It is quite common where an entity provides some amounts as Share Application Money for the sake of allotment of such shares in future. The amount in substance will be advance given for such investment and the entity is waiting for the same to be converted into an Equity in future. Now, there was a query which has been sent to the Expert Advisory Committee (EAC) of ICAI to know about the treatment of such amounts to be shown in the books of accounts and its impairment etc.
- Whether share application money is to be considered for making provision for diminution in the value of investments even though the shares for the same are yet to be allotted ? -
- Whether share application money, in respect of which shares are allotted subsequent to the end of the financial year but before the adoption of accounts of the company, should be considered as share capital for the purpose of making the provision for diminution in the value of Investments? -
- For making provision for diminution in the value of investments, whether the company can consider the fact that the revaluation of assets is under progress and that the fair market value of assets would be higher than the historical value/cost of assets?
Reader can refer this opinion in detail by using this link http://resource.cdn.icai.org/33930eac23624-10.pdf related to “Opinion finalised by the committee on 21.5.2013 and 22.5.2013” In this case EAC has given the opinion of which relevant text is reproduced here “……. since the money would not be refundable to the company, share application money pending ....................................For further read please refer http://gyanifrs.com/2017/02/share-application-money-pending-allotment-ind-as-ifrs/
No comments:
Post a Comment