Accounting · Employee Benefits (Ind AS 19)
An auditor is verifying 'Staff Housing Loans' where the interest is charged at a concessional rate of 4 percent, while the market rate is 9 percent. The total outstanding staff loans are ₹200 crore. The bank has not recorded any 'Perquisite Value' or 'Deferred Employee Benefit' in its accounts. Calculate the interest subsidy provided by the bank in one year and determine its accounting implication.
Verified Solution4 OptionsUpdated: October 2026👁️1 View
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- 1The interest subsidy is 5 percent of ₹200 crore, which is ₹10 crore; this is a 'Staff Cost' and must be recognized under Ind AS 19.✓
- 2There is no cost as the bank is using its own funds to help its employees.
- 3The hidden cost is ₹18 crore; it should be treated as a revenue expense for the bank.
- 4The hidden cost is ₹10 crore; it must be disclosed in the notes to accounts but no entry is needed.
Correct answer
The interest subsidy is 5 percent of ₹200 crore, which is ₹10 crore; this is a 'Staff Cost' and must be recognized under Ind AS 19.
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