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Here it is the 1. (a) question that is On April 1st, 2020, Star Limited has advanced a housing loan of ₹ 15 lakhs to one of its employee at an interest rate of 6% per annum which is repayable in 5 equal annual installments along with interest at each year end employee is not required to give any specific performance against this benefit. The market rate of similar loan for housing finance by banks is 10% per annum.
The account of the company has recognized the staff loan in the balance sheet equivalent to the amount of housing load disbursed i.e ₹ 15 lakhs. The interest income for the year is recognized at the conducted rate in the statement of profit and loss by the company i.e ₹90,000 (%6 of 15 lakhs). Analyze whether the above accounting treatment made by the accountant is in compliance with the relevant Ind AS’s. If not, advise the correct treatment of housing loan, interest and other expense in the financial statements of star limited for the year 2020-21 along with workings and applicable Ind AS’s.
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