Deferred Tax in case of Compulsory Convertible Debentures

Prakash Gehani sir,

(i) whether the above deferred tax asset (DTA) is added to other equity at the time of initial recognition of issue of CCD.

(ii) if so whether while taking back of DTA in each year for 5 years, whether such removal is again routed through other equity or through P&L.

Please clarify.

Prakash Gehani sir,
Let us take on simple example on issue of CCD-
No. of Compulsory Convertible Debentures 1000 (face value 100).

Rate of Interest - 9 % Market Rate - 10%

To be converted after 5 year for 250 equity shares.

Now as per Ind AS 109

Financial Liability- 30,000 (Assumed Figure)

Equity - 70,000 (Assumed figure)

Now-

Financial liability- each year unwinding of interest is added and actual cash outflow of interest is deducted so that at the end of 5th year financial liability is 0 (ZERO).

Now balance in equity at the end of 5th year is Rs. 70,000

How the same is reinstated to Rs. 1,00,000 as at the end of 5th year, equity shares are issued for a value of Rs.  1 lakh and Share capital account has to remain at Rs. 1 lakh. 

How the difference of Rs. 30,000 is to be accounted in these 5 years or in 5th year.