MAY 2010 - Final (New Course) Group 1 - Paper 1

Comforts Ltd. granted Rs. 10,00,000 loan to its employees on January1, 2009at a concessional interest rate of 4% per annum. Loan is to be repaid in fiveequal annual instalmentsalongwith interest. Market rate of interest for suchloan is 10% per annum. Following the principles of recognition and measurementas laid down in AS-30-'Financialinstruments:Recognition and measurement',record the entries for the year ended 31st December,2009for the loan transaction,and also calculate the value of loan initially to be recognised and amortised cost for all the subsequent years. The present value of Re.1 receivable at the end of each year based on discount factor of 10% can be taken as :

...

Year end

1                                  0.9090

2                                  0.8263

3                                  0.7512

4                                  0.6829

5                                  0.6208