Professional Documents
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Contents
Introduction Object Methodology adopted in determining the Financial Statement. General instructions Performa of Balance Sheet General instructions for preparation of balance sheet Performa of Statement of Profit & loss General instructions for preparation of statement of profit & loss. Comparison between Old & Revised Schedule VI
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Introduction
Schedule VI of the Companies Act, 1956, prescribes the format of financial statements and disclosure requirements for corporate entities in India. Considering the economic and regulatory changes that have taken place globally, and being as old as the Act itself (1956), schedule VI had completely outlived its utility. As per notification dated 28th March, 2011 by Ministry of Corporate Affairs the revised Schedule VI is applicable to balance sheet & profit & loss account to be prepared for the financial year commencing on or from 01st April 2011.
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Object
One of the Main aim of revising schedule VI was to attain compatibility and convergence with IFRS in India. why?
y In may 2008, MCA issued a press release in which
it has committed to convergence with IFRS by April 1, 2011 y At the G20 summit on financial Market and World Economy, then Finance Minister also committed to have convergence with IFRS in India
Other main object of revising schedule VI was to eliminate numerous statistical and disclosure requirements which are not relevant from an investor perspective.
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General instructions
Compliance with the Act and/or Accounting Standards:
Requirements of the Act and/or Standards will override the related requirement of Schedule VI.
Disclosures are required by the Companies Act shall be made in the notes to accounts
Additional disclosures specified in the Accounting Standards shall be made in the notes to accounts or by way of additional statement unless required to be disclosed on the face of Financial Statements.
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General instructions
Notes to the accounts shall contain information in addition to that presented in the Financial Statement and shall provide where required Narrative descriptions or disaggregations of the items recognized in those statements and Information about items that do not qualify for recognition in those statements.
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General instructions
Each item on the face of the Balance sheet and statement of the profit and loss shall be cross- referenced to any related information in the notes to the accounts Figures of previous period:
The corresponding amounts (comparatives) for the
immediately preceding reporting period for all items shown in the Financial Statements including notes shall also be given.
Confusion between comparative figures and corresponding figures
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General instructions
Presentation of figures:
Where Turnover:
< Rs. 100 crores = Figures to be in nearest hundreds, thousands, lakhs or millions or decimals thereof. o > Rs. 100 crores = Figures to be in nearest lakhs or millions or decimals thereof.
o
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Particulars
Note No.
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An operating cycle is the time between the acquisition of assets for processing and their realization in cash or cash equivalents. Where the normal operating cycle cannot be identified, it is assumed to have a duration of 12 months. A liability shall be classified as current when it satisfies any of the criteria SPECIFIED FOR ASSETS & all other liabilities shall be classified as non-current.
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A receivable shall be classified as a trade receivable if it is in respect of the amount due on account of goods sold or services rendered in the normal course of business. A payable shall be classified as a trade payable if it is in respect of the amount due on account of goods purchased or services received in the normal course of business.
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Share Capital
The Rights, Preference & Restrictions attaching to each Class of Shares Shares in the company held by each shareholder holding more than 5 % shares specifying the number of shares held;
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Surplus i.e. balance in Statement of Profit & Loss disclosing allocations and appropriations such as dividend, bonus shares and transfer to/from reserves etc. (Additions and deductions since last balance sheet to be shown under each of the specified heads) A reserve specifically represented by earmarked investments shall be termed as a fund.
Debit balance of statement of profit and loss shall be shown as a negative figure under the head Surplus. Similarly, the balance of Reserves and Surplus, after adjusting negative balance of surplus, if any, shall be shown under the head Reserves and Surplus even if the resulting figure is in the negative.
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(a) Current maturities of long-term debt; (b) Current maturities of finance lease obligations; (c) Interest accrued but not due on borrowings; (d) Interest accrued and due on borrowings; (e) Income received in advance; (f) Unpaid dividends (g) Application money received for allotment of securities and due for refund and interest accrued thereon. (h) Unpaid matured deposits and interest accrued thereon (i) Unpaid matured debentures and interest accrued thereon (j) Other payables (specify nature);
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Movement between opening & closing balances to be given Details of reduction by way of reduction of capital, revaluation etc. to be given by way of a note Assets under lease shall be separately specified under each class of asset.
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Non-current investments
Non-current investments shall be classified as trade investments and other investments and it includes Investment property;
Under each classification, details of names of the bodies corporate (indicating separately whether such bodies are (i) subsidiaries, (ii) associates, (iii) joint ventures, or (iv) controlled special purpose entities in whom investments have been made and the nature and extent of the investment so made in each such body corporate.
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Non-current investments
Investments carried at other than at cost should be
(a) Aggregate amount of quoted investments and market value thereof; (b) Aggregate amount of unquoted investments; (c) Aggregate provision for diminution in value of investments
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(iii) Allowance for bad and doubtful loans and advances shall be disclosed under the relevant heads separately.
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Inventories
(i) Inventories shall be classified as: (a) Raw materials; (b) Work-in-progress; (c) Finished goods; (d) Stock-in-trade (in respect of goods acquired for trading); (e) Stores and spares; (f) Loose tools; (g) Others (specify nature). (ii) Goods-in-transit shall be disclosed under the relevant subhead of inventories. (iii) Mode of valuation shall be stated.
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Trade Receivables
(i) Aggregate amount of Trade Receivables outstanding for a period exceeding six months from the date they are due for payment should be separately stated. (ii) Trade receivables shall be sub-classified as: (a)Secured, considered good; (b)Unsecured considered good; (c)Doubtful. (iii) Allowance for bad and doubtful debts shall be disclosed under the relevant heads separately.
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to equity and preference shareholders for the period and the related amount per share shall be disclosed separately. Arrears of fixed cumulative dividends on preference shares shall also be disclosed separately. Where in respect of an issue of securities made for a specific purpose, the whole or part of the amount has not been used for the specific purpose at the balance sheet date, there shall be indicated by way of note how such unutilized amounts have been used or invested.
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I. Revenue from operations II. Other income III. Total Revenue (I + II) IV. Expenses: Cost of materials consumed Purchases of Stock-in-Trade Changes in inventories of finished goods Work-in-progress and Stock-in-Trade
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Particulars
Form of Balance Sheet
Old Schedule VI
Both horizontal and vertical form were allowed
Revised Schedule VI
Only vertical form of Balance Sheet has been specified in the revised Schedule VI
2)
3)
Opening surplus, proposed dividend and transfer to/ from reserves were shown in Profit and Loss Appropriation Account
Transfer from/ to reserves to be shown under the heading Reserves & Surplus only. No requirement of separate Profit and Loss Appropriation Account.
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Comparison (ii)
Sr. No.
4)
Particulars
Rounding off of Figures appearing in financial statement
Old Schedule VI
Turnover of less than Rs. 100 Crs - R/off to the nearest Hundreds, thousands or decimal thereof Turnover of Rs. 100 Crs or more but less than Rs. 500 Crs - R/off to the nearest Hundreds, thousands, lakhs or millions or decimal thereof Turnover of Rs. 500 Crs or more - R/off to the nearest Hundreds, thousands, lakhs, millions or crores, or decimal thereof
Revised Schedule VI
Turnover of less than Rs. 100 Crs - R/off to the nearest Hundreds, thousands, lakhs or millions or decimal thereof Turnover of Rs. 100 Crs or more - R/off to the nearest lakhs, millions or crores, or decimal thereof
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Comparison (iii)
Sr. No.
5)
Particulars
Net Working Capital
Old Schedule VI
Current assets & Liabilities are shown together under application of funds. The net working capital appears on balance sheet.
Revised Schedule VI
Assets & Liabilities are to be bifurcated into current & Noncurrent & to be shown separately. Hence, net working capital will not be appearing in B/S.
6)
Fixed Assets
There was no bifurcation required in to tangible & intangible assets. Capital advances used to be shown under the Head Capital Work in Progress under Fixed Assets
Fixed assets to be shown under non-current assets and have to be bifurcated into Tangible & intangible assets. Capital advances to be shown under the head Long term Loans & Advances
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Comparison (iv)
Sr. No.
7)
Particulars
Borrowings
Old Schedule VI
Short term & long term borrowings are grouped together under the head Loan funds sub-head Secured / Unsecured
Revised Schedule VI
Long term borrowings to be shown under non-current liabilities and short term borrowings to be shown under current liabilities with separate disclosure of secured / unsecured loans. Period and amount of continuing default as on the balance sheet date in repayment of loans and interest to be separately specified
8)
Deposits
Lease deposits to be disclosed as long term loans & advances under the head non-current assets
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Comparison (v)
Sr. Particulars No.
9) Investments
Old Schedule VI
Both current & non-current investments to be disclosed under the head investments Loans & Advance are disclosed along with current assets Loans & Advance to subsidiaries & others to be disclosed separately.
Revised Schedule VI
Current and non-current investments are to be disclosed separately under current assets & non-current assets respectively. Loans & Advances to be broken up in long term & short term and to be disclosed under non-current & current assets respectively. Loans & Advance from related parties & others to be disclosed separately.
10)
11)
Deferred Tax assets / liabilities to be disclosed under non-current assets / liabilities as the case may be.
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Comparison (vi)
Sr. No.
12)
Particulars
Cash & Bank Balances
Old Schedule VI
Bank balance to be bifurcated in scheduled banks & others
Revised Schedule VI
No such bifurcation required. Bank balances in relation to earmarked balances, held as margin money against borrowings, deposits with more than 12 months maturity, each of these to be shown separately. Debit balance of Profit and Loss Account to be shown as negative figure under the head Surplus. Therefore, Reserve & Surplus can have a negative balance.
13)
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Comparison (vii)
Sr. No.
14)
Particulars
Sundry Debtors
Old Schedule VI
Debtors outstanding for more than six months from invoice date to be shown separately No specific mention for separate disclosure of Current maturities of long term debt No specific mention for separate disclosure of Current maturities of finance lease obligation
Revised Schedule VI
Debtors outstanding for more than six months from the date they became due to be shown separately Current maturities of long term debt to be disclosed under other current liabilities. Current maturities of finance lease obligation to be disclosed.
15)
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Comparison (viii)
Sr. No.
16)
Particulars
Separate line item Disclosure criteria
Old Schedule VI
any item under which expense exceeds one per cent of the total revenue of the company or Rs. 5,000 which ever is higher; shall be disclosed separately Function wise & nature wise Finance cost to be classified in fixed loans & other loans
Revised Schedule VI
any item of income / expense which exceeds one per cent of the revenue from operations or Rs. 1,00,000, which ever is higher; to be disclosed separately
17)
Expenses in Statement of Profit and Loss to be classified based on nature of expenses Finance cost shall be classified as interest expense, other borrowing costs & Gain / Loss on foreign currency transaction & translation
18)
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Comparison (ix)
Sr. No. 19) Particulars Foreign exchange gain / loss Purchases Old Schedule VI Revised Schedule VI
Gain / Loss on foreign Gain / Loss on foreign currency currency transaction transaction to be separated to be shown under into finance costs and other finance cost expenses The purchase made and the opening & closing stock, giving break up in respect of each class of goods traded in by the company and indicating the quantities thereof. Goods traded in by the company to be disclosed in broad heads in notes. Disclosure of quantitative details of goods is diluted. Goods-in-transit to be separately disclosed.
20)
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Comparison (x)
Sr. No.
21)
Particulars
TDS amount on Interest, royalty received Managerial Remuneration and Commission
Old Schedule VI
TDS amount was required to be shown for Interest income etc. Payment to directors and detailed calculation under section 198 was required to be disclosed
Revised Schedule VI
No requirement of disclosing TDS amounts separately
22)
23)
ESOP expenses
Expense on Employee Stock Option Scheme (ESOP) and Employee Stock Purchase Plan (ESPP) to be shown separately as part of Employee Benefits expense
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Comparison (xi)
Sr. Particulars No. 24) Part IIIInterpretatio n Old Schedule VI Terms provision, reserve, capital reserve , quoted investment etc. were defined Details of company registration number, capital raised, Balance Sheet details, products etc. were required to be attached with financials Revised Schedule VI No such specific definitions.
25)
No such requirement.
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THANK YOU
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