REVISED SCHEDULE VI

1. CA. Mahendra Mehta REVISED SCHEDULE VI

2. These are personal views of the author and shall neither be considered as professional advise nor be constructed to be the views of ICAI, any of its Region / Branch / Study Circle. disclaimer

3. Quote from Swami Vivekananda Perfection does not come from belief or faith. Perfection comes through selfless work. CA Mahendra Mehta 3

4. Globally corporate Balance Sheets are classified balance sheets. Assets and Liabilities are presented based on current and non current classification. Where as In India Balance Sheets till date were unstructured. • India Moved from controlled economy to a growing economy and to make Indian companies competitive and globally recognisable and to harmonizing and synchronizing Schedule VI with the notified Accounting Standards. • Earlier Schedule VI did not provide any format for presentation of Statement of Profit & Loss leading to development of variety of dissimilar presentation. Necessity for revision CA Mahendra Mehta 4

5. All assets and liabilities are classified into current and non-current categories which are at par with the requirements of Ind AS 1. • The alternative and rarely used horizontal form of Balance Sheet is deleted. • “Schedules” are now replaced by “Notes To Accounts”. • Disclosure of shareholder holding more than 5% shares specifying the number of share held. Salient Features CA Mahendra Mehta 5

6. Debit balance of Profit & Loss Account is to be presented in the Reserves & Surplus within bracket as a negative figure. • Standardization of Statement of Profit & Loss. • Separate Presentation of performance of Discontinuing Operations. Salient Features CA Mahendra Mehta 6

7. Relief from disclosing 5 years old details pertaining to aggregate number and class of shares allotted for consideration other than cash, bonus shares and shares bought back. • Special reserve for repayment of capital and loans. • Disclosure of debts regarding trade receivables from same management is omitted. • Heading “Miscellaneous Expenditure (to the extent not written off or adjusted)” Simplification of disclosure requirements by scrapping the followings balance sheet items CA Mahendra Mehta 7

8. Item-wise quantitative details of purchases, opening and closing stock of goods traded. • Status of completion of work in progress. • Brokerage & Commission on sales. • Payment to directors and detailed calculations under section 198 as also computation of profit u/s 349 with details of calculation of commission by percentage of profits. • Special disclosures of information regarding licensed capacity, installed capacity and actual production for each class of goods. • Item-wise quantitative details of raw material consumed. • Item-wise quantitative details or value of opening and closing stock of goods purchased for manufacturing. Simplification of disclosure requirements by scrapping the followings profit & loss items CA Mahendra Mehta 8

9. Disclosures as per notified Accounting Standards. • Disclosures under Companies Act, 1956 • Disclosures under statutes MSMED Act, 2006. • Disclosures as per others ICAI pronouncements. • In case of Listed Companies , disclosure under clause 32 of the Listing Agreement. Other disclosure requirements CA Mahendra Mehta 9

10. Presentation of figures: Where Turnover: • < ` 100 crores = Figures to be in nearest hundreds, thousands, lakhs or millions or decimals thereof. • >` 100 crores = Figures to be in nearest lakhs or millions or crore or decimals thereof. • Once a unit of measurement is used, it should be used uniformly in the Financial Statements. • Any item under which income or expenses exceed 1% of revenue from operations or ` 1,00,000whichever is higher, shall be shown separately and distinct item against an appropriate account head in Profit & Loss statement. OTHER Presentation REQUIREMENTS CA Mahendra Mehta 10

11. Part I – Format of Balance Sheet CA Mahendra Mehta 11

12. Part I – Format of Balance Sheet CA Mahendra Mehta 12

13. Line Items for Share capital {For each class of share capital} (different classes of preference shares to be treated separately) CA Mahendra Mehta 13

14. Line Items for Share capital {For each class of share capital} (different classes of preference shares to be treated separately) CA Mahendra Mehta 14

15. Line Items for Share capital {For each class of share capital} (different classes of preference shares to be treated separately) CA Mahendra Mehta 15

16. Line Items for Reserves & Surplus CA Mahendra Mehta 16

17. Share application money not exceeding the issued capital and to the extent not refundable is to be disclosed under this line item. • However, the following should be shown under the head “Other Current Liabilities: • The amount of share application money received over and above the authorised capital, • The amount of excess of subscription or • If the requirement of minimum subscription are not met ,”. Share Application Money Pending Allotment CA Mahendra Mehta 17

18. A liability shall be classified as current when it satisfies any of the following criteria: It is expected to be settledin the company’s normal operating cycle , It is held primarily for the purpose of being traded; It is due to be settled within 12 months after the reporting date; or The company does not have an unconditional right to defer settlement of the liability for at least 12 months after the reporting date. Terms of a liability that could, at the option of the counterparty, result in its settlement by the issue of equity instruments do not affect its classification. All other liabilities shall be classified as non-current Classification of Current liabilities CA Mahendra Mehta 18

19. 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 have a duration of 12 months. • Where a company is engaged in running multiple businesses, the operating cycle could be different for each line of business. Such a company will have to classify all the assets and liabilities of the respective business into current and non current, depending upon the operating cycle for the respective business. Operating cycle CA Mahendra Mehta 19

20. Line Items for Long Term Borrowings Borrowings shall further be sub-classified as secured & unsecured. Nature of security shall be specified separately in each case. Where loans have been guaranteed by directors or others, the aggregate amount of such loans under each head shall be disclosed CA Mahendra Mehta 20

21. Line Items for other Long Term liabilities CA Mahendra Mehta 21

22. Line Items for short term borrowings • Borrowings shall further be sub-classified as secured & unsecured. Nature of security shall be specified separately in each case. • Where loans have been guaranteed by directors or others, the aggregate amount of such loans under each head shall be disclosed CA Mahendra Mehta 22

23. Line Items for Other Current liabilities CA Mahendra Mehta 23

24. An asset shall be classified as current when it satisfies any of the following criteria: It is expected to be realised in, or is intended for sale or consumption in, the company’s normal operating cycle; It is held primarily for the purpose of being traded; It is expected to be realised within 12 months after the reporting date; or It is cash or cash equivalent unless it is restricted from being exchanged or used to settle a liability for at least 12 months after the reporting date All other assets shall be classified as non-current Classification of Current Assets CA Mahendra Mehta 24

25. Line Items for Tangible assets • The revised Schedule VI requires that leasehold assets shall be separately presented. • A reconciliation of the gross and net carrying amounts of each class of assets at the beginning and end of the reporting period showing additions, disposals, acquisition, through business combinations and other adjustments and the related depreciation and impairment losses/reversals shall be disclosed. CA Mahendra Mehta 25

26. Line Items for intangible assets CA Mahendra Mehta 26

27. Capital work-in-progress CA Mahendra Mehta 27

28. Intangible assets under development CA Mahendra Mehta 28

29. Line Items for Non current investments • Disclose market value of quoted investments. • Aggregate provisions made for diminution in value of investments. CA Mahendra Mehta 29

30. Line Items for long term loans & advances It will further classified as: • Secured, considered good • Unsecured, considered good • Doubtful • Provision for doubtful debts due from directors • Amount due from partnership firms and private companies in which one of the directors are partners or directors CA Mahendra Mehta 30

31. Line Items for current investments • As per AS 13 current investments are measured at lower of the cost or fair value. • Disclose market value of quoted investments. • Aggregate provisions made for diminution in value of investments. CA Mahendra Mehta 31

32. Line Items for inventories • Goods-in-transit shall be disclosed under the relevant sub-head of inventories • Mode of valuation shall be stated CA Mahendra Mehta 32

33. Line Items for Trade receivables It will further classified as: • Secured, considered good • Unsecured, considered good • Doubtful CA Mahendra Mehta 33

34. Line Items for Cash and Cash Equivalents • Other examples: • Preference shares having remaining maturity of 3 months and insignificant risks. • Investment in T-Bills and bonds issued by central and state Government , etc. and which are having remaining maturity 3 months or less as on the reporting date. • Money market funds permitting withdrawal by cheque. • Cheque from customers awaiting deposits CA Mahendra Mehta 34

35. Line Items for short term loan & advances It will further classified as: • Secured, considered good • Unsecured, considered good • Doubtful • Provision for doubtful debts due from directors • Amount due from partnership firms and private companies in which one of the directors are partners or directors CA Mahendra Mehta 35

36. Part – II : Statement of Profit & Loss CA Mahendra Mehta 36

37. Part – II : Statement of Profit & Loss CA Mahendra Mehta 37

38. Revenue from Operations CA Mahendra Mehta 38

39. Other income CA Mahendra Mehta 39

40. The Revised Schedule VI does not require separate presentation of prior period items on the face of the Statement of Profit or Loss. It requires separate disclosures under Clause 5(i)(l) of part II of the Revised Schedule VI. However, Paragraph 15 of AS 5 Net profit or Loss for the period, Prior Period Items and Changes in Accounting policies requires: “ The nature and amount of prior period items should be separately disclosed in the Statement of Profit and loss in a manner that their impact on the current profit or loss can be perceived” The words “in the Statement of profit and loss” would mean on the face of the profit and loss. The best approach to explain the impact would be to add a separate line item before “V. Profit Before Exceptional and Extraordinary Item” on the face of the Statement of Profit or Loss Prior period items

41. Exceptional items – Material items which derive from events or transactions that fall within the ordinary activities of the reporting entity and which individually or if of a similar type, in aggregate, need to be disclosed by virtue of their size or incidence if the financial statements are to give a true and fair view. • Extraordinary items – Material items possessing a high degree of abnormality which arise from events or transaction that fall outside the ordinary activities of the reporting entity and which are not expected to recur. Exceptional items & Extraordinary items

42. “Schedules” are now replaced by “Notes to Accounts”. • Notes to accounts shall • contain supplementary information • mark cross reference and • maintain balance between providing relevant information and information overload. • Notes to accounts shall contain information in addition to that presented in the Financial Statements and shall provide where required: a) narrative descriptions or disaggregation of items recognised in those statement and b) Information about items that do not qualify for recognition in those statements. Features of notes to accounts CA Mahendra Mehta 42

43. Notes to accounts shall disclose details of: Significant accounting policies Share Capital Reserves and Surplus Long term borrowings Other Long term liabilities Long term provisions Short-term borrowings Other current liabilities Short-term provisions Tangible assets Intangible assets Non-current investments Notes to accounts CA Mahendra Mehta 43

44. Other long term loans and advances Other non-current assets Current investments Inventories Trade receivables Cash and cash equivalents Short-term loans and advances Other current assets Contingent liabilities and commitments Revenue from operations Other Income Cost of materials consumed Purchase of traded goods Notes to accounts CA Mahendra Mehta 44

45. Changes in inventories of finished goods, work-in-progress and stock-in-trade Employee benefits expense Finance cost Other expenses Exceptional items, if any Extraordinary items, if any Additional information to the financial statements. Notes to accounts CA Mahendra Mehta 45

46. Computation Of operating Cycle CAMahendraMechta46

47. Weighted average raw material holding period CAMahendraMechta47

48. WEIGHTED AVERAGE PRODUCTION CYCLE CAMahendraMechta48

49. Weighted average finished goods holding period CAMahendraMechta49

50. WEIGHTED AVERAGE COLLECTION PERIOD CAMahendraMechta50