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IAI Actuarial Core Principles · Business Finance · Construction and features of company accounts and reports

Kaveri Engineering Ltd has profit before tax of Rs 500 lakh, tax at 25% and a revaluation gain on land of Rs 80 lakh (before deferred tax at 20% on the gain). It also has a Rs 30 lakh actuarial loss on its defined benefit plan, with no tax effect, recognised in other comprehensive income. What is total comprehensive income?

Profit after tax is Rs 375 lakh. Other comprehensive income is the revaluation gain net of 20% deferred tax, Rs 64 lakh, less the actuarial loss of Rs 30 lakh, giving Rs 34 lakh. Total comprehensive income is therefore Rs 409 lakh.

  1. ARs 409 lakhCorrect
  2. BRs 410 lakh
  3. CRs 425 lakh
  4. DRs 455 lakh
  5. Rs 375 lakh

Explanation

Profit after tax = 500 x 0.75 = 375. Revaluation gain net of deferred tax = 80 x 0.8 = 64. OCI = 64 - 30 = 34. Total comprehensive income = 375 + 34 = 409. Option 375 ignores OCI; 455 ignores tax on the gain and the loss.

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