1. The document provides reconciliation of equity and total comprehensive income from previous GAAP to IFRS as of April 1, 2010 and for the year ended March 31, 2011 for XYZ Ltd. 2. Significant adjustments include higher property, plant, and equipment, recognition of intangible assets and financial assets at fair value, inclusion of overhead in inventory, and recognition of pension liabilities and deferred taxes. 3. Total equity increased by Rs. 538 lakhs and total comprehensive income decreased by Rs. 111 lakhs primarily due to the above adjustments.

1. CASE STUDY 1: Reconciliation of Equity and Total Comprehensive Income
IFRS requires the first - time adopter to disclose reconciliation of equity and total compreshensive income showing all
material adjustments made. The example below describes how it may be presented. This reconciliation is made on the
transition date. Thus if the reporting date be 31st March,2012 the same would be prepared as of 1st April, 2010.
Reconciliation of XYZ Equity as at 1st April,2010
Effect of
Previous
Note Transition IFRS
GAAP
Particulars to IFRS
Property,plant and equipment 1 4150 50 4200
Goodwill 2 610 75 685
Intangible Assets 2 104 (75) 29
Financial Assets 3 1735 210 1945
Total non - current Assets 6599 260 6859
Trade and other receivables 1855 0 1855
Inventories 4 1481 200 1681
Other receivables 5 167 216 383
Cash and cash equivalents 374 0 374
Total Current Assets 3877 416 4293
Total Assets 10476 676 11152
Interest bearing loans 4698 0 4698
Trade and Other payables 2062 0 2062
Employee Benefits 6 0 33 33
Restructuring provision 7 125 (125) -
Current Tax Liability 21 0 21

2. Deferred tax liability 8 290 230 520
Total Liabilities 7196 138 7334
Total Assets less total liabilities 3280 538 3818
Issued Capital 750 0 750
Revaluation Surplus 3 0 147 147
Hedging Reserve 5 0 151 151
Retained Earnings 9 2530 240 2770
Total Equity 3280 538 3818
Notes:
1. Depreciation was influenced by tax requiremens under the previous accounting standards but under IFRS represents
the useful life of assets. The cumulative adjustment increasing the carrying amount of plant, property and equipment by
50.
2.Intangible assets under previous accounting standards included 75 for items that are transferred to goodwill because
they do not qualify under the IFRS to be recognised as Intangibles.
3.Financial assets are all classified as available - for - sale under IFRS and are carried at their fair value of 1945. The
resulting gains 147(210, less deferred tax of 63) are included in the revaluation surplus.
4.Inventories include fixed and variable production overhead of 200 under IFRS which was excluded under the previous
accounting standards.
5.Unrealised gains of 216 on un - matured forward foreign exchange contracts are recognised under IFRS. The resulting
gain of 151(216 less related deferred tax of 65) are included in hedging reserve.
6. A pension liability of 33 is recognised under IFRS which was not recognised under the previous accounting standards
where it was recognised on cash basis.
7.A restructuring provision of 125 relating to head office activities was recognised under previous accounting standards
but does not qualify for recognition under the IFRS.
8. The above changes increased the deferred tax liability as follows:
Gross Tax Net
a. Revaluation reserve 210 63 147
b. Hedging reserve 216 65 151
c. Retained Earnings 342 103 239
Increase in deferred tax liability : 230
9. Adjustments to retained earnings are as follows:
a. Depreciation (note 1) : 50
b. Produciton overhead (note 4) : 200
c. Pension liability (note 6): (33)
d. Restructuring provision (note 7) : 125
342

3. e. Tax effect of the above 103
Total Adjustment to retained earnings 239
Reconciliation of Total Comprehensive Income of XYZ Ltd. for year ended 31st March, 2011
Effect of
Previous
Transition IFRS
GAAP
Particulars Note to IFRS
Revenue 10455 - 10455
Cost of Sales 1,2,3 (7,642) (48) (7,690)
Gross Profit 2,813 (48) 2,765
Distribution Costs 1 (953) (15) (968)
Administrative expenses 1,4 (1,421) (150) (1,571)
Finance Income 723 - 723
Finance Costs (951) - (951)
Profit before tax 211 (213) (2)
Tax expense 5 (79) 64 (15)
Profit(Loss) for the year 132 (149) (17)
Available for sale financial assets 6 - 75 75
Cash flow hedges 7 - (20) (20)
Tax relating to other comprehensive
income 8 - (17) (17)
Other Comprehensive Income - 38.5 38.5
Total Comprehensive Income 132 (111) 22

4. Note to reconciliation of total comprehensive income
1. A pension liability is recognised under IFRS, but was not recognised under accounting standards. The pension liability
increased by 65 during the year which caused increases in the cost of sales(25), distribution costs(15), and
administrative expenses(25).
2.Cost of Sales is higher by 23 under IFRSs because inventories include fixed and variable production overhead under
IFRSs but not under earlier accounting standards.
3.Depreciation was influenced by tax requirements under previous accounting standards, but reflects the useful life of
the assets under IFRS. The effect on profit for the year is not material.
4. A restructuring provision of 125 was recognised in the previous accounting standard on 1st April 2010 but did not
qualify for recognition under IFRS until the year ended 31st March 2011. The increases administrative expenses for the
year 2010-11 under IFRS.
5. Adjustments 1-4 result in a reduction of 64 in deferred tax expense.
6. Available for sale financial assets carried at fair value under IFRS increased in value by 90 in the year 2010-11. The
entity sold these assets during the year realising a gain of 20 in the profit and loss. On the realised gain 15 had been
included in the revaluation reserve as at 1st April,2010 and is reclassified from revaluation reserve to profit and loss.
7. The fair value of forward foreign exchange contracts that are effective hedges of forecast transactions decreases by
20 in the year 2010-11.
8. Adjustment 6-7 lead fo an increase in 17in deferred tax expenses.
ADJUSTMENT NO 5 Increase in
Deductible
Expenses
1 Pension Liability 65
2 Cost of Sales 23
3 Restructuring Provision 125
213
Applying a tax rate of 30% on above 64
ADJUSTMENT NO 8 Available for Sale Financial Assets 75
Cash flow hedges -20
55
Applying a tax rate of 30% on above 16.5