XYZ Ltd. is a first-time adopter of Ind AS. The company prepares its opening Ind AS Balance Sheet as at 1 st April, 2025. Under previous GAAP, the…

CA Final · Financial Reporting · PYQS · May 2026
XYZ Ltd. is a first-time adopter of Ind AS. The company prepares its opening Ind AS Balance Sheet as at 1 st April, 2025. Under previous GAAP, the company had recognized a provision for a lawsuit of 10 Lakhs as at 31 st March, 2025 based on the best estimate available at that time. On 15 th April, 2026 (before the approval of financial statements), the lawsuit was settled for 15 Lakhs. This information was not available on the transition. date. How should this be reflected in the opening Ind AS Balance Sheet?
(A) Adjust the provision to 15 Lakhs in the opening Ind AS Balance Sheet.
(B) Keep the provision at - 10 Lakhs in the opening Ind AS Balance Sheet.
(C) Adjust the difference of 5 Lakhs in Retained Earnings.
(D) Reverse the provision and recognize the actual liability of 15 Lakhs.

Suggested Answer and Working Notes:

Correct Answer: Option (B)

Keep the provision at - 10 Lakhs in the opening Ind AS Balance Sheet.

Topics: Ind AS 110

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