Revised Schedule VI

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REVISED SCHEDULE VI
CA PURVI TRIVEDI
([email protected])
ELLISBRIDGE CPE STUDY CIRCLE OF WIRC OF ICAI
30th January, 2012
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
Background and Applicability
•
•
•
•
Revised Schedule VI is primarily necessitated due to
the following reasons:
To harmonize and synchronize with IFRS/Ind AS
Comparison of financial statements with global
companies
Liquidity Based Presentation-Current vs. Non-current
classification
Enhancing the disclosure requirements - Changes in
outdated disclosures and eliminate redundant
disclosures
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, 2011
specifying 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 or
after April 1, 2011.
• Guidance Note to Revised Schedule VI to the
Companies Act, 1956 issued by ICAI(Dec. 2011).
Background and Applicability
• Applicable to all Companies, except those referred to
in Proviso to Section 211(1) and Section 211(2) of the
Companies Act,1956,
i.e. Banking Companies or
Insurance Companies or
Electricity Companies,
which are required to prepare financial statements in
a format prescribed by another statute.
• However, neither the Electricity Act, 2003 nor the
Rules framed thereunder prescribe any specific
format, hence Electricity Companies are to follow
Revised Schedule VI.
Background and Applicability
POSER: VOLUNTARY APPLICATION
• A company having June 30,2011 as year-end wants to
publish its financial statements on December,2011.Can
it voluntarily apply Revised Schedule VI for
preparation of its financial statements for the year
ending 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.
Background and Applicability
POSER: 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.
Background and Applicability
POSER:HALF YEARLY OR NINE MONTHS PERIOD
RESULTS
• A company wants to publish its nine months financial
statements for the period ended December, 2011. Should
it use Old Schedule VI or Revised VI in the preparation of
its 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.
Background and Applicability
 As 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.
Background and Applicability
POSER: CLAUSE 41 TO THE LISTING AGREEMENT
• As the format of Balance Sheet currently prescribed
under Clause 41 to the Listing Agreement is based on Old
Schedule VI, whether such companies are required to
present their financials in the format of Old Schedule VI
or 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 is
prescribed – Format of Revised Schedule VI has to be
used for submission to stock exchanges as well.
Background and Applicability
POSER: IPO/FPO FILINGS
• Whether for IPO/FPO filings, information for earlier
years should be given under Revised Schedule VI or under
Old Schedule VI?
 As per MCA’s General Circular No.62/2011 dated 5th
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 year’s figures in
accordance with Revised Schedule VI would be difficult
and make comparables unrealistic. However, for period
beyond 31st March 2012, they would prepare only in the
new format as prescribed by the present Schedule VI of
the Companies Act, 1956.
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 Company’s Business 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 of
too much aggregation.
• Rounding off (where opted for) simplified.
• Explicit requirement to use the same unit of measurement
uniformly throughout the financial statements.
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 and
other legal requirements shall be made in the notes to
accounts.
• Comparatives (including corresponding amounts and notes) for
the immediately preceding reporting period shall also be given.
• Terms Used herein shall be as per the applicable Accounting
Standards.
• The Schedule shall stand modified in accordance with any
changes in treatment or disclosure as per the Act/ Accounting
Standards.
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 Current
Assets.
• Fixed Assets will be classified into Tangible Assets and NonTangible Assets. Movement during the year is to be given in
addition to Opening and Closing Balances on the face of the
Balance Sheet.
Major Changes in Balance Sheet
• Share Option Outstanding Account is a new addition under
“Reserves & Surplus” arising out of share-based payments like
Employees 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 item
which is classified in between equity and liabilities.
• Assets under Construction (i.e. Capital WIP and Intangible
Assets under development) are separate line items.
• Loans and Advances from / to Related Parties to be disclosed
separately.
• 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.
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 Losses
will be shown as a negative figure under “Reserves & Surplus”.
• Profit and Loss Appropriation Account to be disclosed under
“Reserves and Surplus”.
• Current maturities of a long term borrowing will have to be
classified under the head “Other Current Liabilities.”
• Share Application Money received for allotment of securities
and due for refund and interest accrued thereon to be
classified under “Other Current Liabilities”.
• Disclosure of all defaults in Repayment of Loans and Interest
to be specified in each case.
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 disclosed
separately 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 discontinuing
operations need to be disclosed separately.
Major Changes in Profit and Loss
• The items to be disclosed under Revenue from Operations have
been specifically indicated for both finance companies and
others.
• Expense on ESOP and ESPP should be disclosed separately
under Employee Benefits Expense.
• Any item of income or expenditure which exceeds one percent
of the revenue from operations or Rs. 100,000, whichever is
higher should be disclosed separately.
• Broad heads shall be decided taking into account the concept of
materiality and presentation of true and fair view of
financial statements.
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 deposit
accounts, Details of names, amount, maximum amounts with nonscheduled bank.
• Commission, brokerage and non-trade discounts paid to selling
agents.
• Managerial Remuneration u/s. 198 and computation of net
profits for calculation of commission.
• Information on licensed capacity, installed capacity and actual
production.
Structure of Existing Schedule VI
• Part I – Form of the Balance Sheet
–Option between
A. Horizontal Form and
B. Vertical Form
• General Instructions for preparation of Balance
Sheet
• 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 otherwise
requires
• Part IV – Balance Sheet abstract and Company’s
General business profile
Structure of Revised Schedule VI
• General Instructions
• Part I – Form of the Balance Sheet
• General Instructions for preparation of
Balance Sheet
• Part II – Form of Statement of Profit
and Loss
• General Instructions for preparation of
Statement of Profit and Loss
Part I – Form of the Balance Sheet
(Rupees in…)
Particulars
I
EQUITY AND LIABILITIES
(1)
Shareholders’ Funds
(a) Share Capital
(b) Reserves and Surplus
(c) Money received against Share
Warrants
(2)
Share Application Money pending
allotment
Note
No.
Current
Reporting
period
Previous
Reporting
period
Part I – Form of the Balance Sheet
(Rupees in…)
Particulars
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
Note
No.
Current
Reporting
period
Previous
Reporting
period
Part I – Form of the Balance Sheet
(Rupees in…)
Particulars
I
EQUITY AND LIABILITIES
(4)
Current Liabilities
Note
No.
(a) Short-Term Borrowings
(b) Trade Payables
(c) Other Current Liabilities
(d) Short-Term Provisions
TOTAL
Current
Reporting
period
Previous
Reporting
period
Part I – Form of the Balance Sheet
(Rupees in…)
Particulars
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
Note
No.
Current
Reporting
period
Previous
Reporting
period
Part I – Form of the Balance Sheet
(Rupees in…)
Particulars
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
Note
No.
Current
Reporting
period
Previous
Reporting
period
Part I – Form of the Balance Sheet
(Rupees in…)
Particulars
II
Note
No.
ASSETS
(c) Trade Receivables
(d) Cash and Cash Equivalents
(e) Short-Term Loans and Advances
(f) Other Current Assets
TOTAL
See accompanying notes to financial statements
Current
Reporting
period
Previous
Reporting
period
Share Capital
•
•
•
•
•
•
Disclosure for each class of share capital (different classes of
preference 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 the
ultimate holding company,
Share Capital
• Share holding details of more than 5 % shares specifying the
names of shareholders and number of shares held as on the
Balance Sheet date,
• Shares reserved for issue under options and contracts/
commitments for the sale of shares/disinvestment, including the
terms and amounts,
• Aggregate number and class of shares allotted as fully paid up
pursuant to contracts without consideration being received in
cash, including bonus shares and shares bought back, for a
period of immediately preceding 5 years,
• Terms (including date of conversion) of any securities
convertible into equity/ preference shares issued,
• Calls unpaid by Directors and Officers,
• Forfeited Shares (amount originally paid up).
Share Capital
POSER:PREFERANCE SHARES-LIABILITY OR EQUITY
• Revised Schedule VI states that different classes of
Preference Shares are to be treated separately. Whether
Preference Shares should be presented as share capital or a
company compulsorily needs to decide whether they are liability
or equity based on its economic substance using AS-31?
 Revised Schedule VI deals with only presentation and disclosure
requirements. Accounting for various items is governed by AS.
However, as AS-30,31 and 32 on Financial Instruments are
yet to be notified and Section 85(1) of the Act refers to
Preference Shares as a kind of Share Capital, they will have to
be classified as Share Capital.
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 allocations
and appropriations such as dividend, bonus shares and transfer
to/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 a
negative figure under the head ‘Surplus’.
Money Received Against Share
Warrants
• Issued to promoters and others, in case of listed companies, in
terms of Guidelines for Preferential Issues (i.e. SEBI(ICDR)
Guidelines, 2009.
• AS 20 defines Share Warrants as ‘financial instruments which
give the holder the right to acquire equity shares.’
• Disclosed as a separate line item, since shares are yet to be
allotted against the same.
Share Application Money Pending
Allotment
• Disclosed between ‘Shareholders’ Fund’ and ‘Non-Current
Liabilities.’
• Share application money not exceeding the issued capital and
to the extent non-refundable can only be classified under this
head – as ‘Equity.’
• Other amounts to the extent refundable, including interest –
to be classified as ‘Other Current Liabilities.’
• If a company’s Authorized Share Capital is not sufficient to
cover allotment of fresh shares on account of share application
money – to be disclosed under ‘Other Current Liabilities.’
• Other disclosures include: Terms & conditions, No. of shares
proposed to be issued, premium, if any, period before which
shares shall be allotted, reasons, including period, in case it is
pending beyond the period of allotment.
Current Liability
•
•
•
•
A liability shall be classified as current when it
satisfies any of the following 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 twelve months after
the reporting date; or
the company does not have an unconditional right
to defer settlement of the liability for at least
twelve months after the reporting date.
All other liabilities shall be classified as Non-Current.
Current vs. Non Current Liabilities
• Classification will depend on facts of each
rights/obligations of parties, past experience, etc.
case,
EXAMPLES
• If Loan is repayable within 12 months – Current.
• If Loan is repayable after 12 months and if the company is
expected to exercise option available to it to pre-pay – Current.
• If Loan is not repayable after 12 months and if the company is
not expecting to exercise option available to repay – NonCurrent.
Operating Cycle
• 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 be of duration of 12 months.
• Generally, it is calculated as:
Average Inventory Holding Period
(+) Average Production Period
(+) Average Collection Period
(-) Average Payment Period
Operating Cycle
POSER: OPERATING CYCLE
• An entity manufactures passenger vehicles. The time between
purchasing of raw materials for manufacture and completion of
manufacture and delivery to customers is 11 months. Dues are
settled after a period of 8 months from the date of sale. Will
the Inventory and the Trade Receivables be Current or NonCurrent in nature?
 Both Inventory and Trade Receivables would be classified under
Current Assets as the Operating Cycle is of 19 months (11
months + 8 months).
Non-Current Liabilities
•
•
•
•
LONG-TERM BORROWINGS:
Classified as Bonds/Debentures, Term Loans from banks and
other parties, Deferred payment liabilities, Deposits, Loans and
advances from related parties, Long term maturities of finance
lease obligations, Other loans and advances.
Further sub-classification into Secured and Unsecured
specifying the nature of security, rate of interest and other
terms of repayment.
Loans guaranteed by directors and others to be specified.
Period and amount of continuing default as on the balance sheet
date in repayment of loans and interest, to be specified
separately in each case.
Non-Current Liabilities
DEFERRED TAX LIABILITES(NET):
• AS 22 simply specifies that they should be presented
separately. Now, to be specifically disclosed under Non-Current
Liabilities.
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-Current
Liability will be governed by Revised Schedule VI.
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 services
rendered in the normal course of business.
• Payables towards the purchase of Capital items, amounts due
under 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 and
Non-Current based on the principles of Current/ Non-Current
classification.
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 be
provided 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 required
to be provided for, unless AS-4 is revised.
Current Assets
•
•
•
•
An asset shall be classified as current when it
satisfies any of the following criteria:
It expects to realise the asset, or intends to sell or
consume 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 a
liability for at least twelve months after the
reporting date.
All others are to be treated as ‘Non-current’.
Non -Current Assets
•
•
•
•
•
FIXED 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 each
class of assets
Movement in the Opening and Closing balance of assets, including
adjustments made on account of borrowing costs and foreign
exchange
fluctuations,
acquisitions
through
business
combinations are to be separately disclosed.
Details of Reduction /Increase in value of assets due to
reduction in capital or revaluation of assets are to be disclosed
for a period of subsequent 5 years.
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 firms
alongwith names of partners, total capital and share of each
partner is to be given.
LLP is a body corporate and not a partnership firm – to be
disclosed under Other Investments.
Aggregate amount of quoted/unquoted investments , market
value thereof, provision for dimunition in value of investments is
also to be disclosed.
Non-Current Assets
•
•
•
•
DEFERRED TAX ASSETS(NET)
LONG-TERM LOANS AND ADVANCES:
Classified as Capital Advances, Security Deposits, Loans and
Advances to related parties,
Further sub-classification under Secured & Unsecured
considered 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.
Trade Receivables
• 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.
• Trade Receivables outstanding for a period of 6
months from the date they are due for payment
should be separately shown.
(Old Schedule VI required separate presentation of
debtors outstanding for a period exceeding 6
months(i.e. based on billing date) and other debtors.)
Current Assets
CURRENT INVESTMENTS: Same principles of classification
and other disclosure requirements as are applicable to NonCurrent 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 and
Unsecured considered good and Doubtful.
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 be
separately stated
Separate disclosure for Balances with banks to the extent held
as 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 12
months maturity .
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 Cash
Equivalents’ and ‘Other Bank Balances.’
SHORT-TERM LOANS AND ADVANCES:
• Same principles of classification and other disclosure
requirements as are applicable to Long-Term Loans and
Advances.
OTHER CURRENT ASSETS:
• Residual line-item which incorporates current assets that do
not fit into any other asset categories (Eg., Unbilled Revenue,
Unamortised premium on forward contracts, etc.)
Contingent Liabilities And
Commitments
•
•
•
•
•
•
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 on
capital account and not provided for,
Uncalled liability on shares and other investments partly paid,
Other commitments (specify nature) which will include, noncancellable contractual commitments, cancellation of which
results in a penalty disproportionate to the benefits involved.
Part II –Form of Statement of Profit and Loss
(Rupees in…)
Particulars
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 Finished
Goods, Work- in-Progress and
Stock-in-Trade
Note
No.
Current
Reporting
period
Previous
Reporting
period
Part II –Form of Statement of Profit and Loss
(Rupees in…)
Particulars
Employee Benefit Expense
Finance Costs
Depreciation and Amortization
Expense
Other Expenses
Total Expenses
V
Profit before Exceptional and
Extraordinary Items and tax (III –
IV)
VI
Exceptional Items
Note
No.
Current
Reporting
period
Previous
Reporting
period
Part II –Form of Statement of Profit and Loss
(Rupees in…)
Particulars
VII
Profit before Extraordinary Items
and 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 from
Continuing Operations (VII – VIII)
Note
No.
Current
Reporting
period
Previous
Reporting
period
Part II –Form of Statement of Profit and Loss
(Rupees in…)
Particulars
XII
Profit/(Loss) from Discontinuing
Operations
XIII
Tax Expense of Discontinuing
Operations
XIV
Profit / (Loss) from Discontinuing
Operations (after tax) (XII-XIII)
XV
Profit / (Loss) for the period
(XI + XIV)
XVI
Earnings per equity share :
(1) Basic
(2) Diluted
Note
No.
Current
Reporting
period
See accompanying notes to the financial statements
Previous
Reporting
period
Revenue From Operations
A 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
Revenue From Operations
POSER: INDIRECT TAXES
• Whether revenue of the company should be presented as net of
indirect taxes such as Vat, Service Tax, etc. as required by
Revised 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.
Other Operating Revenues
POSER:REVENUE FROM OPERATIONS VS. OTHER INCOME
• A Company engaged in manufacture and sale of industrial and
consumer products, also has a real estate arm and is
continuously engaged in leasing of real estate properties.
Another Consumer Products Company, owns a 12 storied building
and temporarily lets out one floor on rent which is currently not
in use. In such a case, where the lease rent should be
accounted?
 Rent arising from leasing of real estate would be ‘Other
Operating Income’ in the former case, whereas ‘Other Income’
in the latter case.
Other Operating Revenues
POSER:REVENUE FROM OPERATIONS VS. OTHER INCOME
• Whether profit on sale of fixed asset and sale of manufacturing
scrap 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- generating
activities would be classified under ‘Other Operating Revenues’.
Other Income
Disclosure 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
attributable to such income)
directly
• Classification of income would also depend on the purpose for
which the particular asset is acquired/held.
Other
Income
POSER: DIVIDEND FROM SUBSIDIARY COMPANIES
• What would be the treatment of dividend from Subsidiary
Companies, as unlike the Old Schedule VI, the Revised Schedule
VI, does not prescribe any accounting treatment ?
 Dividend Income from Subsidiary Companies should be
recognized in accordance with AS-9 i.e. only when the right to
receive the same is established on or before the Balance Sheet
date.
 Disclosure is required as it amounts to Change in Accounting
Policy as per AS-5 which is to be applied prospectively.
(Dividend approved by the shareholders in the current year but
already recognized in the previous year should not be
derecognized for the comparatives presented in the first year
of application of Revised Schedule VI).
Other Income
POSER: REVENUE FROM OPERATIONS VS. OTHER INCOME
• Whether Dividend Income in case of Finance Companies would be
classified as Revenue from Operations or Other Income?
 General Instructions to Statement of Profit and Loss
specifically requires a finance company to disclose its Revenue
from operations as: Interest and Income from other financial
services i.e. it does not specify dividend income to be treated as
main revenue.
 Besides, General Instructions requires interest income of nonfinance company to be disclosed as other income. So, if the
dividend income of a finance company was to be stated in main
revenue, it would have clarified the same.
Other Income
SHARE IN PROFITS/LOSS IN PARTNERSHIP FIRMS/LLP/
SUBSIDIARY COMPANIES /ASSOCIATES
• No specific requirement to disclose separately, unlike Old
Schedule 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 the
difference is more than 6 months, disclosure is required.
Expenses
•
•
•
•
•
Disclosure is to be made on the face of Statement of Profit
and 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 Borrowing
Costs, Applicable Net Gain/Loss on Foreign Currency
Transactions and Translation.
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 is
higher is to be separately disclosed.
• Besides, under ‘Other Expenses’: Separate disclosure for
Consumption 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 is
required.
• Tax Expense: Bifurcated into Current Tax and Deferred Tax. In
case of MAT, disclosure in this regard should be made:
Current Tax (MAT)
Less: MAT Credit Entitlement
Net Current Tax
Additional Information
•
•
•
•
•
Additional information regarding aggregate expenditure and
income:
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-inProgress and the Gross Income from Services rendered – as
applicable are to be shown under broad heads. Broad Heads to
be decided taking into account the concept of materiality and
presentation of true and fair view of financial statements. (10%
of total value is generally considered as acceptable threshold
limit).
Additional Information
• The aggregate, if material, of any amounts set aside or proposed
to be set aside to reserve and any amounts withdrawn from such
reserves.
• The aggregate, if material, of the amounts set aside to
provisions made for meeting specific liabilities, contingencies or
commitments and any amounts withdrawn from such provisions,
as no longer required.
• Provisions for losses of Subsidiary Companies.
Other Disclosures
Statement of Profit and Loss shall also contain by way of a note:
• Value of imports calculated on C.I.F basis by the company
during the financial year in respect of Raw Materials,
Components and spare parts, Capital goods;
• Expenditure in foreign currency during the financial year on
account of royalty, know-how, professional and consultation
fees, interest, and other matters;
• Total value if all imported and indigenous raw materials, spare
parts and components consumed during the financial year and
the percentage of each to the total consumption;
Other Disclosures
• The amount remitted during the year in foreign currencies on
account of dividends with a specific mention of the total number
of non-resident shareholders, the total number of shares held
by them on which the dividends were due and the year to which
the dividends related;
• Earnings in foreign exchange classified as: Export of goods
calculated on F.O.B. basis, Royalty, know-how ,professional and
consultation fees, Interest & Dividend and Other Income,
indicating the nature thereof.
Comparison with Existing Schedule
VI
Particulars
Old Schedule VI
Revised Schedule VI
Authority
Provisions of
Schedule VI will prevail
over Accounting
Standards
Provisions of Accounting
Standards will prevail
over Schedule VI
Form of
Balance
Sheet
Both horizontal and
vertical form were
Allowed
Only vertical form of
Balance Sheet has been
specified in the revised
Schedule VI
Form of
Profit and
Loss
Account
No format specified
for Profit and Loss
Account
Form of Profit and Loss
Account specified under
Part II
Comparison with Existing Schedule
VI
Particulars
Old Schedule VI
Revised Schedule VI
Headings in
Balance
Sheet
“Sources of funds”
“Equities and Liabilities”
and “Application of funds” and “Assets”
Profit and
Loss Appropriation
Account
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.
Comparison with Existing Schedule
VI
Particulars
Old Schedule VI
Revised Schedule VI
Proposed
Dividend
Proposed Dividend
required to be provided
for
Proposed Dividend to
be disclosed in notes
Quantitative
Details
Quantitative details of
Raw materials,
purchases, stocks and
turnover to be given for
each class of goods. Also
licensed and installed
capacity and production
quantity to be given for
manufacturing
Companies
No quantitative details
required. Limited
requirements for
disclosure for CIF and
FOB values etc.
Comparison with Existing Schedule
VI
Particulars
Old Schedule VI
Rounding off of
Turnover < Rs.100 Crs Figures appearing in R/off to the nearest
Financial
Hundreds, thousands or
Statements
decimal thereof
Rs.100 Crs.<Turnover <
Rs. 500 Crs - R/off to
the nearest
Hundreds, thousands,
lakhs or millions or
decimal thereof
Turnover >Rs. 500 Crs R/off to the nearest
Hundreds, thousands,
lakhs, millions or crores,
or decimal thereof
Revised Schedule VI
Turnover < Rs. 100 Crs R/off to the nearest
Hundreds, thousands,
lakhs or millions or
decimal thereof
Turnover > Rs. 100
Crs - R/off to the
nearest lakhs, millions or
crores, or decimal
thereof
Comparison with Existing Schedule
VI
Particulars
Old Schedule VI
Revised Schedule VI
Share Capital
Requirement to
disclose separately
bonus shares/shares
allotted without
consideration issued
without any time limit
Number of bonus
shares/shares allotted
without payment being
received in cash/ shares
bought back during last 5
years
No requirement for
details of shareholders
holding more than 5% of
Shares
Names and number of
shares held by
shareholders holding more
than 5 % of Shares
Comparison with Existing Schedule
VI
Particulars
Old Schedule VI
Revised Schedule VI
Unpaid Calls
Disclosure was required
for unpaid calls by
directors of the
company.
Disclosure will now be
required for total unpaid
calls by directors and
officers of the
company.
Net Working
Capital
Current Assets &
Liabilities are shown
together under
application of funds. The
net working capital
appears on Balance
Sheet.
Assets & Liabilities are to
be bifurcated in to
Current & Non-current
and to be shown
separately. Hence,
net working capital will
not be appearing in
Balance Sheet.
Comparison with Existing Schedule
VI
Particulars
Old Schedule VI
Fixed
Assets
There was no bifurcation Fixed assets to be shown
required in to tangible & under non-current assets
intangible assets.
and have to be bifurcated
into Tangible & intangible
assets.
Capital advances used to
be shown under the Head
Capital Work in Progress
under Fixed Assets
Revised Schedule VI
Capital advances to be
shown under the head
‘Long term Loans and
Advances’
Comparison with Existing Schedule
VI
Particulars
Old Schedule VI
Borrowings
Short term & long term
borrowings are grouped
together under the
head Loan funds subhead 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.
Comparison with Existing Schedule
VI
Particulars
Old Schedule VI
Revised Schedule VI
Deposits
Lease deposits are part
of loans & advances
Lease deposits to be
disclosed as long term
loans & advances under
the head non-current
Assets
Investments
Both current & noncurrent investments to
be disclosed under the
head Investments
Current and non-current
investments are to be
disclosed separately under
current assets & noncurrent assets
respectively.
Comparison with Existing Schedule
VI
Particulars
Old Schedule VI
Revised Schedule VI
Loans &
Advances
Loans & Advance
are disclosed along
with current assets
Loans & Advances to be
broken up
in long term & short
term and to be
disclosed under noncurrent &
current assets
respectively.
Loans & Advance to
subsidiaries & others
to be disclosed
separately.
Loans & Advance from
related parties & others
to be disclosed
separately
Comparison with Existing Schedule
VI
Particulars
Old Schedule VI
Revised Schedule VI
Deferred Tax
Assets /
Liabilities
Deferred Tax assets
/ liabilities to be
disclosed separately
Cash & Bank
Balances
Bank balance to be
No such bifurcation
bifurcated in scheduled required. Bank balances in
banks & others
relation to earmarked
balances, held as margin
money against
borrowings, deposits with
more than 12 months
maturity, each of these to
be shown separately.
Deferred Tax assets /
liabilities to be
disclosed under noncurrent assets /
liabilities as the case may
be.
Comparison with Existing Schedule
VI
Particulars
Old Schedule VI
Revised Schedule VI
Profit & Loss
(Debit
Balance)
P&L debit balance to
be separately
disclosed in the
Balance Sheet.
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.
Sundry
Debtors
Debtors outstanding
for more than six
months from invoice
date to be shown
separately
Debtors outstanding for
more than six months from
the date they became due to
be shown separately
Comparison with Existing Schedule
VI
Particulars
Old Schedule VI
Revised Schedule VI
Other Current
Liabilities
No specific mention for
separate disclosure of
Current maturities of
long term debt
Current maturities of long
term debt to be disclosed
under other current
liabilities.
No specific mention for
separate disclosure of
Current maturities of
finance lease
Obligation
Current maturities of
finance lease obligation
to be disclosed.
Comparison with Existing Schedule
VI
Particulars
Old Schedule VI
Revised Schedule VI
Separate line-item
Disclosure Criteria
Any item under which
expense exceeds 1% of
the total revenue of the
company or Rs. 5,000
whichever is higher;
shall be disclosed
separately
Any item of income /
expense which exceeds
1% of the revenue from
operations or Rs. 1,00,000,
whichever is higher; to be
disclosed separately
Expense
Classification
Function wise &
Nature wise
Expenses in Statement
of Profit and Loss to be
classified based on
nature of expenses only
Comparison with Existing Schedule
VI
Particulars
Old Schedule VI
Revised Schedule VI
Finance Cost
Finance cost to be
classified in fixed
loans & other loans
Finance cost shall be
classified as interest
expense, other borrowing
costs & Gain / Loss on
foreign currency
transaction & translation
Foreign Exchange
Gain / Loss
Gain / Loss on
foreign currency
transaction to be
shown under finance
cost
Gain / Loss on foreign
currency transaction to
be separated into finance
costs and other
expenses
Comparison with Existing Schedule
VI
Particulars
Old Schedule VI
Revised Schedule VI
Purchases
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.
TDS amount on
Interest, Royalty
Received
TDS amount was
required to be shown
for Interest income
etc.
No requirement of
disclosing TDS amounts
separately
Comparison with Existing Schedule
VI
Particulars
Old Schedule VI
Revised Schedule VI
Managerial
Remuneration
And Commission
Payment to directors
and detailed
calculation under
section 198 was
required to be
disclosed
No disclosure requirements
for Managerial
Remuneration
ESOP Expenses
No requirement to
show separately as
part of Employee
Benefits Expense
Expense on Employee
Stock Option Scheme
(ESOP) and Employee
Stock Purchase Plan (ESPP)
to be shown separately as
part of Employee Benefits
expense
Comparison with Existing Schedule
VI
Particulars
Old Schedule VI
Revised Schedule VI
Part III
Interpretation
Terms: provision,
reserve, capital
reserve, quoted
investment etc. were
defined
No such specific
definitions.
Part IV Balance
Sheet Abstract
Details of company
registration number,
capital raised, Balance
Sheet details,
products etc. were
required to be
attached with
financials
No such requirement.
Thank You
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