satisfy the vesting conditions. However, actual employee turnover was such that this estimate was revised to 82% on 31 st March, 2024 and 92% on 31 st March, 2025. On 1 st April, 2023 the fair value of each share option was estimated at 3. The estimate was revised to 4 on 31 st March, 2024 and 5on 31 st March 2025. Hans Ltd. correctly recognised this transaction in the financial statements for the year ended 31 st March, 2024 but, however, the company did not make additional adjustment in the financial statements for the year ended 31 st March, 2025. (ii) On 1 st September, 2024, a local statute was passed which necessitated Hans Ltd. to undertake modifications to its automotive accessories to enable reduction of harmful emissions. The modifications should have been completed by 31 st January, 2025 at an estimated cost to Hans Ltd. of 50 lakhs. As a matter of fact, by 31 st March, 2025 none of the accessories had been modified although they continued to be used. It is quite likely that Hans Ltd. will be fined 3 lakhs per month for the illegal use of the accessories. The directors of Hans Ltd. intend to carry out the modifications during the year to be ended on 31 st March, 2026. They expect that a penalty will become payable very shortly as legal action has commenced against Hans Ltd. (iii) On 1 st April, 2024, Hans Ltd. issued preference shares for a consideration of 10 lakhs to an investor. The holder has an option to convert these preference shares to a fixed number of equity shares of Hans Limited anytime upto a period of 3 years. If the option is not exercised by the holder, the preference shares are redeemed at the end of 3 years. The preference shares carry a fixed coupon of 6% per annum which is payable at the end of every year. The prevailing market rate for similar preference shares, without the conversion feature, is 9% per annum. (iv) On 1 st April, 2024, Hans Limited entered into a loan agreement with a bank. The loan is repayable in five equal annual instalments starting from 31 st March, 2027. One of the loan covenants is that an amount equivalent to 50% of the loan amount should be contributed by the promoters by 28 th February, 2025 failing which the loan becomes payable on demand. In anticipation that the company may not be able to mobilize the promoters' contribution by due date, it approached the bank on 15 th January, 2025 and got the compliance date extended up to 31 st May, 2025 for getting promoters' contribution. (v) Hans Limited entered into a transaction to purchase 1,000 grams of silver on 15 th January, 2025. The transaction provides for a price payable which is equal to market value of 1,000 grams of silver on 15 th April, 2025 and shall be settled by issue of such number of equity shares of Hans Limited as is required to settle the aforementioned transaction, at a price of 100 per share on 15 th April, 2025. (vi) On 1 st May, 2024, Hans Limited acquired 100% of the equity and voting rights of MNO Limited, a subsidiary of a property investment group. It paid 600 lakhs in cash and issued 1,00,000 Equity Shares of the face value of 100 each at a fair value of 185 per share to the selling shareholders of MNO Limited. MNO Limited owns three investment properties. Fair values of the said properties are estimated to be 700 lakhs. The properties are single tenant industrial warehouses subject to long term leases. The leases oblige MNO Limited to provide basic maintenance and security services, which have been outsourced to third party specialist providers. The administration of MNO Limited's leases was carried out by an executive of its former parent company on a part time basis but the said executive does not transfer to the new owner. The financial statements for the year ended and as on 31 st March, 2025 are still under finalization.