OF THE COMPANIES ACT, 1956 AN INSIGHT TO REVISED SCHEDULE VI

OF THE COMPANIES ACT, 1956 AN INSIGHT TO REVISED SCHEDULE VI
CA. (Dr.) G.S. Grewal Slide 1

Approach in Discussion
Schedule VI Approach in Discussion The presentation is prepared to meet the course requirement of ISC. It should be noted that the treatment of Loss on Issue of Shares, Loss on Issue of Debentures and Preliminary Expenses is different than treatment of CBSE. Key elements / issues of Revised Schedule VI, both for Balance Sheet and Statement of Profit and Loss have been highlighted. The discussion of the key elements/issues are, in brief but where considered otherwise, they are discussed in detail. Individual items of Statement of Profit and Loss and Balance Sheet have been explained with the help of examples where considered appropriate. CA. (Dr.) G.S. Grewal

Companies Act, 1956 and Schedule VI
Schedule VI is prescribed under the Companies Act, 1956. It has prescribed forms for preparing financial statements of a company i.e. (a) Balance Sheet; and (b) Statement of Profit and Loss. CA. (Dr.) G.S. Grewal

Is it mandatory to follow Schedule VI?
Section 211 of the Companies Act, 1956 prescribes that: Balance Sheet and Profit and Loss Account (now titled Statement of Profit and Loss) shall be in the form setout in Schedule VI or as near thereto as circumstances admit. CA. (Dr.) G.S. Grewal

Highlights of Revised Schedule VI
General In case, Revised Schedule VI is in conflict with law and Accounting Standards, Provisions of Law and accounting standards will override Schedule VI. Detail of each item of statement of Profit and Loss and Balance Sheet shall be given in Note duly referenced to the Balance Sheet or Statement of Profit and Loss. Notes shall be part of the financial statements. CA. (Dr.) G.S. Grewal

Schedule VI STATEMENT OF PROFIT AND LOSS and BALANCE SHEET
Highlights STATEMENT OF PROFIT AND LOSS and BALANCE SHEET CA. (Dr.) G.S. Grewal

Statement of Profit and Loss
Schedule VI Statement of Profit and Loss Statement of Profit and Loss is to be prepared in the form prescribed in Schedule VI of the Companies Act, 1956. Income to be classified as ‘Revenue from Operations’ and ‘Other Income’. Expenses to be classified on the basis of its nature and not on the basis of activity. The form of Statement of Profit and Loss does not provide for appropriation of profits. CA. (Dr.) G.S. Grewal

Balance Sheet Only vertical form of Balance Sheet is prescribed.
Schedule VI Balance Sheet Only vertical form of Balance Sheet is prescribed. Assets and liabilities (including provisions) are to be classified as into Non-current and Current. Non-current Liabilities, Current Liabilities, Non-current Assets, Current Assets, Trade Payables and Trade Receivables have been defined. Share Application Money Pending Allotment to be separately shown. Balance of Statement of Profit and Loss, whether ‘positive’ or ‘negative’ is to be shown under ‘Reserve and Surplus’. The head ‘Miscellaneous Expenditure’ has been deleted. CA. (Dr.) G.S. Grewal

Accounting Treatment of Miscellaneous Expenditure
Schedule VI Accounting Treatment of Miscellaneous Expenditure Accounting treatment of following expenditure under the Revised Schedule VI is as discussed in the following slides: Preliminary Expenses (including Deferred Revenue Expenditure); Discount or Loss on Issue of Shares; Share Issue Expenses; and Discount or Loss on Issue of Debentures. CA. (Dr.) G.S. Grewal

Writing Off of Miscellaneous Expenditure
Schedule VI Writing Off of Miscellaneous Expenditure Miscellaneous Expenditure may be written off : Either from Securities Premium Reserve as provided in section 78 (if it exists); or from General Reserve (if it exists); or (ii) from the Statement of Profit and Loss. CA. (Dr.) G.S. Grewal

Writing Off of Miscellaneous Expenditure
Schedule VI Writing Off of Miscellaneous Expenditure Securities Premium Reserve may be used for the purposes provided in section 78 i.e. for: Issuing Fully Paid Bonus Shares; Writing off of Preliminary Expenses; Writing off discount allowed on issue of securities or debentures of the company; and Premium payable on redemption of Redeemable Preference Shares or Debentures. CA. (Dr.) G.S. Grewal

(including Deferred Revenue Expenditure)
Schedule VI Preliminary Expenses Preliminary Expenses (including Deferred Revenue Expenditure) Preliminary expenses and Deferred Revenue Expenditure is to be written off in the year they are incurred. either from Securities Premium Reserve (if it exists); or from General Reserve (if it exists); or (iii) from the Statement of Profit and Loss in the year in which it is incurred. CA. (Dr.) G.S. Grewal

Discount or Loss on Issue of Shares
Schedule VI Discount or Loss on Issue of Shares Discount or Loss on Issue of Shares (i.e. Discount on Issue of Shares and/or Premium Payable on Redemption of Preference Shares) are written off: either from Securities Premium Reserve (if it exists); or from General Reserve (if it exists); or (iii) from the Statement of Profit and Loss in the year in which it is incurred. CA. (Dr.) G.S. Grewal

Loss on Issue of Debentures
Schedule VI Loss on Issue of Debentures Loss on Issue of Debentures (i.e. Discount on Issue of Debentures and / or Premium Payable on Redemption of Debentures) are in the nature of borrowing costs. Accounting Treatment of Borrowing Cost is guided by AS 16, Borrowing Costs. It is written off: either from Securities Premium Reserve (if it exists); or from General Reserve (if it exists); or (iii) from the Statement of Profit and Loss in the year in which it is incurred. CA. (Dr.) G.S. Grewal

Schedule VI “Terms” Used in STATEMENT OF PROFIT AND LOSS
Meaning “Terms” Used in STATEMENT OF PROFIT AND LOSS CA. (Dr.) G.S. Grewal

Meaning of Terms Used in Statement of Profit and Loss
Schedule VI Meaning of Terms Used in Statement of Profit and Loss Revenue from Operations It is the revenue earned from the business operations i.e. business activities. Examples of Revenue from Operations are: Sale of goods; Sale of services; Other Operating revenues; Other Income It means revenue that is not revenue from operations. For example: Interest and dividend etc. for a Non – finance Companies. CA. (Dr.) G.S. Grewal

Schedule VI Meaning of Terms Used in Statement of Profit and Loss Expenses Expenses are classified or shown under the heads discussed below: Cost of Material Consumed Under the head, consumption of raw materials to produce the goods is disclosed. As the title suggests, it relates to manufacturing companies. Purchases of Stock – in – trade Under the head, purchase of goods i.e. stock – in – trade i.e. goods traded in is disclosed. Changes in Inventories of Finished Goods, WIP and Stock – in - trade It is the difference between opening inventory (stock) and closing inventory (stock) of Finished Goods, WIP and Stock – in – trade. Opening and closing inventory of raw material is not dealt in the head as it is accounted in ‘Cost of Material Consumed’. CA. (Dr.) G.S. Grewal

Schedule VI Meaning of Terms Used in Statement of Profit and Loss Employees Benefit Cost Expenses incurred on employees towards salary, wages, leave encashment, provident fund and staff welfare etc. are shown under the head. Finance Cost Expenses incurred on interest on borrowings is disclosed or shown under this head. It should borne in mind that bank charges are not part of finance cost, it being payment towards service rendered by the bank. Bank Charges are included in Other Expenses. Depreciation and Amortisation Depreciation is charged on tangible fixed assets for its use over its useful life. Amortisation is associated with Intangible Assets and is the amount written off over its estimated useful life. Other Expenses All expenses that do not fall in the above classification are shown under Other Expenses. CA. (Dr.) G.S. Grewal

(Equity and Liabilities Part)
Schedule VI Meaning “Terms” Used in BALANCE SHEET (Equity and Liabilities Part) CA. (Dr.) G.S. Grewal

Meaning of Terms Used in Equity and Liabilities
Schedule VI Meaning of Terms Used in Equity and Liabilities Shareholders’ Funds Shareholders’ Funds includes Share Capital; Reserves and Surplus; and Money Received against Share Warrants. (a) Share Capital Share Capital is the amount received on the subscribed shares. Share Capital includes both Equity share Capital and Preference Share Capital. (b) Reserves and Surplus Reserves and Surplus includes the amount received as Securities Premium Reserve and the amount appropriated out of surplus of Statement of Profit and Loss. (c) Money Received against Share Warrants It is the amount that the company has received has against share warrants that shall be converted into shares on a future date at a pre-determined price. CA. (Dr.) G.S. Grewal

Schedule VI Meaning of Terms Used in Equity and Liabilities Share Application Money Allotment Share Application Money Pending Allotment means the amount received towards share application against which allotment shall be made. Current Liabilities and Non – current Liabilities Current Liabilities are those liabilities which are expected to be settled in company’s normal operating cycle; or due to be settled within twelve month after the reporting date i.e. Balance Sheet date; or held primarily for the purpose of being traded; or there is no unconditional right to defer settlement for at least 12 months after the reporting date i.e. Balance Sheet date. All other liabilities are Non – current Liabilities. CA. (Dr.) G.S. Grewal

Schedule VI Meaning of Terms Used in Equity and Liabilities Operating Cycle Operating Cycle means the time between the acquisition of assets for processing and their realisation in cash or cash equivalents. Where operating cycle cannot be identified, it is assumed to be 12 months. Long – term Borrowings Long – term Borrowings means borrowings which are repayable after 12 months of date of borrowing. CA. (Dr.) G.S. Grewal

Schedule VI Meaning of Terms Used in Equity and Liabilities Deferred Tax Liabilities (Net) It is only a book entry i.e. not an actual liability. The entry is passed with the net effect of tax on difference between accounting income and taxable income which are temporary in nature. If accounting income is higher than the taxable income, it results in Deferred Tax Liability. In a Balance Sheet either Deferred Tax Liabilities (Net) or Deferred Tax Assets (Net) will appear. Other Long term Liabilities Long – term liabilities other than long term borrowings are shown as Other Long term Liabilities. Long term Provisions Provision is amount provided for a liability amount of which is not ascertained but is estimated. Provisions that are likely to be paid after 12 months of the date of Balance Sheet are shown as Long term Provisions. CA. (Dr.) G.S. Grewal

Schedule VI Meaning of Terms Used in Equity and Liabilities 2. Current Liabilities Current Liabilities are those liabilities that are payable within 12 from the date of the Balance Sheet. Current Liabilities are classified into: Short term Borrowings; Trade Payables; Other Current Liabilities; and Short term Provisions. Short term Borrowings Short term Borrowing are the borrowings of the company which are payable with the 12 months of the date of borrowing. CA. (Dr.) G.S. Grewal

Schedule VI Meaning of Terms Used in Equity and Liabilities (b) Trade Payables Trade Payables is the amount payable for purchase of goods or services taken in the ordinary course of business. Trade Payables includes Sundry Creditors and Bills Payable. (c) Other Current Liabilities Liabilities that are payable within 12 months of the date of Balance Sheet and which are not classified as Short term Borrowings and Trade Payables are Other Current Liabilities. (d) Short term Provisions Provision is amount provided for a liability amount of which is not ascertained but is estimated. Provisions that are likely to be paid within 12 months of the date of Balance Sheet are shown as Short term Provisions. CA. (Dr.) G.S. Grewal

Average Payment Time (in months)
Schedule VI Illustration: Classification of liability as non – current and current on the basis of Operating Cycle Liability Operating Cycle (in months) Average Payment Time (in months) Classification Trade Payables 10 8 Current Liabilities 12 15 Non – current Liabilities 18 24 CA. (Dr.) G.S. Grewal

Schedule VI “Terms” Used in BALANCE SHEET (Assets Part)
Meaning “Terms” Used in BALANCE SHEET (Assets Part) CA. (Dr.) G.S. Grewal

Meaning of Terms Used in Assets
Schedule VI Meaning of Terms Used in Assets Current Assets and Non Current Assets Current Assets are those assets which are expected to be realised in or intended for sale or consumption in the company’s normal Operating Cycle; or held primarily for the purpose of trading, or expected to be realised within 12 months from the reporting date or closing date i.e. Balance Sheet date; or It is cash and cash equivalent unless it is restricted from being exchanged or used to settle a liability for at least 12 months after the reporting date i.e. Balance Sheet date. All other assets are Non – current Assets. CA. (Dr.) G.S. Grewal

Schedule VI Meaning of Terms Used in Assets Operating Cycle Operating Cycle means the time between the acquisition of assets for processing and their realisation in cash or cash equivalents. Where operating cycle cannot be identified, it is assumed to be 12 months. Non – current Assets (a) Fixed Assets Fixed assets are the assets owned by enterprise to enhance its earning capacity and not for resale. Fixed Assets are classified into four following classes: Tangible Assets; Intangible Assets; Capital Work – in – progress; Intangible Assets under Development. (i) Tangible Fixed Assets Tangible Fixed Assets are those assets which have physical existence i.e. they can be seen and touched. CA. (Dr.) G.S. Grewal

Schedule VI Meaning of Terms Used in Assets (ii) Intangible Fixed Assets Intangible Fixed Assets are those assets which do not have physical existence i.e. they cannot be seen or touched. (iii) Capital Work – in – progress Tangible Fixed assets that are under construction i.e. are not yet complete are classified or shown as Capital Work – in – progress. (iv) Intangible Assets under Development Intangible Fixed Assets that are under development i.e. are not yet complete are classified as Intangible Assets under Development. (b) Non – current Investments Non – current Investments are those investments which are made with the aim to hold it for a long time. They are further classified into Trade Investments and Non – trade Investments. Trade investments are the investments that are made in another company not being its subsidiary, for the purpose of promoting its own business. CA. (Dr.) G.S. Grewal

Schedule VI Meaning of Terms Used in Assets (c) Deferred Tax Assets (Net) Deferred Tax Assets (Net) like Deferred Tax Liability (Net) is a book entry i.e. it is not an actual asset. The entry is passed with the net effect of tax on difference between accounting income and taxable income which are temporary in nature. If accounting income is lower than the taxable income, it results in Deferred Tax Asset. In a Balance Sheet either Deferred Tax Liability (Net) or Deferred Tax Asset (Net) will appear. (d) Long term Loans and Advances Loans and Advances given by a company which are receivable in cash or in kind after a period of 12 months from the date of advance are classified as Long term Loans and Advances. (e) Other Non – current Assets All assets that receivable or recoverable after 12 months of the date of Balance Sheet which do not fall in the category of (a) to (d) above are classified or shown as Other Non – current Assets. CA. (Dr.) G.S. Grewal

Schedule VI Meaning of Terms Used in Assets 2. Current Assets Current Assets are those assets which fulfill any of the four conditions prescribed by Revised Schedule VI of the Companies Act, The prescribed conditions are discussed earlier in slide 21. They are classified into following classes: Current Investments; Inventories; Trade Receivables; Cash and Cash Equivalents; Short term Loans and Advances; Other Current Assets. (a) Current Investments Current Investments are those investments of a company which are made with the purpose to sell within a period of 12 months of the date of Balance Sheet. CA. (Dr.) G.S. Grewal

Schedule VI Meaning of Terms Used in Assets (b) Inventories Inventories are goods held by a company to be consumed or sold in the normal course of its business. They include: Raw Material; Stock – in – trade; Consumable Stores; Loose tools; Stores and spares. (c) Trade Receivables Trade Receivables means the amount receivable for sale of goods or services rendered in the ordinary course of its business. Trade Receivable includes both Sundry Debtors and Bills Receivable. CA. (Dr.) G.S. Grewal

Schedule VI Meaning of Terms Used in Assets (d) Cash and Cash Equivalents Cash and Cash Equivalents includes Cash in Hand, Cash at Bank, Cheques / Drafts in Hand, Earmarked Bank Balances, Balance lying as Margin Money, Deposits in banks with more than 12 months maturity. (e) Short term Loans and Advances Advances receivable by a company whether in cash or in kind within 12 months from the date of Balance Sheet are classified as Short term Loans and Advances. (f) Other Current Assets Current assets that are not classified in any of the above classifications (a) to (e) above are classified as Other Current Assets. CA. (Dr.) G.S. Grewal

Average Collection Time (in months)
Schedule VI Illustration: Classification of asset as non – current and current on the basis of Operating Cycle Asset Operating Cycle (in months) Average Collection Time (in months) Classification Trade Receivables 11 10 Current Assets 12 15 Non – current Assets 20 24 Non – current Assets. CA. (Dr.) G.S. Grewal

Form of Statement of Profit and Loss
Schedule VI Form of Statement of Profit and Loss Particulars Note No. Figures for the current reporting period Figure for the previous reporting period I. Revenue from Operations II. Other Income III Total Revenue (I + II) IV. Expenses (a) Cost of Material Consumed (b) Purchase of Stock – in – trade (c) Changes in Inventories of finished goods, Work – in – progress and stock – in – trade (d) Employees Benefits Expenses (e) Finance Cost (f) Depreciation and Amortisation Expenses (g) Other Expenses Total Expenses V. Profit before exceptional and extraordinary items and tax (III – IV) CA. (Dr.) G.S. Grewal

Form of Statement of Profit and Loss
Schedule VI Form of Statement of Profit and Loss Particulars Note No. Figures for the current reporting period Figure for the previous reporting period V. Profit before exceptional and extraordinary items and tax (III – IV) VI. Exceptional Items VII. Profit before extraordinary items and tax VIII. Extraordinary Items IX. Profit before tax X. Tax Expense Current Tax Deferred Tax XI. Profit (loss) for the period from continued operations XII Profit (Loss) from the discontinuing business XIII Tax expenses of discontinuing operations XIV. Profit (Loss) for the period XV. Earnings per equity share (EPS and Diluted EPS) CA. (Dr.) G.S. Grewal

Discussion on Heads of Accounts
Schedule VI Discussion on Heads of Accounts Income is classified into: Revenue form Operations; and Other Income. CA. (Dr.) G.S. Grewal

Schedule VI Discussion on Heads of Accounts Revenue from Operations It is revenue earned from the business operations (activities). For a manufacturing or trading company it includes: Sale of Products; Sale of Services; and Other Operating Revenues (Say Sale of Scrap). For a finance company it includes: Interest; Dividend; Profit from sale of shares; and Income from Other Financial Services. CA. (Dr.) G.S. Grewal

Schedule VI Discussion on Heads of Accounts Other Income Other Income includes revenue that is not revenue from operations. Other income is classified into: (a) Interest income; (b) Dividend income; (c) Profit on sale of investments; and (d) Other non-operating income. CA. (Dr.) G.S. Grewal

Schedule VI Discussion on Heads of Accounts Expenses are shown under the following heads: Cost of Materials Consumed: It relates to manufacturing companies and is computed as follows: Opening Balance + Purchases – Closing Balance (b) Purchase of stock-in-trade: It relates to trading companies. (c) Changes in inventories of finished goods, WIP and Stock-in-trade. CA. (Dr.) G.S. Grewal

Schedule VI Discussion on Heads of Accounts (d) Employees Benefits Expenses: Expenses incurred on employees are classified or shown under the head. It includes expenses on Salary Wages, Leave Encashment, Staff Welfare Expenses Retirement Benefits etc. Employees Benefits Expenses may be further disclosed or shown as Direct Expenses (Wages and related costs or expenses) being part of Cost of Goods Sold and Indirect Expenses (Salaries and related costs or expenses). CA. (Dr.) G.S. Grewal

Schedule VI Discussion on Heads of Accounts Finance Cost: Finance cost means expenses incurred on raising the loan and payment of interest on the borrowings, both Long – term borrowings and short – term borrowings. It does not include Bank Charges, which are shown as Other Expenses; it being the cost of services availed. CA. (Dr.) G.S. Grewal

Schedule VI Discussion on Heads of Accounts Depreciation and Amortisation Expenses: The term ‘Depreciation’ is associated with tangible fixed assets and is the amount written off over the useful life of the tangible asset. For example: depreciation written off on compute₹ The term ‘Amortisation’ is associated with intangible fixed assets and is the amount written off over the useful life of the intangible asset. For example: Goodwill or patents being amortised. CA. (Dr.) G.S. Grewal

Schedule VI Discussion on Heads of Accounts Other expenses: Expenses that do not fall in any of the above expenses are shown under Other Expenses. The expenses may be further classified into: (i) Direct Expenses (such as Carriage Inwards, Octroi etc.) form part of the Cost of Goods Sold. (ii) Indirect Expenses (such as Administration, Selling and Distribution etc.) form part of the Operating Expenses. (iii) Activity wise Expenses (such as Printing & Stationery, Postage, Administration, Advertisement etc.) (iv)Non – Operating Expenses. Expenses incurred for other than operating activities are non – operating expenses. CA. (Dr.) G.S. Grewal

Form of Balance Sheet (Under Revised Schedule VI)
PARTICULARS NOTE NO. CURRENT YEAR PREVIOUS YEAR I. EQUITY AND LIABILITIES Shareholders’ Funds (a) Share Capital (b) Reserves and Surplus (c) Money Received Against Share Warrants (2) Share Application Money Pending Allotment Non – current Liabilities (a) Long – term Borrowings (b) Deferred Tax Liabilities (Net) (c) Other Long – term Liabilities (d) Long – term Provisions Current Liabilities (a) Short – term Borrowings (b) Trade Payables (c) Other Current Liabilities (d) Short – term Provisions TOTAL CA. (Dr.) G.S. Grewal

Form of Balance Sheet (Under Revised Schedule VI)
PARTICULARS NOTE NO. CURRENT YEAR PREVIOUS YEAR II. ASSETS Non – current Assets (a) Fixed Assets (i) Tangible Assets (ii) Intangible Assets (iii) Capital Work – in – progress (iv) Intangible Assets under Development (b) Non – current Investments (c) Deferred Tax Assets (Net) (d) Long – term Loans and Advances (e) Other Non – current Assets (2) Current Asset (a) Current Investments (b) Inventories (c) Trade Receivables (d) Cash and Cash Equivalents (e) Short – term Loans and Advances (f) Other Current Assets CA. (Dr.) G.S. Grewal

Discussion on Items in Liabilities Part of the Balance Sheet
Schedule VI Discussion on Items in Liabilities Part of the Balance Sheet Shareholders’ Funds Share Capital Share Capital includes both Equity Share Capital and Preference Share Capital. Information disclosed in Notes to Account relating to Share Capital is as follows: Authorised Capital; Issued Capital; Subscribed Capital; Subscribed and fully paid up Subscribed but not fully paid up CA. (Dr.) G.S. Grewal

Example 1: Share Capital
Schedule VI Example 1: Share Capital AB Ltd. has an authorised capital of Rs. 5,00,000 divided into 50,000 equity shares of Rs. 10 each. It issued 10,000 Equity Shares of Rs. 10 each at par. All the shares were subscribed for and the due amount was received. How will be Share Capital shown in the Balance Sheet of the company? CA. (Dr.) G.S. Grewal

Solution: To be shown in the Balance Sheet as follows:
Schedule VI Solution: To be shown in the Balance Sheet as follows: Balance Sheet of …………. as at: …………………….. Particulars Note No. Rs. EQUITY AND LIABILITIES Shareholders Funds Share Capital 1 1,00,000 CA. (Dr.) G.S. Grewal

Solution: It will be shown in the Notes as follows:
Schedule VI Solution: It will be shown in the Notes as follows: Note 1: Share Capital Rs. Authorised Share Capital Equity Capital 50,000 Equity Shares of Rs. 10 each 5,00,000 Issued Capital 10,000 Equity Shares of Rs. 10 each 1,00,000 Subscribed Capital Subscribed and fully paid up CA. (Dr.) G.S. Grewal

Schedule VI Example 2: Share Capital Grand Ltd. has an authorised capital of Rs. 5,00,000 divided into 30,000 equity shares of Rs. 10 each and 2,000 Preference Shares of Rs. 100 each. It issued 10,000 Equity shares and also 2,000 Preference Shares at par. All shares offered were subscribed for and the money was duly received except final call of Rs. 3 per equity shares on 500 shares. How will be Share Capital shown in the Balance Sheet of the company? CA. (Dr.) G.S. Grewal

Schedule VI Solution: To be shown in the Balance Sheet as follows: Balance Sheet of Grand Ltd. as at: …………………….. Particulars Note No. Rs. EQUITY AND LIABILITIES Shareholders Funds Share Capital 1 298,500 CA. (Dr.) G.S. Grewal

Schedule VI Solution: It will be shown in the Notes as follows: Note 1: Share Capital Rs. Authorised Share Capital Equity Capital 30,000 Equity Shares of ₹ 10 each 2,000 Preference Shares of ₹ 100 each 3,00,000 2,00,000 5,00,000 Issued Capital 10,000 Equity Shares of ₹ 10 each 1,00,000 Subscribed Capital Subscribed and fully paid up 9,500 Equity Shares of ₹ 10 each Subscribed but not fully paid up 500, Equity Shares of ₹ 10 each Less: Calls – in – arrears 5,000 1,500 95,000 3,500 2,98,500 CA. (Dr.) G.S. Grewal

Schedule VI Example 3: Share Capital Matrix Ltd. is registered with an authorised capital of Rs. 5,00,000 divided into 50,000 equity shares of Rs. 10 each. It issued 10,000 equity shares of Rs. 10 each at par. Final call of Rs. 2 per share was yet to be called. All shares offered were subscribed for and the money was duly received. How will be Share Capital shown in the Balance Sheet of the company? CA. (Dr.) G.S. Grewal

Schedule VI Solution: To be shown in the Balance Sheet as follows: Balance Sheet of Matrix Ltd. as at: …………………….. Particulars Note No. ₹ EQUITY AND LIABILITIES Shareholders Funds Share Capital 1 80,000 CA. (Dr.) G.S. Grewal

Schedule VI Solution: It will be shown in the Notes as follows: Note 1: Share Capital Rs. Authorised Share Capital Equity Capital 50,000 Equity Shares of Rs. 10 each 5,00,000 Issued Capital 10,000 Equity Shares of Rs. 10 each 1,00,000 Subscribed Capital Subscribed but not fully paid up 10,000, Equity Shares of Rs. 10 each; Rs. 8 Called up 80,000 CA. (Dr.) G.S. Grewal

Schedule VI Example 4: Share Capital JBM Ltd. is registered with an authorised capital of Rs. 5,00,000 divided into 50,000 equity shares of Rs. 10 each. It issued 10,000 equity shares of Rs. 10 each at par. Calls were made of Rs. 8 per share. All shares offered were subscribed for and the money was duly received except final call of Rs. 3 on 500 shares. How will be Share Capital shown in the Balance Sheet of the company? CA. (Dr.) G.S. Grewal

Schedule VI Solution: To be shown in the Balance Sheet as follows: Balance Sheet of JBM Ltd. as at: …………………….. Particulars Note No. Rs. EQUITY AND LIABILITIES Shareholders Funds Share Capital 1 78,500 CA. (Dr.) G.S. Grewal

Schedule VI Solution: It will be shown in the Notes as follows: Note 1: Share Capital Rs. Authorised Share Capital Equity Capital 50,000 Equity Shares of Rs. 10 each 5,00,000 Issued Capital 10,000 Equity Shares of Rs. 10 each 1,00,000 Subscribed Capital Subscribed but not fully paid up 10,000, Equity Shares of Rs. 10 each; Rs. 8 Called up Less: Calls – in – arrears 80,000 1,500 78,500 CA. (Dr.) G.S. Grewal

Schedule VI Example 5: Share Capital M Ltd. has an authorised capital of Rs. 5,00,000 divided into 50,000 equity shares of Rs. 10 each. The company has existing issued and fully paid 15,000 shares of Rs. 10 each. It further issued 10,000 equity shares of Rs. 10 each at par. The money called was Rs. 8 per share. All shares were subscribed for and the money was duly received except final call of Rs. 3 per share on 1,000 shares. How will be Share Capital shown in the Balance Sheet of the company? CA. (Dr.) G.S. Grewal

Schedule VI Solution: To be shown in the Balance Sheet as follows: Balance Sheet of M Ltd. as at: …………………….. Particulars Note No. Rs. EQUITY AND LIABILITIES Shareholders Funds Share Capital 1 2,27,000 CA. (Dr.) G.S. Grewal

Schedule VI Solution: It will be shown in the Notes as follows: Note 1: Share Capital Amount (Rs.) Authorised Share Capital Equity Capital 50,000 Equity Shares of Rs. 10 each 5,00,000 Issued Capital 25,000 Equity Shares of Rs. 10 each 2,50,000 Subscribed Capital Subscribed and fully paid up 15,000, Equity Shares of Rs. 10 each Subscribed but not fully paid up 10,000, Equity Shares of Rs. 10 each; Rs. 8 Called up Less: Calls – in – arrears 80,000 3,000 1,50,000 77,000 2,27,000 CA. (Dr.) G.S. Grewal

Schedule VI Example 6: Share Capital Casio Ltd. is registered with the capital: 1,00,000, Equity Shares of Rs. 10 each; and 50,000, 9% Preference Shares of Rs. 10 each. It issued 90,000 Equity Shares and 50,000, 9% Preference Shares for subscription. 85,000 Equity Shares were subscribed on which the company had called Rs. 8. It did not receive first call of Rs. 2 on 3,000 shares, out of which 2,000 allotted to Atul were forfeited. Out of the forfeited shares 1,500 shares were reissued at Rs. 6, Rs. 8 paid up. 9% Preference Shares were fully paid up. How will it be shown in balance sheet as per Revised Schedule VI? CA. (Dr.) G.S. Grewal

Schedule VI Solution: To be shown in the Balance Sheet as follows: Balance Sheet of Casio Ltd. as at: …………………….. Particulars Note No. Rs. EQUITY AND LIABILITIES Shareholders Funds Share Capital 1 11,77,000 CA. (Dr.) G.S. Grewal

Schedule VI Solution: It will be shown in the Notes as follows: Note 1: Share Capital Amount (Rs.) Authorised Share Capital Equity Share Capital 1,00,000 Equity Shares of Rs. 10 each Preference Share Capital 50,000, 9% Preference Share of Rs. 10 each 10,00,000 5,00,000 15,00,000 Issued Capital 90,000 Equity Shares of Rs. 10 each 50,000 9% Preference Share of Rs. 10 each 9,00,000 14,00,000 Subscribed Capital Subscribed and Fully Paid up 50,000, 9% Preference Shares of Rs. 10 each Subscribed and not Fully Paid up 84,500 Equity Shares of Rs. 8 each Less: Calls in Arrears (1,000 Shares X Rs. 2) Add: Forfeited Shares Account 6,76,000 2,000 6,74,000 3,000 6,77,000 11,77,000 CA. (Dr.) G.S. Grewal

Capital Redemption Reserve Securities Premium Reserve
Schedule VI Reserve and Surplus Reserve is a portion of earnings, receipts or other surplus set aside for a specific purpose. Reserve and Surplus is part of Shareholders’ Funds. Revised Schedule VI has prescribed that reserves be shown under the following heads: Capital Reserves Capital Redemption Reserve Securities Premium Reserve Debentures Redemption Reserve Revaluation Reserve Share Options Outstanding Any Other Reserves (to specify the nature and purpose of each reserve) CA. (Dr.) G.S. Grewal

Reserves and Surplus Any Other Reserve
Schedule VI Reserves and Surplus Any Other Reserve Revised Schedule VI is flexible and allows a company to have reserves as per its requirements besides the six prescribed reserves. For example: a company may have following reserves : Workmen Compensation Reserve; or Investments Fluctuation Reserve; C) Statement of Profit and Loss is an important reserve because (i) it shows the profit or loss for the year; and (ii) appropriation of profit is made through this reserve. CA. (Dr.) G.S. Grewal

Less: Deletion / Utilization Balance
Schedule VI Reserve and Surplus All reserves must have information as to opening balance, addition / deletion and closing balance. The sum total of all the reserves is shown on the face of the Balance Sheet. Each item of Reserves and Surplus to have following details: Opening Balance xxxxx Add: Addition Less: Deletion / Utilization Balance CA. (Dr.) G.S. Grewal

Amount of Reserves and Surplus – How shown
Schedule VI Amount of Reserves and Surplus – How shown Individual reserves are shown in the Note for Reserves and Surplus giving details of opening balance; addition / deletion and closing balance. Closing Balances under each reserve are totalled; and The total is shown as one amount in the Balance Sheet. CA. (Dr.) G.S. Grewal

Loss from Statement of Profit and Loss
Schedule VI Loss from Statement of Profit and Loss Current year’s loss is deducted from existing credit balance in Statement of Profit and Loss under ‘Reserves and Surplus’. If the existing balance is negative, current year’s loss is added to it. The net amount after transfer whether positive or negative amount, it is shown as negative amount under the head Statement of Profit and Loss in the Note for Reserves and Surplus. CA. (Dr.) G.S. Grewal

Appropriation of Profit
Schedule VI Appropriation of Profit Appropriation of Profit out of Balance – Statement of Profit and Loss: Profit for the accounting period is transferred and added to the existing Balance of Statement of Profit and Loss under Reserves and Surplus. Thereafter appropriations for transfer to reserves and proposed dividend etc. is made as follows: Opening Balance xxx Add: Profit (Loss) for the Year Less Appropriations to DDR Workmen Compensation Reserve Proposed Dividend Balance CA. (Dr.) G.S. Grewal

Example 1: on Reserves and Surplus
Schedule VI Example 1: on Reserves and Surplus A company has a opening credit balance in Statement of Profit and Loss of Rs. 1,00,000. During the year, it earned a profit of Rs. 1,50,000. Questions: (i) How will it be shown in the Balance Sheet? (ii) What amount will be shown therein? CA. (Dr.) G.S. Grewal

Balance Sheet of M Ltd. as at: ……………………..
Particulars Note No. Rs. Shareholders’ Funds (a) Reserves and Surplus 2 2,50,000 CA. (Dr.) G.S. Grewal

2. The amount shown will be: Statement of Profit and Loss
Schedule VI Solution: 1. Balance of Statement of Profit and Loss will be shown under Reserves and Surplus. 2. The amount shown will be: Statement of Profit and Loss Balance – Statement of Profit & Loss Rs. Opening ,00,000 Add: Profit for the Period ,50,000 Balance (to be shown in the Balance Sheet) 2,50,000 CA. (Dr.) G.S. Grewal

Schedule VI Example 2: on Reserves and Surplus A company has a opening credit balance in Statement of Profit and Loss of Rs. 1,00,000. During the year, it incurred loss of Rs. 1,50,000. Questions: (i) How will you show the balance of Statement of Profit and Loss in the Balance Sheet? (ii) What amount will be shown therein? CA. (Dr.) G.S. Grewal

Particulars Note No. Rs. Shareholders’ Funds (b) Reserves and Surplus 2 (50,000) CA. (Dr.) G.S. Grewal

2. The amount shown will be: Statement of Profit and Loss Rs.
Schedule VI Solution: 1. Balance of Statement of Profit and Loss will be shown under Reserves and Surplus as a negative amount. 2. The amount shown will be: Statement of Profit and Loss Rs. Statement of Profit & Loss (Opening) ,00,000 Add: Profit (Loss) for the Period (1,50,000) Balance (50,000) CA. (Dr.) G.S. Grewal

Schedule VI Example 3: on Reserves and Surplus A company has an opening debit balance in Statement of Profit and Loss of Rs. 1,00,000. During the year, it incurred a loss of Rs. 1,50,000. Questions: (i) How will you show the balance in Statement of Profit and Loss in financial statements? (ii) What amount will be shown therein? CA. (Dr.) G.S. Grewal

Particulars Note No. Rs. Shareholders’ Funds (a) Reserves and Surplus 2 (2,50,000) CA. (Dr.) G.S. Grewal

2. The amount shown will be: Statement of Profit and Loss Rs.
Schedule VI Solution: 1. Balance of Statement of Profit and Loss will be shown under Reserves and Surplus as a negative amount. 2. The amount shown will be: Statement of Profit and Loss Rs. Statement of Profit and Loss (Opening) (1,00,000) Add: Profit (Loss) for the Period (1,50,000) Balance (to be shown in the Balance Sheet) (2,50,000) CA. (Dr.) G.S. Grewal

Schedule VI Example 4: on Reserves and Surplus A company has a opening credit balance in Statement of Profit and Loss of Rs. 1,00,000. During the year, it earned a profit of Rs. 75,000. It decided to transfer Rs.15,000 to Debenture Redemption Reserve (DRR) and also proposed to pay dividend of Rs. 25,000. Question: How will you show the appropriations in the financial statements? CA. (Dr.) G.S. Grewal

Particulars Note No. Rs. Shareholders’ Funds (a) Reserves and Surplus 2 1,50,000 CA. (Dr.) G.S. Grewal

It will be shown in the Note on Reserves and Surplus as follows:
Schedule VI Solution: It will be shown in the Note on Reserves and Surplus as follows: Statement of Profit and Loss Rs. Statement of Profit & Loss (Opening) ,00,000 Add: Profit for the Period ,000 1,75,000 Less: Appropriation Proposed Dividend ,000 Transfer to DRR , ,000 Balance ,35,000 CA. (Dr.) G.S. Grewal

Debenture Redemption Reserve Opening Balance Nil
Schedule VI Solution Contd/… Debenture Redemption Reserve Opening Balance Nil Transfer from Balance in Statement of Profit and Loss ,000 Balance ,000 Reserves and Surplus to be shown on the face of the Balance Sheet (Rs. 1,35,000 + Rs. 15,000) 1,50,000 Current Liabilities Short – term Provisions Proposed Dividend ,000 CA. (Dr.) G.S. Grewal

Schedule VI Example 5: on Reserves and Surplus A company has opening credit balance in Statement of Profit and Loss of Rs. 1,00,000. During the year, it incurred loss of Rs. 1,50,000. It has a opening balance in Debenture Redemption Reserve of Rs. 60,000. Question: How will you show the two in the financial statements? CA. (Dr.) G.S. Grewal

Particulars Note No. Rs. Shareholders’ Funds (a) Share Capital (b) Reserves and Surplus 2 10,000 CA. (Dr.) G.S. Grewal

Debenture Redemption Reserve (DRR) Opening Balance 60,000
Schedule VI Solution: Reserves and Surplus Debenture Redemption Reserve (DRR) Opening Balance ,000 Statement of Profit and Loss Statement of Profit & Loss (Opening) ,00,000 Add: Profit for the Period (1,50,000) Balance (50,000) Amount to be shown under Reserves and Surplus ,000 CA. (Dr.) G.S. Grewal

Schedule VI Example 6: on Reserves and Surplus A company has opening debit balance in Statement of Profit and Loss of Rs. 1,00,000. During the year, it earned a profit of Rs. 3,00,000. It decided to transfer Rs. 50,000 to Debenture Redemption Reserve (DRR) and also proposed to pay dividend of Rs. 25,000. Question: How will you show them in the financial statements? CA. (Dr.) G.S. Grewal

Particulars Note No. Rs. 1. Shareholders’ Funds (a) Reserves and Surplus 2 1,75,000 CA. (Dr.) G.S. Grewal

Statement of Profit and Loss Rs.
Schedule VI Solution: Reserves and Surplus Statement of Profit and Loss Rs. Statement of Profit and Loss (1,00,000) Add: Profit (Loss) for the Period ,00,000 Balance ,00,000 Less: Appropriations Transfer to DRR 50,000 Proposed Dividend , ,000 Balance – Statement of Profit and Loss 1,25,000 CA. (Dr.) G.S. Grewal

Debentures Redemption Reserve (DRR) Opening Balance Nil
Schedule VI Solution Contd/… Debentures Redemption Reserve (DRR) Opening Balance Nil Transfer from Statement of Profit and Loss ,000 50,000 Balance – Reserves and Surplus ,75,000 Current Liabilities Short – term Provisions Proposed Dividend ,000 CA. (Dr.) G.S. Grewal

Money Received Against Share Warrant
Schedule VI Money Received Against Share Warrant A share warrant is a bearer document of title to shares and can be issued only by public limited companies and that too as fully paid up. A share warrant cannot be issued by a private company, because the share warrant are bearer security and bearer is entitled to the number of shares against the warrant. It is a negotiable document and is transferable by mere delivery. The holder of the share warrant is entitled to receive dividend as declared by the company. Share warrant is accompanied by attached coupon for the payment of dividend. CA. (Dr.) G.S. Grewal

Share Application Money Pending Allotment
Schedule VI Share Application Money Pending Allotment Share application money pending allotment is the amount received as Share Application Money against which shares are to be allotted by the company. Till the time shares are not allotted, amount remains in the account titled ‘Share Application Money Pending Allotment’. Amount refundable to the applicants are shown as ‘Other Current Liabilities’ under Current Liabilities. CA. (Dr.) G.S. Grewal

Non-Current Liabilities
Schedule VI Non-Current Liabilities Non-current liabilities are classified under the following four sub-heads on the face of the balance sheet. Long-term Borrowings Deferred Tax Liability (Net) Other Long term Liabilities Long-term Provisions. It may be noted that Deferred Tax Liability (Net) is classified as non-current without any consideration towards time. CA. (Dr.) G.S. Grewal

Non-Current Liabilities
Schedule VI Non-Current Liabilities Long – term Borrowings Borrowings are classified as long – term borrowing or short – term borrowing on the basis of it becoming due for payment from the date of loan. For example: A term loan of Rs. 5,00,000 granted to a company repayable in 20 equal quarterly installments along with interest will be classified or shown as Long – term borrowing. It is so because it is repayable after more than 12 months from the date of Balance Sheet. On the other hand, Cash Credit limit allowed that is repayable within 12 months from the date of Balance sheet is classified or shown as Short term borrowing. CA. (Dr.) G.S. Grewal

Examples of Long – term Borrowings
Schedule VI Examples of Long – term Borrowings Bonds Debentures Term loans from banks from other parties Deposits CA. (Dr.) G.S. Grewal

Deferred Tax Liabilities (Net) and Deferred Tax Assets (Net)
Schedule VI Deferred Tax Liabilities (Net) and Deferred Tax Assets (Net) Deferred Tax Liabilities or Deferred Tax Assets is a new entry on the face of the Balance Sheet. It is only a book entry. It is neither an actual Liability nor an actual asset. In a Balance Sheet, either Deferred Tax Liabilities (Net) or Deferred Tax Assets (Net) will appear. CA. (Dr.) G.S. Grewal

Concept of Deferred Tax
Schedule VI Concept of Deferred Tax Deferred Tax Liabilities (Net) or Deferred Tax Assets (Net) is the amount of tax on difference between Accounting Profit and Taxable Profit arising because of items with timing difference. Example: Depreciation method applied may be SLM to determine accounting profit. Income Tax Act, allows only WDV method. Therefore, depreciation debited in the books of accounts and depreciation allowed under Income Tax Act will differ. As a result, difference between accounting profit and taxable profit will arise. CA. (Dr.) G.S. Grewal

Schedule VI Concept of Deferred Tax If Accounting Profit is higher than Taxable Profit It will result in Deferred Tax Liability. Thus, an entry for Deferred Tax Liability will be passed. The entry is passed with the amount of income tax on amount of difference between accounting profit and taxable profit. In case of first entry or which has an effect of increasing the existing balance in Deferred Tax Liabilities, the journal entry passed is: Statement of Profit and Loss … Dr. To Deferred Tax Liabilities (Net) If the existing balance is debit balance i.e. Deferred Tax Assets (Net), the journal entry passed is: To Deferred Tax Assets (Net) CA. (Dr.) G.S. Grewal

Schedule VI Concept of Deferred Tax Effect on Reserves and Surplus Lower amount is carried to Reserves and Surplus under Statement of Profit and Loss. Computation of Capital Employed: The amount of Deferred Tax Liabilities (Net) should be added to Reserves and Surplus. Computation of Net Profit Before Tax and Extraordinary Items in Cash Flow Statement: The difference between the Closing Balance and Opening Balance should be computed. If the difference is positive i.e. current year’s balance is higher add it to difference of Reserves and Surplus. If the difference is negative i.e. current year’s balance is higher deduct it from the difference of Reserves and Surplus. CA. (Dr.) G.S. Grewal

Schedule VI Concept of Deferred Tax If Accounting Profit is Lower than Taxable Profit It will result in Deferred Tax Asset. The entry is passed with the amount of income tax on amount of difference between accounting profit and taxable profit. In case of first entry or which has an effect of decreasing the existing balance in Deferred Tax Assets, the journal entry passed is: Deferred Tax Assets (Net) … Dr. To Statement of Profit and Loss If the existing balance is credit balance i.e. Deferred Tax Liabilities (Net), the journal entry passed is: Deferred Tax Liabilities (Net) … Dr. CA. (Dr.) G.S. Grewal

Schedule VI Concept of Deferred Tax Effect on Reserves and Surplus Higher amount is carried to Reserves and Surplus under Statement of Profit and Loss. Computation of Capital Employed: The amount of Deferred Tax Assets (Net) should be added to Reserves and Surplus. Computation of Net Profit Before Tax and Extraordinary Items in Cash Flow Statement: The difference between the Closing Balance and Opening Balance should be computed. If the difference is positive i.e. current year’s balance is higher deduct it from the difference of Reserves and Surplus. If the difference is negative i.e. current year’s balance is lower add it to the difference of Reserves and Surplus. CA. (Dr.) G.S. Grewal

Other Long Term Liabilities
Schedule VI Other Long Term Liabilities Long – term Liabilities other than Long – term Borrowings are shown under this head. Other Long Term Liabilities shall be classified as: (a) Trade payables: Trade payable shall be classified as Other Long – term Liabilities if the purchases of goods and services are made on the terms that the payment is to be made after 12 months of the date of Balance Sheet. (b) Others: Any other Long –term Liability other than trade payables shall also be shown under ‘Other Long – term Liabilities’ but as a separate item. CA. (Dr.) G.S. Grewal

Long-term Provisions Premium Payable on Redemption of Debentures;
Schedule VI Long-term Provisions Provision is a liability amount of which is not known but is estimated with substantial accuracy. On the other hand, Liability is a liability amount of which is ascertained. Provision of amount towards a liability that is likely to arise after more than 12 months from the date of Balance Sheet is shown as long – term provision. Examples Premium Payable on Redemption of Debentures; Premium Payable on Redemption of Preference Shares; Provision for Retirement Benefits; Provision for Warranties. CA. (Dr.) G.S. Grewal

Schedule VI Current Liabilities Current Liabilities are required to be sub-classified on the face of the balance sheet as below: Short-term borrowings Trade payables Other current liabilities Short-term provisions. CA. (Dr.) G.S. Grewal

Short-term borrowings
Schedule VI Short-term borrowings Short-term borrowings are those borrowings which are payable within 12 months from the date of loan. Examples are: Loans repayable on demand form banks and from other parties; and Deposits. In case, short – term borrowings are other than the above two classes, its nature should be specified. Important Note Loan repayable within 12 months from the date of Balance Sheet out of the long – term borrowings shall not be classified as Short – term Borrowing. It shall be classified as ‘Current Maturities of Long – term Debts’ under ‘Other Current Liabilities’. CA. (Dr.) G.S. Grewal

Schedule VI Trade Payable Trade payable is the amounts payable in respect of goods purchased or services taken in the ordinary course of business. In case the terms of purchases or services taken requires payment to be made beyond a period of 12 months of the date of Balance Sheet, it shall be classified or shown as non-current liabilities, under Other Non-Current Liabilities. CA. (Dr.) G.S. Grewal

Other current liabilities
Schedule VI Other current liabilities Liabilities that are not short – term borrowings or trade payables are shown under Other Current Liabilities. Following are shown as Other Current Liabilities: Current maturities of long-term debts; Interest accrued but not due on borrowings; Interest accrued and due on borrowings; Income received in advance; Calls-in-Advance; Unpaid dividends; Unpaid matured deposits and interest accrued thereon; Unpaid matured debentures and interest accrued thereon; and Other payables (specify nature). CA. (Dr.) G.S. Grewal

Short-term Provisions
Schedule VI Short-term Provisions Provision is a liability amount of which is not known but is estimated with substantial accuracy. On the other hand, Liability is a liability amount of which is ascertained. Provision of amount towards a liability that is likely to arise within 12 months from the date of Balance Sheet is shown as short – term provision. Examples: Provision for Doubtful Debts; Provision for Employee Benefits; Provision for Expenses; Provision for Tax; Proposed Dividend. CA. (Dr.) G.S. Grewal

Schedule VI Non-Current Assets Assets side of the Balance Sheet is divided into two parts: i.e. Non–current Assets and Current Assets. Non–current Assets are classified as follows: Fixed assets; Non-current investments; Deferred Tax Assets (net); Long-term Loans and Advances; and Other Non-current Assets. CA. (Dr.) G.S. Grewal

Schedule VI Fixed Assets Recognising the significance of intangible assets, the revised Schedule VI requires them to be presented separately from Tangible Fixed Assets. Fixed assets are sub-classified on the face of the Balance Sheet as follows: Tangible Assets; Intangible Assets; Capital work-in-progress; and Intangible Assets Under Development. CA. (Dr.) G.S. Grewal

Non – current Investment
Schedule VI Non – current Investment Non-current investments are classified as Trade Investments and Other Investments. Trade Investments are those investments which are made a company in another company for the promotion of its own business. They are further classified as follows: Investment property; Investments in Equity Instruments; Investments in preference shares Investments in Government or Trust securities; Investments in Debentures or Bonds; Investments in Mutual Funds; Investments in Partnership Firms; and Other non-current investments (specify nature) CA. (Dr.) G.S. Grewal

Long Term Loan and Advances
Schedule VI Long Term Loan and Advances Long-term Loans and Advances are those advances which are recoverable in cash or kind beyond a period of 12 months from the date of Balance Sheet. They are classified as into: Capital Advances; Security Deposits; Loans and advances to related parties (giving details thereof); and Other loans and advances (specify nature). CA. (Dr.) G.S. Grewal

Other Non – current Assets
Schedule VI Other Non – current Assets All non–current assets which do not fall within the categories i.e. fixed assets, long – term investments and long–term loans and advances are classified as ‘Other Non-current Assets’. They shall be classified as: Long Term Trade Receivables (including trade receivables on deferred credit terms) i.e. trade receivables payment of which is agreed to be received beyond a period of 12 months form the date of the Balance Sheet; Any other non – current asset, nature of which shall be specified. CA. (Dr.) G.S. Grewal

Schedule VI Current Assets These are classified into following categories on the face of the balance sheet: Current investments; Inventories; Trade receivables; Cash and cash equivalents; Short-term Loans and Advances; and Other Current Assets. CA. (Dr.) G.S. Grewal

Schedule VI Current Investment Current investments are those investments which are made with the purpose to sell within 12 months of the date of Balance Sheet. Investments are classified into: Investments in Equity Instruments; Investment in Preference Shares Investments in Government or Trust Securities; Investments in Debentures or Bonds; Investments in Mutual Funds; Investments in Partnership Firms Other investments (nature needs to be specified). CA. (Dr.) G.S. Grewal

Schedule VI Inventories Inventories are goods held by a company to be consumed or sold in the normal course of its business. They are classified into: Raw materials; Work-in-progress; Finished goods; Stock-in-trade; Stores and spares; Loose tools; Others (nature to be specified). CA. (Dr.) G.S. Grewal

Schedule VI Trade Receivable Trade receivables are receivables against sale of goods or services rendered in the ordinary course of business. Trade receivables are classified as current assets if they are expected to be realised within 12 months from the date of Balance Sheet or within the Operating Cycle of the business, whichever is longer. CA. (Dr.) G.S. Grewal

Cash and Cash Equivalents
Schedule VI Cash and Cash Equivalents Cash and Cash Equivalents is classified into: Balances with Bank Cheques, drafts on hand Cash in Hand Others (nature to be specified) e) Earmarked Balances with Banks (Unpaid Dividend) f) Balances with Banks as Margin Money or Security against borrowings, guarantees and other commitments etc. g) Bank Deposits with more than 12 months maturity. CA. (Dr.) G.S. Grewal

Short-term Loans and Advances
These need to be sub-classified in the notes as: - Loans and advances to related parties (giving details thereof) - Others (specifying nature). CA. (Dr.) G.S. Grewal

Other Current Assets Other current assets is the residuary heading, which covers current assets that do not fall into any of the other ‘current asset’ categories. Examples of items that may be included in this category are unbilled revenue; interest accrued on investments, to the extent due for realisation within 12 months from the reporting date. Constituents of ‘other current assets’ are to be presented in the notes. CA. (Dr.) G.S. Grewal

THANK YOU Please be free to write to us on:
Schedule VI THANK YOU Please be free to write to us on: CA. (Dr.) G. S. Grewal: : .com CA. (Dr.) G.S. Grewal

OF THE COMPANIES ACT, 1956 AN INSIGHT TO REVISED SCHEDULE VI

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OF THE COMPANIES ACT, 1956 AN INSIGHT TO REVISED SCHEDULE VI

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