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Written By Admin on Friday, 18 November 2011 | Friday, November 18, 2011


Key changes related to disclosure requirements of Balance sheet:
1.      The revised Schedule VI prescribes a vertical format for presentation of balance sheet. Thus, a company will not have the option to use a horizontal format for presentation of financial statements.
2.      Current and non-current classification has been introduced for presentation of assets and liabilities in the balance sheet, which is more in line with the concepts used under Ind-AS/ IFRS. The application of this classification will require assets and liabilities to be broken into their current and non¬current portions.
3.      Number of shares held by each shareholder holding more than 5% shares now needs to be disclosed.
4.      Details pertaining to aggregate number and class of shares allotted for consideration other than cash, bonus shares and shares bought back will be disclosed only if such an event has occurred during a period of 5 years immediately preceding the balance sheet date.
5.      Any debit balance in P&L account will be disclosed under the head “Reserves and surplus.” Earlier, any P&L debit balance carried forward after deduction from uncommitted reserves was required to be shown on the asset side of the balance sheet.
6.      Specific disclosures have been prescribed for the share application money. The application money not exceeding the issued capital and to the extent not refundable will be shown separately on the face of the balance sheet. The amount in excess of subscription, or if the requirements of minimum subscription are not met, will be shown under “Other current liabilities”.
7.      Capital advances are now required to be presented separately under the head “Loans & advances” rather than as part of “capital work-in-progress” or “fixed assets”.
8.      Tangible assets under lease are required to be separately specified under each class of asset.
9.      In the earlier Schedule VI, details of capital commitments were required to be disclosed. Under the revised Schedule VI, all commitments need to be disclosed.
10.  The revised Schedule VI requires all defaults in repayment of loans and interest to be specified in each case.
11.  The revised Schedule VI introduces a number of other additional disclosures. Key examples are:
a) Rights, preferences and restrictions attaching to each class of shares including restrictions on the distribution of dividends and the repayment of capital
b) Terms of repayment of loans and period
c) In each class of investment, details regarding names of the bodies corporate, indicating separately whether such bodies are (i) subsidiaries, (ii) associates, (iii) joint ventures, or (iv) controlled special purpose entities, in whom investments have been made and the nature and extent of the investment made in each such body corporate (showing separately partly-paid investments)
d) Regarding investments in the capital of partnership firms, the names of the firms with the names of all their partners, total capital and the shares of each partnerAggregate provision for diminution in value of investments (separately for current and long-term investments).
Key changes related to disclosure requirements of Profit &Loss account:
1.      The revised Schedule VI lays down a format for the presentation of P&L account. This format of P&L account does not list any appropriation item on its face. The classification of expenses is based on their nature and not on their function.
2.      In addition to specific disclosures prescribed in the P&L account, any item of income or expense which exceeds 1% of the revenue from operations or Rs.100,000, whichever is higher, needs to be disclosed separately.
Net exchange gain/loss on foreign currency borrowings to the extent considered as an adjustment to interest cost needs to be disclosed separately as a finance cost.
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