REQUIREMENTS TO REVISE SCHEDULE-VI

Emergence of MNC’S

Rapid increase in cross border
transactions.

To make our financial statements to speak
global language for attracting foreign
funds into India.
REVISED SCHEDULE - VI
Old
schedule VI had outlived its utility;
Revised Schedule VI effective from 1st April, 2011.
Being a statutory format its early adoption is not
permitted;
Revised Schedule VI has been framed as per the
existing non- converged Indian Accounting
standards notified under the Companies
(Accounting Standards) rules,2006.
UNIT OF MEASUREMENT
•Uniformly –
•All
Financial statement .
items shown in Financial statements including
notes should be given.
CHANGES IN P & L A/C
•Expenses are Grouped-
Nature.
•Income or Expenditure >
1% of Revenue from
operations or Rs. 1,00,000 whichever is Higher
should be disclosed.
•Net gain or Loss on AS-11,
i.e., Accounting for
foreign exchange loss or gain , should be classified
as under the head of finance cost.
•Net gain or loss on others separately .
COMPARISION OF P & L A/C
Old Schedule VI.
Revised Schedule VI
• Cost of sales
• Purchases and changes in stock, direct
expenses.
• Indirect Expenses
• Indirect expenses.
• Staff Welfare
expenses.
• Employee benefit expenses.
• Profit before Tax
• Profit before exceptional & extraordinary items & Tax.
• Profit after Tax
• Profit before Extraordinary and Tax.
• Surplus
• Profit before Tax.
• P/L discontinuing operation.
• EPS should be shown separately.
• Diluted Earning per share also shown
separately.
CHANGES IN BALANCE SHEET
* Current & Non – Current Items.
* Secured & Unsecured- Notes to Accounts.
* Sundry Creditors – Trade Payables.
* Sundry Debtors – Trade Receivables.
* Other Receivables – Other Current assets.
* Other Payables - Other Current Liabilities.
COMPARISION OF BALANCE SHEET
Old Schedule VI
•
•
•
•
•
•
Shareholders Funds.
Borrowings loan funds.
Current Liabilities &
provisions.
Fixed Assets.
Investments.
Loans & advances.
Revised Schedule VI






Shareholders funds – Share
warranty, share Application,
Pending Allotment.
Long term Borrowings &
short term borrowings.
Non current & current
liabilities.
Fixed assets – Tangible,
Intangible, Capital work in
progress, intangible under
development.
Non current Investments &
Fixed Investments.
Long term and Short term
Loan & advances.
FORM OF BALANCE SHEET
FORM OF BALANCE SHEET
Particulars
Note No
Figures as in C/Y
Figures as in Figures as in
Note No C/Y
P/Y
Figures as in P/Y
1. EQUITY AND LIABILITIES
Particulars
1. EQUITY AND LIABILITIES
(1) Shareholder's Funds
(1) Shareholder's Funds
(a) Share Capital
(a)
Share Capital
(2) Share application money pending allotment
(3)
Non-Current
Liabilities
(2) Share
application money pending
allotment
(a) Long-term borrowings
(3) Non-Current
Liabilities
(b)
Deferred
tax liabilities (Net)
(c) Other Long term liabilities
(d)
Longborrowings
term provisions
(a) Long-term
(4) Current Liabilities
(a)
Short-term
borrowings
(b) Deferred
tax liabilities (Net)
(b) Trade payables
(c) Other current liabilities
(c) Other Long term liabilities
(d) Short-term provisions
Total
When Liability is classified as current liabilities?
1.
2.
3.
4.
5.
Condition to be satisfy the current liabilities
criteria:It is expected to be settled in the company’s
normal operating cycle,
It is held primarily for the purpose of being traded,
It is due to be settled within 12 months after the
reporting date, or;
The company does not have an unconditional right
to defer settlement of the liability for at least 12
months after the reporting date.
All other Liabilities shall be classified as NonCurrent.
Meaning of Operating Cycle
1.
2.
The term “Operating Cycle” is defined as the time
between the acquisition of assets for processing and
their realization in Cash or cash equivalents. A
Company’s normal operating cycle may be longer than
twelve months e.g. companies manufacturing wines,
etc. However, where the normal operating cycle cannot
be identified, it is assumed to have a duration of twelve
months.
Where a company is engaged in running multiple
businesses, the operating cycle could be different for
each line of business. Such a company will have to
classify all the assets and liabilities of the respective
businesses into current and non-current, depending
upon the operating cycles for the respective businesses.
Definition of Operating Cycle.

The Operating Cycle is the amount of time it
takes for a company to turn cash used to purchase
inventory into cash once again. This number is
calculated by adding the age of inventory ( the
number of days that inventory is held prior to sale)
with the collection period ( the number of days
required to collect receivables). A company with a
short operating cycle is able to recover its
investment. A company with a long operating cycle
will have less cash available to meet any short term
needs, which can result in increased borrowing
and interest expense.
Examples of Current and Non- current
1.
A company has excess finished goods inventory that
it does not expect to realize within the company’s
operating cycle of fifteen months. Since such finished
goods inventory is held primarily for the purpose of
being traded, the same should be classified as
“current”.
2. A company has sold 10,000 tones of steel to its customer.
The sale contract provides for a normal credit period of three
months. The company’s operating cycle is six months.
However, the company does not expect to receive the payment
within twelve months from the reporting date. Therefore, the
same should be classified as “Non-Current” in the Balance
Sheet. In case, the company expects to realize the amount up
to 12 months from the Balance Sheet date (though beyond
operating cycle), the same should be classified as “current”.
Points related with current liabilities.
1.
The portion of long term debts/ lease obligations,
which is due for payments within 12 months of the
reporting date is required to be classified under “
Other Current Liabilities” while the balance
amount should be classified under Long term
Borrowings.
1.
Trade deposits & security deposits which are not in
the nature of borrowings should be classified
separately under
Other Non-current/Current
Liabilities. Other payables may be in the nature of
statutory dues such as withholding taxes, Service
Tax, VAT, Excise duty etc.
Short – term Provisions
The amounts shall be classified as:
(a) Provision for employee benefits;
(b) Others (specify nature).
Others would include all provisions other than
provisions for employee, benefits such as Provision for
dividend, Provision for taxation, Provision for
warranties, etc. These amounts should be disclosed
separately specifying nature thereof.
Definition of Long term debt
Long term liabilities are liabilities with a due date that’s
extends over a one year, such as a notes payable that
matures in 2 years.
Examples of long term liabilities are debentures, Bonds,
mortgage Loans ad other bank loans( It should be noted
that all bank loans are long term since not all paid over a
period greater than one year.)
It is a sign to show that the company is able to obtain long
term financing.
Income received In advance
"...It may occur that you receive income or a portion of an
income in advance. In the financial statements all income
must be shown for a period of one year or 12 consecutive
months or accounting periods or reporting dates. The income
account must be adjusted to reflect the correct income
amounts at the end of the financial year. The amount of the
income will decrease in the books of the business and a
liability is created - Income received in advance. It is regarded
as a liability to the business at the end of the financial year as
the income is only receivable in the next financial year...."
They are actually liabilities to the business as the business has
still not earned the revenue because goods or services have still
not
been
provided
to
the
customers...."