Alpha Ltd., whose functional currency is the Indian Rupee (₹), recently acquired S Ltd., a company that had been preparing its financial statements…

Alpha Ltd., whose functional currency is the Indian Rupee (₹), recently acquired S Ltd., a company that had been preparing its financial statements under the previous GAAP. On transition to Ind AS, Alpha Ltd. is required to prepare an opening Ind AS balance sheet for S Ltd. During the transition exercise, Alpha Ltd. identified that S Ltd. had entered into certain derivative contracts which had not been recognised as assets or liabilities under the previous GAAP. After considering the requirements of Ind AS 101, Alpha Ltd. concluded that the derivatives are required to be recognised in the opening Ind AS balance sheet because Ind AS requires recognition of such assets and liabilities. Following the transition adjustments, Alpha Ltd. undertook construction of a qualifying asset. To finance the construction, on 1 April 20X1, Alpha Ltd. borrowed US$ 1,000 at an interest rate of 4% per annum to finance the construction of a qualifying asset. Interest is payable annually on 31 March. Alpha Ltd. could have borrowed an equivalent amount in its functional currency at 12% per annum. On 1 April 20X1, the exchange rate was US$ 1 = ₹ 40. The exchange rate on 31 March 20X2 was US$ 1 = ₹ 50. During the following year, the exchange rate on 31 March 20X3 fell to ₹ 44 per US$ 1, and the loan continued to remain outstanding. Analyze the transactions mentioned above and choose the most appropriate option in questions 7 to 12 in line with relevant Ind AS: