RECOMMEND the correct accounting treatment (initial and subsequent) as per Ind AS 109 of the loans given to employees at concessional rate.

In the given case, The Elites has provided loan at 5% p.a. whereas market rate of interest is 10% p.a. This represents that the loan is provided at off-market terms. Hence, the loan will be recognized at a fair value. Transaction price of providing a loan is 10lakhs. However, the fair value of loan is 8.76 lakhs as shown in table below: Year Cash flow (₹) PV @ 10% PV (₹) 2025-2026 2.31 0.909 2.10 2026-2027 2.31 0.826 1.91 2027-2028 2.31 0.751 1.74 2028-2029 2.31 0.683 1.58 2029-2030 2.31 0.621 1.43 Total 11.55 8.76 The difference between transaction price and fair value is 1.24 lakhs (10lakhs -8.76 lakhs). In the stated case, The Elites has provided a loan of 10lakhs having fair value of 8.76 lakhs, it reflects the benefit provided to employees. Also, The Elites Ltd has to pay - 1.24 lakhs excess amount which has been amortized over the period of loan. In view of Para B5.1.2A of Ind AS 109, accounting treatment should be as follows: Initial Recognition: Financial Asset at fair value of 8.76 lakhsPrepaid Staff Expenses - 1.24 lakhs Subsequent Recognition: Interest @10% p.a. will be accrued on the outstanding balance of financial asset every year till completion of the loan account.Prepaid staff expense to be amortized in Statement of Profit and Loss over the tenure of the loan.