363921 45344 revised schedule vi

7/28/2019 363921 45344 Revised Schedule Vi

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REVISED SCHEDULE VI

CA PURVI TRIVEDI([email protected])

ELLISBRIDGE CPE STUDY CIRCLE OF WIRC OF ICAI30 th January, 2012


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Overview Background and Applicability Significant Features Major Changes

Structure of Revised Schedule VI Form of Balance Sheet Statement of Profit and Loss Comparison with Existing Schedule VI


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Background and ApplicabilityRevised Schedule VI is primarily necessitated due tothe following reasons:

To harmonize and synchronize with IFRS/Ind AS

Comparison of financial statements with globalcompanies Liquidity Based Presentation-Current vs. Non-current

classification

Enhancing the disclosure requirements - Changes inoutdated disclosures and eliminate redundantdisclosures


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Background and Applicability Notification for Schedule VI was issued by MCA vide

S.O.No.441 dated March 21, 1961. Ministry of Corporate Affairs issued Original

Notification S.O.No.447(E) dated February 28, 2011specifying requirements of Revised Schedule VI.

Amendment made vide Notification S.O. No.663(E)dated March 30,2011 to the Original Notification Applicable for financial statements commencing on orafter April 1, 2011.

Guidance Note to Revised Schedule VI to theCompanies Act, 1956 issued by ICAI(Dec. 2011).


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Background and Applicability Applicable to all Companies, except those referred to

in Proviso to Section 211(1) and Section 211(2) of theCompanies Act,1956,i.e. Banking Companies or

Insurance Companies orElectricity Companies,

which are required to prepare financial statements in

a format prescribed by another statute. However, neither the Electricity Act, 2003 nor theRules framed thereunder prescribe any specificformat, hence Electricity Companies are to followRevised Schedule VI.


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Background and ApplicabilityPOSER: VOLUNTARY APPLICATION

A company having June 30,2011 as year-end wants to

publish its financial statements on December,2011.Canit voluntarily apply Revised Schedule VI forpreparation of its financial statements for the yearending on June 30,2011?

Schedule VI is a statutory format . The Company cannot voluntarily apply Revised Schedule VI in

preparation of its financial statements for the year ending June 30,2011, since its early adoption is not

permitted.


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Background and ApplicabilityPOSER: CALENDAR YEAR

Can a company having its financial year as calendar

year, apply Revised Schedule VI from 2011?

No, Revised Schedule VI is applicable for the financial year commencing from on or after

April,2011. So a company having its financial year as January to December can apply Revised Schedule VI only for the calendar year 2012.


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Background and ApplicabilityPOSER:HALF YEARLY OR NINE MONTHS PERIOD

RESULTS

A company wants to publish its nine months financialstatements for the period ended December, 2011. Shouldit use Old Schedule VI or Revised VI in the preparation ofits half yearly financial statements?

As per Para 10 of AS 25 Interim Financial Reporting, if an enterprise prepares and presents a complete set of financial statements in its interim financial report, its form and content should confirm to the requirements as applicable to annual complete set of financial statements.


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Background and ApplicabilityAs per Para 11 of AS 25 Interim Financial Reporting, if an enterprise prepares and presents a set of condensed financial statements in its interim financial report, those condensed statements should include, at a minimum, each

of the headings and sub-headings that were included in its most recent annual financial statements and the selected explanatory notes as required by this Statement.

Hence, for Complete Set of Financial Statements Revised Schedule VI will be applicable.

And, for Condensed Set of Financial Statements Old Schedule VI will be applicable.


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Background and ApplicabilityPOSER: CLAUSE 41 TO THE LISTING AGREEMENT

As the format of Balance Sheet currently prescribedunder Clause 41 to the Listing Agreement is based on OldSchedule VI, whether such companies are required topresent their financials in the format of Old Schedule VIor Revised Schedule VI?

For Half Yearly Results , a specific format is prescribed

by SEBI Required to follow Old Schedule VI .For Annual Audited Yearly Results , no such format isprescribed Format of Revised Schedule VI has to beused for submission to stock exchanges as well.


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Background and ApplicabilityPOSER: IPO/FPO FILINGS

Whether for IPO/FPO filings, information for earlier years should be given under Revised Schedule VI or underOld Schedule VI?

As per MCAs General Circular No.62/2011 dated 5 th September,2011, the presentation of financial statements for the limited purpose of Initial Public Offer/Further Public Offer during FY 2011-12 maybe in the format of Old Schedule VI under the Companies Act,1956, as reclassifying previous years figures in accordance with Revised Schedule VI would be difficult and make comparables unrealistic. However, for period beyond 31 st March 2012, they would prepare only in the new format as prescribed by the present Schedule VI of the Companies Act, 1956.


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Significant Features Vertical Format only . Horizontal Format is withdrawn. Format of Profit and Loss is introduced for the first time. Part IV Balance Sheet Abstract and CompanysBusiness Profile

Omitted.

Based on Accounting Standards. Concept of Schedules eliminated. All information in Notes with Cross Referencing. Simplification of Disclosure Requirements. Striking Balance to be maintained between providing excessive

details and not providing important information as a result oftoo much aggregation.

Rounding off (where opted for) simplified. Explicit requirement to use the same unit of measurement

uniformly throughout the financial statements.


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Significant Features Requirements of the Act and/or Notified Accounting

Standards will prevail over the Schedule. Minimum requirements are specified . They are in addition to

and not in substitution of the disclosure requirements specified

in the Accounting Standards . Other Disclosures as required by the Companies Act andother legal requirements shall be made in the notes toaccounts.

Comparatives (including corresponding amounts and notes) forthe immediately preceding reporting period shall also be given.

Terms Used herein shall be as per the applicable AccountingStandards.

The Schedule shall stand modified in accordance with anychanges in treatment or disclosure as per the Act/ AccountingStandards.


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Major Changes in Balance Sheet Equity and Liabilities will be written instead of Sources of

Funds. Assets will be written instead of Application of Funds. Cash and Cash Equivalents , will be written instead of Cash and

Bank Balances. Liabilities will be classified under two heads Current Liabilities

and Non Current Liabilities. Long Term Borrowings shall be further sub-classified as

Secured and Unsecured Loans. Provisions will be segregated into Short Term Provisions and

Long Term Provisions. Assets will be classified into Non-Current Assets and CurrentAssets.

Fixed Assets will be classified into Tangible Assets and Non-Tangible Assets. Movement during the year is to be given inaddition to Opening and Closing Balances on the face of the

Balance Sheet.


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Major Changes in Balance Sheet Share Option Outstanding Account is a new addition under

Reserves & Surplus arising out of share-based payments likeEmployees Stock Option.

Money received against share warrants is a new line item in

equity. It is classified as a separate component of Equity. Share Application Money pending allotment is a new line itemwhich is classified in between equity and liabilities.

Assets under Construction (i.e. Capital WIP and IntangibleAssets under development) are separate line items.

Loans and Advances from / to Related Parties to be disclosedseparately. Miscellaneous Expenditure is now to be shown separately under

Other Current Assets . Deferred Tax Assets/Liability(Net) shall be classified under

the head Non-Current Assets / Non-Current Liabilities.


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Major Changes in Balance Sheet Under Share Capital, a sub head will be included Shares in

the Company held by each shareholder holding more than 5 %shares specifying the number of shares held.

Debit Balance of Profit & Loss A/c or Accumulated Losseswill be shown as a negative figure under Reserves &Surplus .

Profit and Loss Appropriation Account to be disclosed underReserves and Surplus .

Current maturities of a long term borrowing will have to beclassified under the head Other Current Liabilities.

Share Application Money received for allotment of securities

and due for refund and interest accrued thereon to beclassified under Other Current Liabilities . Disclosure of all defaults in Repayment of Loans and Interest

to be specified in each case.


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Major Changes in Profit and Loss Now termed as Profit and Loss Statement for the year ended

on . Format specified in Revised Schedule. Disclose by nature of expense. Functional classification is

prohibited. Exceptional and extraordinary items need to be disclosedseparately on the face of the Statement of Profit and Loss.

Prior period items should be disclosed in the notes. Profit / loss before and after tax from discontinuing

operations, the tax expense from discontinuing operations,Pre-tax gain/loss recognized on disposal of assets/settlement of liabilities attributable to discontinuingoperations need to be disclosed separately.


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Major Changes in Profit and Loss

The items to be disclosed under Revenue from Operations havebeen specifically indicated for both finance companies andothers.

Expense on ESOP and ESPP should be disclosed separatelyunder Employee Benefits Expense. Any item of income or expenditure which exceeds one percent

of the revenue from operations or Rs. 100,000, whichever ishigher should be disclosed separately.

Broad heads shall be decided taking into account the concept ofmateriality and presentation of true and fair view offinancial statements.


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Disclosures No Longer Required Investments purchased and sold during the year. Investments, Sundry Debtors and Loans and Advance pertaining

to companies under the same management. Break up of Bank Balances between Scheduled and Other banks,

break up between current account, call account and depositaccounts, Details of names, amount, maximum amounts with non-scheduled bank.

Commission, brokerage and non-trade discounts paid to sellingagents.

Managerial Remuneration u/s. 198 and computation of netprofits for calculation of commission. Information on licensed capacity, installed capacity and actual

production.


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Structure of Existing Schedule VI

Part I Form of the Balance SheetOption betweenA. Horizontal Form andB. Vertical Form

General Instructions for preparation of BalanceSheet Part II Requirements as to Profit and Loss Account Part III Interpretation for the purpose of Parts

I and II of Schedule VI unless the context otherwiserequires Part IV Balance Sheet abstract and Companys General business profile


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Structure of Revised Schedule VI

General Instructions Part I Form of the Balance Sheet

General Instructions for preparation ofBalance Sheet Part II Form of Statement of Profit

and Loss General Instructions for preparation ofStatement of Profit and Loss


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Part I Form of the Balance Sheet(Rupees in)

Particulars NoteNo.

CurrentReportingperiod

PreviousReportingperiod

I EQUITY AND LIABILITIES(1) Shareholders Funds

(a) Share Capital

(b) Reserves and Surplus

(c) Money received against ShareWarrants

(2) Share Application Money pendingallotment


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Particulars NoteNo.



I EQUITY AND LIABILITIES

(3) Non-Current Liabilities

(a) Long-Term Borrowings

(b) Deferred Tax Liabilities (Net)

(c) Other Long Term Liabilities

(d) Long-Term Provisions


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Particulars NoteNo.



I EQUITY AND LIABILITIES(4) Current Liabilities

(a) Short-Term Borrowings

(b) Trade Payables

(c) Other Current Liabilities

(d) Short-Term Provisions

TOTAL


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Particulars NoteNo.



I ASSETS(1) Non-Current Assets

(a) Fixed Assets

(i) Tangible Assets

(ii) Intangible Assets

(iii) Capital Work-In-Progress

(iv) Intangible Assets under Development


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Particulars NoteNo.



II ASSETS(1) (b) Non-Current Investments

(c) Deferred Tax Assets (net)

(d) Long-Term Loans and Advances

(e) Other Non-Current Assets

(2) Current Assets

(a) Current Investments

(b) Inventories


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Particulars NoteNo.



II ASSETS(c) Trade Receivables

(d) Cash and Cash Equivalents

(e) Short-Term Loans and Advances

(f) Other Current Assets

TOTALSee accompanying notes to financial statements


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Share CapitalDisclosure for each class of share capital (different classes ofpreference shares to be treated separately) :

Number and Amount of shares authorized, Number of shares issued, subscribed and fully paid, and

subscribed but not fully paid , Par Value per share, Reconciliation of the number of shares outstanding at the

beginning and at the end of the reporting period, Rights, preferences and restrictions attaching to each class of

shares, Shares held by entire chain of Subsidiaries and Associates

starting from holding company and ending right upto theultimate holding company,


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Share Capital Share holding details of more than 5 % shares specifying the

names of shareholders and number of shares held as on theBalance Sheet date,

Shares reserved for issue under options and contracts/commitments for the sale of shares/disinvestment, including theterms and amounts,

Aggregate number and class of shares allotted as fully paid uppursuant to contracts without consideration being received incash, including bonus shares and shares bought back, for aperiod of immediately preceding 5 years,

Terms (including date of conversion) of any securitiesconvertible into equity/ preference shares issued,

Calls unpaid by Directors and Officers, Forfeited Shares (amount originally paid up).


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Share CapitalPOSER:PREFERANCE SHARES-LIABILITY OR EQUITY

Revised Schedule VI states that different classes ofPreference Shares are to be treated separately. WhetherPreference Shares should be presented as share capital or acompany compulsorily needs to decide whether they are liabilityor equity based on its economic substance using AS-31?

Revised Schedule VI deals with only presentation and disclosurerequirements. Accounting for various items is governed by AS.

However, as AS-30,31 and 32 on Financial Instruments areyet to be notified and Section 85(1) of the Act refers toPreference Shares as a kind of Share Capital, they will have tobe classified as Share Capital .


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Reserves and Surplus Classified as:- Capital Reserves, Capital Redemption Reserve,

Securities Premium Reserve, Debenture Redemption Reserve,Revaluation Reserve, Share Options Outstanding Account,Other Reserves (residual),

Surplus , i.e. balance in Statement of P&L disclosing allocationsand appropriations such as dividend, bonus shares and transferto/from reserves etc.

Movement under each Reserve is to be shown, Reserves specifically represented by earmarked investments

shall be termed as Fund. Debit balance of statement of profit and loss to be shown as anegative figure under the head Surplus.


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Money Received Against ShareWarrants

Issued to promoters and others, in case of listed companies, interms of Guidelines for Preferential Issues (i.e. SEBI(ICDR)Guidelines, 2009.

AS 20 defines Share Warrants as financial instruments whichgive the holder the right to acquire equity shares.

Disclosed as a separate line item, since shares are yet to beallotted against the same.


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Share Application Money PendingAllotment

Disclosed between Shareholders Fund and Non-CurrentLiabilities.

Share application money not exceeding the issued capital andto the extent non-refundable can only be classified under thishead as Equity.

Other amounts to the extent refundable, including interest to be classified as Other Current Liabilities.

If a companys Authorized Share Capital is not sufficient tocover allotment of fresh shares on account of share application

money to be disclosed under Other Current Liabilities. Other disclosures include: Terms & conditions, No. of sharesproposed to be issued, premium, if any, period before whichshares shall be allotted, reasons, including period, in case it ispending beyond the period of allotment.


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Current LiabilityA liability shall be classified as current when itsatisfies any of the following criteria:

it is expected to be settled in the companys normal operating cycle ;

it is held primarily for the purpose of being traded ; it is due to be settled within twelve months after

the reporting date; or the company does not have an unconditional right

to defer settlement of the liability for at leasttwelve months after the reporting date.

All other liabilities shall be classified as Non-Current.


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Current vs. Non Current Liabilities Classification will depend on facts of each case,

rights/obligations of parties, past experience, etc.

EXAMPLES

If Loan is repayable within 12 months Current.

If Loan is repayable after 12 months and if the company isexpected to exercise option available to it to pre-pay Current.

If Loan is not repayable after 12 months and if the company isnot expecting to exercise option available to repay Non-Current.


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Operating Cycle An Operating Cycle is the time between the acquisition of

assets for processing and their realization in cash or cashequivalents.

Where the normal operating cycle cannot be identified, it isassumed to be of duration of 12 months.

Generally, it is calculated as:Average Inventory Holding Period

(+) Average Production Period(+) Average Collection Period(-) Average Payment Period


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Non-Current LiabilitiesLONG-TERM BORROWINGS:

Classified as Bonds/Debentures, Term Loans from banks andother parties, Deferred payment liabilities, Deposits, Loans andadvances from related parties , Long term maturities of financelease obligations, Other loans and advances.

Further sub-classification into Secured and Unsecuredspecifying the nature of security, rate of interest and otherterms of repayment.

Loans guaranteed by directors and others to be specified.

Period and amount of continuing default as on the balance sheetdate in repayment of loans and interest, to be specifiedseparately in each case.


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Non-Current LiabilitiesDEFERRED TAX LIABILITES(NET):

AS 22 simply specifies that they should be presentedseparately. Now, to be specifically disclosed under Non-CurrentLiabilities.

OTHER LONG TERM LIABILITIES: Classified as Trade Payables and Others.

LONG TERM PROVISIONS: Classified into Provision for Employee Benefits and Others. AS-15 governs the measurement of various employee benefit

obligations, but classification as Current and Non-CurrentLiability will be governed by Revised Schedule VI.


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Trade Payables A payable shall be classified as a trade payable if it is in respect

of the amount due on account of goods purchased or servicesrendered in the normal course of business.

Payables towards the purchase of Capital items, amounts dueunder Statutory Obligations, etc. are not Trade Payables classified as Other Current Liabilities.

Acceptances are disclosed as Trade Payables.

A Trade Payable is to be further bifurcated as Current andNon-Current based on the principles of Current/ Non-Currentclassification.


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Current Liabilities Classified as Short Term Borrowings, Trade Payables, Other

Current Liabilities and Short Term Provisions Short Term Provisions are further classified as Provision for

employee benefits and others (eg., provision for dividend,taxation, warranties, etc.)

POSER: DISCLOSURE FOR PROPOSED DIVIDEND As per Revised Schedule VI, proposed dividend is required to be

disclosed only in the notes. Whether it is required to beprovided for?

AS-4 requires dividends to be stated in respect of the period covered by the financial statements, whether proposed or declared after the Balance Sheet date even before approval of the financial statements. Hence, Proposed Dividend is requiredto be provided for, unless AS-4 is revised.


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Current AssetsAn asset shall be classified as current when itsatisfies any of the following criteria:

It expects to realise the asset, or intends to sell orconsume it, in normal operating cycle ,

It holds asset primarily for the purpose of trading , It is expected to be realised within 12 months after

reporting period, It is cash and cash equivalents , unless it is

restricted from being exchanged or used to settle aliability for at least twelve months after thereporting date.

All others are to be treated as Non -current.


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Non -Current AssetsFIXED ASSETS:

Classified as Tangible and Intangible Assets. Capital Work-in-Progress and Intangible Assets Under

Development are to be separately disclosed.

Assets under lease are to be separately specified under eachclass of assets Movement in the Opening and Closing balance of assets, including

adjustments made on account of borrowing costs and foreignexchange fluctuations, acquisitions through business

combinations are to be separately disclosed. Details of Reduction /Increase in value of assets due toreduction in capital or revaluation of assets are to be disclosedfor a period of subsequent 5 years .


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Non-Current Assets NON-CURRENT INVESTMENTS:

Classified as Trade Investments and Other Investments Further classified as Investment in Property, Financial

Instruments, Partnership firms, Other Investments.

In case of Investment in Partnership Firms, names of firmsalongwith names of partners, total capital and share of eachpartner is to be given.

LLP is a body corporate and not a partnership firm to bedisclosed under Other Investments.

Aggregate amount of quoted/unquoted investments , marketvalue thereof, provision for dimunition in value of investments isalso to be disclosed.


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Non-Current Assets DEFERRED TAX ASSETS(NET)LONG-TERM LOANS AND ADVANCES:

Classified as Capital Advances, Security Deposits, Loans andAdvances to related parties,

Further sub-classification under Secured & Unsecuredconsidered good and Doubtful to be made Allowances for bad and doubtful loans to be made Loans and advances due by directors, officers of the company

and their associated are to be disclosed separately.

OTHER NON-CURRENT ASSETS: Classified as Long Term Trade Receivables and Others.


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Trade Receivables A receivable shall be classified as a Trade Receivable

if it is in respect of the amount due on account ofgoods sold or services rendered in the normalcourse of business.

Trade Receivables outstanding for a period of 6months from the date they are due for paymentshould be separa tely shown.

(Old Schedule VI required separate presentation ofdebtors outstanding for a period exceeding 6months(i.e. based on billing date) and other debtors.)


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Current AssetsCURRENT INVESTMENTS: Same principles of classificationand other disclosure requirements as are applicable to Non-Current Investments.

INVENTORIES:Classified as Raw Materials, Work-in-Progress,Finished Goods, Stock-in-Trade , Stores & Spares, Loose Tools

and Others. Goods-in-Transit to be disclosed separately under relevant

sub-head.

Mode of valuation is to be stated.

TRADE RECEIVABLES: Further sub-classified as Secured andUnsecured considered good and Doubtful.


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Current Assets CASH AND CASH EQUIVALENTS:

Classified as:- Balances with banks, Cheques/drafts on hand,Cash on hand, Others (specify nature).

Earmarked balances with banks (eg., for unpaid dividend)to beseparately stated

Separate disclosure for Balances with banks to the extent heldas margin money or security against the borrowings, guarantees,other commitments, etc.

Repatriation restrictions , if any, in respect of cash and bank

balances to be separately stated. Separate disclosure for Bank deposits with more than 12months maturity .


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CURRENT ASSETS AS-3 defines Cash equivalents as short-term(within 3 months

maturity), highly liquid investments that are readily convertible into known amount of cash.

To resolve the conflict between AS-3 and Revised Schedule VI,it is recommended to have 2 sub-headings, viz., Cash and CashEquivalentsand Other Bank Balances. SHORT-TERM LOANS AND ADVANCES:

Same principles of classification and other disclosurerequirements as are applicable to Long-Term Loans andAdvances. OTHER CURRENT ASSETS:

Residual line-item which incorporates current assets that donot fit into any other asset categories (Eg., U nbilled Revenue,Unamortised premium on forward contracts, etc.)


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Contingent Liabilities AndCommitments

Two separate classifications:(As a footnote to Balance Sheet)Contingent liabilities to be classified as:

Claims against the company not acknowledged as debt, Guarantees,

Other money for which the company is contingently liable.Commitments to be classified as:

Estimated amount of contracts remaining to be executed oncapital account and not provided for,

Uncalled liability on shares and other investments partly paid, Other commitments (specify nature) which will include, non-

cancellable contractual commitments, cancellation of whichresults in a penalty disproportionate to the benefits involved.

Part II Form of Statement of Profit and Loss


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Part II Form of Statement of Profit and Loss

(Rupees in)

Particulars NoteNo.



I Revenue from Operations II Other Income III Total Revenue ( I + II ) IV Expenses:

Cost of Material Consumed

Purchases of Stock-in-Trade Changes in Inventories of FinishedGoods, Work- in-Progress andStock-in-Trade


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Part II Form of Statement of Profit and Loss(Rupees in)

Particulars Note

No.

Current

Reportingperiod

Previous

Reportingperiod

Employee Benefit Expense Finance Costs Depreciation and AmortizationExpense Other Expenses

Total Expenses

VProfit before Exceptional andExtraordinary Items and tax (III IV)

VI Exceptional Items


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Particulars NoteNo.



VII Profit before Extraordinary Itemsand Tax (V VI)

VIII Extraordinary Items IX Profit before Tax (VII VIII) X Tax Expense:

(1) Current Tax

(2) Deferred Tax

XI Profit /(Loss) for the period fromContinuing Operations (VII VIII)


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Particulars NoteNo.



XII Profit/(Loss) from DiscontinuingOperations

XIII Tax Expense of DiscontinuingOperations

XIV Profit / (Loss) from DiscontinuingOperations (after tax) (XII-XIII)

XV Profit / (Loss) for the period

(XI + XIV) XVI Earnings per equity share :

(1) Basic(2) Diluted

See accompanying notes to the financial statements


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Revenue From OperationsA Non-Finance Company shall disclose separately, revenue from: Sale of Products, Sale of Services, Other Operating Revenues

Less: Excise Duty

A Finance Company shall disclose separately, revenue from: Interest, and Other Financial Services


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Revenue From Operations POSER: INDIRECT TAXES

Whether revenue of the company should be presented as net ofindirect taxes such as Vat, Service Tax, etc. as required byRevised Schedule VI for Excise Duty?

If the company is acting as a principal and hence responsible for paying tax on its own account-revenue should also be grossed up for the tax billed to the customer and the tax payable should be shown as an expense or ,if it is acting as an agent i.e. simply collecting and paying tax on behalf of government authorities,then revenue should be presented net of taxes.


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Other Operating Revenues POSER:REVENUE FROM OPERATIONS VS. OTHER INCOME

A Company engaged in manufacture and sale of industrial andconsumer products, also has a real estate arm and iscontinuously engaged in leasing of real estate properties.Another Consumer Products Company, owns a 12 storied buildingand temporarily lets out one floor on rent which is currently notin use. In such a case, where the lease rent should beaccounted?

Rent arising from leasing of real estate would be Other Operating Income in the former case, whereas Other Income in the latter case.


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Other Operating Revenues POSER:REVENUE FROM OPERATIONS VS. OTHER INCOME

Whether profit on sale of fixed asset and sale of manufacturingscrap should be classified as Other Operating Revenue?

Profit on sale of fixed asset Other Income Sale of manufacturing scrap Other Operating Revenue.

Revenue arising from principal or ancillary revenue- generatingactivities would be classified under Other Operating Revenues.


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Other IncomeDisclosure showing separately: Interest Income (In case of Non-Finance Companies) Dividend Income Net Gain/Loss on sale of Investments

Other non-operating income (net of expenses directlyattributable to such income)

Classification of income would also depend on the purpose forwhich the particular asset is acquired/held.


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Other IncomePOSER: DIVIDEND FROM SUBSIDIARY COMPANIES

What would be the treatment of dividend from SubsidiaryCompanies, as unlike the Old Schedule VI, the Revised ScheduleVI, does not prescribe any accounting treatment ?Dividend Income from Subsidiary Companies should berecognized in accordance with AS-9 i.e. only when the right toreceive the same is established on or before the Balance Sheetdate.Disclosure is required as it amounts to Change in AccountingPolicy as per AS-5 which is to be applied prospectively.

(Dividend approved by the shareholders in the current year butalready recognized in the previous year should not bederecognized for the comparatives presented in the first yearof application of Revised Schedule VI).


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Other IncomePOSER: REVENUE FROM OPERATIONS VS. OTHER INCOME

Whether Dividend Income in case of Finance Companies would beclassified as Revenue from Operations or Other Income?

General Instructions to Statement of Profit and Lossspecifically requires a finance company to disclose its Revenuefrom operations as: Interest and Income from other financialservices i.e. it does not specify dividend income to be treated asmain revenue.

Besides, General Instructions requires interest income of non-finance company to be disclosed as other income. So, if thedividend income of a finance company was to be stated in mainrevenue, it would have clarified the same.


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Other IncomeSHARE IN PROFITS/LOSS IN PARTNERSHIP FIRMS/LLP/

SUBSIDIARY COMPANIES /ASSOCIATES

No specific requirement to disclose separately, unlike OldSchedule VI.

However, disclosure should be made on Accrual Concept , i.e.when accounted for by the Associates.

Should be guided by AS-21 (Subsidiaries), AS-23 (Associates)and AS-27(Consolidated Financial Statements) .

In case of differences between the reporting dates ,adjustments to be made for significant transactions and if thedifference is more than 6 months, disclosure is required.


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ExpensesDisclosure is to be made on the face of Statement of Profitand Loss :

Cost of Materials Consumed. Purchases of Stock-in-Trade: Goods purchased normally with the

intention to resell or trade-in. Changes in Inventories of Finished Goods, Work-in-Progress and

Stock-in-Trade: Separate disclosure is required. Employee Benefit Expense: In addition to Salary & Wages,

Contribution to PF and Other Funds, Staff Welfare, Expense on

ESOP/ESPP is to be disclosed separately. Finance Costs: Besides, Interest Expense and Other BorrowingCosts, Applicable Net Gain/Loss on Foreign CurrencyTransactions and Translation.


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Expenses Depreciation and Amortization Expense. Other Expenses: Any item of expenditure which exceeds 1% of

the Revenue from Operations or Rs.1,00,000, whichever ishigher is to be separately disclosed.

Besides, under Other Expenses: Separate disclosure forConsumption of stores and spare parts, Power and fuel, Rent,Repairs to building and machinery, Insurance, Rates and taxes(excluding taxes on income) and Miscellaneous expenses isrequired.

Tax Expense: Bifurcated into Current Tax and Deferred Tax. Incase of MAT, disclosure in this regard should be made:Current Tax (MAT)Less: MAT Credit EntitlementNet Current Tax


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Additional InformationAdditional information regarding aggregate expenditure andincome:

Adjustments to the carrying amount of investments. Net gain or loss on foreign currency transaction and translation

(other than considered as finance cost). Payments to the auditor. Prior period items. Purchases, Sales, Consumption of Raw Material, Work-in-

Progress and the Gross Income from Services rendered as

applicable are to be shown under broad heads . Broad Heads tobe decided taking into account the concept of materiality andpresentation of true and fair view of financial statements. (10%of total value is generally considered as acceptable thresholdlimit).


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Additional Information The aggregate, if material, of any amounts set aside or proposed

to be set aside to reserve and any amounts withdrawn from suchreserves.

The aggregate, if material, of the amounts set aside toprovisions made for meeting specific liabilities, contingencies orcommitments and any amounts withdrawn from such provisions,as no longer required.

Provisions for losses of Subsidiary Companies.


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Other DisclosuresStatement of Profit and Loss shall also contain by way of a note:

Value of imports calculated on C.I.F basis by the companyduring the financial year in respect of Raw Materials,Components and spare parts, Capital goods;

Expenditure in foreign currency during the financial year onaccount of royalty, know-how, professional and consultationfees, interest, and other matters;

Total value if all imported and indigenous raw materials, spareparts and components consumed during the financial year andthe percentage of each to the total consumption;


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Other Disclosures The amount remitted during the year in foreign currencies on

account of dividends with a specific mention of the total numberof non-resident shareholders, the total number of shares heldby them on which the dividends were due and the year to whichthe dividends related;

Earnings in foreign exchange classified as: Export of goodscalculated on F.O.B. basis, Royalty, know-how ,professional andconsultation fees, Interest & Dividend and Other Income,indicating the nature thereof.

C i ith E i ti g S h d l


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Comparison with Existing ScheduleVI

Particulars Old Schedule VI Revised Schedule VI

Authority Provisions of

Schedule VI will prevailover AccountingStandards

Provisions of Accounting

Standards will prevailover Schedule VI

Form ofBalanceSheet

Both horizontal andvertical form wereAllowed

Only vertical form ofBalance Sheet has beenspecified in the revisedSchedule VI

Form ofProfit andLossAccount

No format specifiedfor Profit and LossAccount

Form of Profit and LossAccount specified underPart II

Comparison ith E isting Sched le


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Headings in

BalanceSheet

Sources of funds

and Application of funds

Equities and Liabilities

and Assets

Profit andLoss AppropriationAccount

Opening surplus, proposeddividend and transfer to/from reserves wereshown in Profit andLoss AppropriationAccount

Transfer from/ toreserves to be shownunder the headingReserves & Surplus only.No requirement ofseparate Profit and LossAppropriation Account.

Comparison with Existing Schedule


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ProposedDividend

Proposed Dividendrequired to be provided

for

Proposed Dividend tobe disclosed in notes

QuantitativeDetails

Quantitative details ofRaw materials,purchases, stocks andturnover to be given foreach class of goods. Alsolicensed and installedcapacity and productionquantity to be given formanufacturingCompanies

No quantitative detailsrequired. Limitedrequirements fordisclosure for CIF andFOB values etc.



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p gVI


Rounding off ofFigures appearing inFinancialStatements

Turnover < Rs.100 Crs -R/off to the nearestHundreds, thousands ordecimal thereof

Turnover < Rs. 100 Crs -R/off to the nearestHundreds, thousands,lakhs or millions ordecimal thereof

Rs.100 Crs.Rs. 500 Crs -R/off to the nearest

Hundreds, thousands,lakhs, millions or crores,or decimal thereof



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Share Capital Requirement todisclose separatelybonus shares/shares

allotted withoutconsideration issuedwithout any time limit

Number of bonusshares/shares allottedwithout payment being

received in cash/ sharesbought back during last 5 years

No requirement fordetails of shareholdersholding more than 5% ofShares

Names and number ofshares held byshareholders holding morethan 5 % of Shares



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Unpaid Calls Disclosure was required

for unpaid calls bydirectors of thecompany.

Disclosure will now be

required for total unpaidcalls by directors andofficers of thecompany.

Net WorkingCapital

Current Assets &Liabilities are showntogether underapplication of funds. Thenet working capitalappears on BalanceSheet.

Assets & Liabilities are tobe bifurcated in toCurrent & Non-currentand to be shownseparately. Hence,net working capital willnot be appearing inBalance Sheet.



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Fixed

Assets

There was no bifurcation

required in to tangible &intangible assets.

Fixed assets to be shown

under non-current assetsand have to be bifurcatedinto Tangible & intangibleassets.

Capital advances used tobe shown under the HeadCapital Work in Progressunder Fixed Assets

Capital advances to beshown under the headLong term Loans and Advances



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Borrowings Short term & long term

borrowings are groupedtogether under thehead Loan funds sub-head Secured /Unsecured

Long term borrowings to be

shown under non-currentliabilities and short termborrowings to be shownunder current liabilitieswith separate disclosure ofsecured / unsecured loans.

Period and amount ofcontinuing default as onthe balance sheet date inrepayment of loans andinterest to be separatelyspecified.



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Deposits Lease deposits are part

of loans & advances

Lease deposits to be

disclosed as long termloans & advances underthe head non-currentAssets

Investments Both current & non-current investments tobe disclosed under thehead Investments

Current and non-currentinvestments are to bedisclosed separately undercurrent assets & non-current assetsrespectively.



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Loans &Advances

Loans & Advanceare disclosed alongwith current assets

Loans & Advances to bebroken upin long term & shortterm and to bedisclosed under non-current &current assetsrespectively.

Loans & Advance tosubsidiaries & othersto be disclosedseparately.

Loans & Advance fromrelated parties & othersto be disclosedseparately



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Deferred TaxAssets /Liabilities

Deferred Tax assets/ liabilities to bedisclosed separately

Deferred Tax assets /liabilities to bedisclosed under non-current assets /liabilities as the case maybe.

Cash & BankBalances

Bank balance to bebifurcated in scheduledbanks & others

No such bifurcationrequired. Bank balances inrelation to earmarked

balances, held as marginmoney againstborrowings, deposits withmore than 12 monthsmaturity, each of these tobe shown separately.



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Profit & Loss(DebitBalance)

P&L debit balance tobe separatelydisclosed in theBalance Sheet.

Debit balance of Profit andLoss Account to be shown asnegative figure under thehead Surplus. Therefore,Reserve & Surplus can havea negative balance.

SundryDebtors

Debtors outstandingfor more than six

months from invoicedate to be shownseparately

Debtors outstanding formore than six months from

the date they became due tobe shown separately


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Separate line-item

Disclosure Criteria

Any item under which

expense exceeds 1% ofthe total revenue of thecompany or Rs. 5,000whichever is higher;shall be disclosedseparately

Any item of income /

expense which exceeds1% of the revenue fromoperations or Rs. 1,00,000,whichever is higher; to bedisclosed separately

ExpenseClassification

Function wise &Nature wise

Expenses in Statementof Profit and Loss to beclassified based onnature of expenses only



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Finance Cost Finance cost to be

classified in fixedloans & other loans

Finance cost shall be

classified as interestexpense, other borrowingcosts & Gain / Loss onforeign currencytransaction & translation

Foreign ExchangeGain / Loss

Gain / Loss onforeign currencytransaction to beshown under financecost

Gain / Loss on foreigncurrency transaction tobe separated into financecosts and otherexpenses



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Purchases The purchase made

and the opening &closing stock, givingbreak up in respect ofeach class of goodstraded in by thecompany and

indicating thequantities thereof.

Goods traded in by the

company to be disclosedin broad heads in notes.Disclosure of quantitativedetails of goods is diluted.Goods-in-transit to beseparately disclosed.

TDS amount onInterest, RoyaltyReceived

TDS amount wasrequired to be shownfor Interest incomeetc.

No requirement ofdisclosing TDS amountsseparately



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ManagerialRemunerationAnd Commission

Payment to directorsand detailedcalculation undersection 198 wasrequired to bedisclosed

No disclosure requirementsfor ManagerialRemuneration

ESOP Expenses No requirement toshow separately aspart of EmployeeBenefits Expense

Expense on EmployeeStock Option Scheme(ESOP) and EmployeeStock Purchase Plan (ESPP)to be shown separately aspart of Employee Benefitsexpense



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Part III

Interpretation

Terms: provision,

reserve, capitalreserve, quotedinvestment etc. weredefined

No such specific

definitions.

Part IV BalanceSheet Abstract

Details of companyregistration number,capital raised, BalanceSheet details,products etc. wererequired to beattached withfinancials

No such requirement.


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Thank You

363921 45344 revised schedule vi

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