Revised Schedule VI –

Catching up with global

trends

October 20, 2012

 Agenda
Introduction

Structure and format

Overview of changes & general instructions

Discussion on the Revised Schedule VI FAQs

Implementation issues

Old v/s new Schedule VI

2
Introduction
Introduction (1/2)

Applicable to:

All Indian companies registered under the Companies Act are required to prepare
its Balance Sheet, a statement of Profit and Loss and notes thereto as per
Revised Schedule VI (excludes banking and insurance companies)

Revised Schedule VI is prescribed in context of standalone financial statements.

However, applicable to consolidated financial statements also

Date of Application:

 Applicable for the financial year commencing on or after 1 April 2011

 Early adoption of the Revised Schedule VI not allowed

4
Introduction (2/2)

Interim Financial statements prepared in 2011-12

 Condensed Interim Financial statements – Format should conform to that used in the
company’s most recent annual Financial Statements i.e. old Schedule VI

 Complete set of Financial statements for Interim reporting – New format applicable to annual
Financial Statements i.e. the Revised Schedule VI

Clause 41 of the listing agreement

 Half yearly and quarterly reporting – Clause 41 (SEBI’s circular dated 16 April 2012,
CIR/CFD/DIL/4/2012) has prescribed a specific format. Hence, companies to use prescribed
format for half yearly reporting

 Yearly reporting – No format currently prescribed for balance sheet by clause 41. Hence,
companies should use format of Revised Schedule VI for submission to stock exchanges as
well.

5
Key principles of Revised Schedule VI

 Where mismatch exists between requirements of the Act/ notified accounting standards
and Revised Schedule VI, requirements of the Act/ notified accounting standards will
prevail.

 Revised Schedule VI prescribes minimum requirements for disclosure on the face of the
financial statements or in the notes. Additional line items/ disclosures, as necessary, may
be provided where relevant for understanding of the financial statements. Further,
disclosure requirements of the notified accounting standards would continue to apply.

 Terms used in the Revised Schedule VI will carry the meaning as defined by the
applicable Accounting Standards.

 Balance should be maintained between important information and excessive information.

Judgment to be exercised.

6
Structure and format
Structure and format

The Structure of Revised Schedule VI is as under:

1. General Instructions – Applicable to both Balance Sheet and Statement of Profit & Loss

2. Part I – Form of Balance Sheet (Only vertical form)

3. General Instructions for Preparation of Balance Sheet

4. Part II – Form of Statement of Profit and Loss (Specific format prescribed)

5. General Instructions for Preparation of Statement of Profit and Loss

8
Part I – Form of Balance Sheet (1/2)

Particulars Note no. Current Year Previous

Year
(I) Equity & Liabilities

(1) Shareholders’ funds

(a) Share Capital
(b) Reserves & Surplus
(c) Money received against share warrants

(2) Share application money pending allotment

(3) Non – current Liabilities

(a) Long term borrowings
(b) Deferred tax liabilities
(c) Other long term liabilities
(d) Long term provisions

(4) Current liabilities

(a) Short term borrowings
(b) Trade payables
(c) Other current liabilities
(d) Short term provisions

TOTAL

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Part I – Form of Balance Sheet (2/2)

Particulars Note no. Current Year Previous

Year
(II) Assets
(1) 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 Assets

(a) Current investments
(b) Inventories
(c) Trade receivables
(d) Cash and cash equivalents
(e) Short term loans and advances
(f) Other current assets

TOTAL

10
Part II – Form of Statement of Profit and Loss (1/2)

Particulars Note Current Previous

no. Year Year
I. Revenue from operations
II. Other income
III. Total revenue (I + II)
IV. Expenses:
Cost of materials consumed
Purchases of stock in trade
Changes in inventories of finished goods, work in progress and
stock in trade
Employee benefits expense
Finance costs
Depreciation and amortization expense
Other expenses
Total expenses
V. Profit before exceptional and extra ordinary
items and tax (III – IV)
VI. Exceptional items
VII. Profit before extra ordinary items and tax (v- vi)

VIII. Extraordinary items

IX. Profit before Tax (VII- VIII)

11
Part II – Form of Statement of Profit and Loss (2/2)

Particulars Note no. Current Previous

Year Year
X. Tax expense:
1. Current Tax
2. Deferred Tax

XI. Profit (loss) for the period from continuing operations

XII . Profit/(loss) from discontinuing operations

XIII. Tax expense of discontinuing operations

XIV. Profit/(loss) from discontinuing operations (after tax)

XV. Profit (loss) for the period (XI + XIV)

XVI. Earnings per equity share:

1. Basic
2. Diluted

12
Overview of
changes
Overview of changes – General

 Requirements of the Act/ notified Accounting Standards will prevail over the Schedule

 Only the vertical format has been prescribed for presentation of Financial Statements

 Existing nomenclature: ‘Sources of Funds’ and ‘Application of Funds’ changed to ‘Equity and Liabilities’
and ‘Assets’

 Concept of ‘Schedules’ eliminated. Such information is now to be furnished in the Notes to Accounts

 All items of assets and liabilities are to be bifurcated between current and non-current portions and
presented separately on the face of the Balance Sheet

 Option of presenting figures in terms of hundreds and thousands if turnover exceeds 100 crores have
been eliminated (only millions, crores, lakhs)

 Explicit requirement to use the same unit of measurement uniformly throughout the Financial Statements
and notes thereon

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Overview of changes – Rounding off

Old Schedule VI Revised Schedule VI

 Turnover < INR. 100 Crores – Round off to  Turnover < INR. 100 Crores – Round off to
the nearest hundreds, thousands or the nearest hundreds, thousands, lakhs or
decimal thereof millions or decimal thereof.

 Turnover INR. 100 to INR. 500 Crores -  Turnover > INR. 100 Crores - Round off to
Round off to the nearest hundreds, the nearest lakhs, millions or crores, or
thousands, lakhs or millions or decimal decimal thereof
thereof

 Turnover > INR. 500 Crores - Round off to

the nearest hundreds, thousands, lakhs,
millions or crores, or decimal thereof.

15
Overview of changes – Balance Sheet

 Any debit balance in the Statement of Profit and Loss will be disclosed under the head “Reserves and
surplus”

 The term “sundry debtors” has been replaced with the term “trade receivables”

 Separate disclosure of trade receivables outstanding for a period exceeding six months from the date the
bill/ invoice is due for payment

 “Capital advances” are specifically required to be presented separately under the head “Loans &
advances”

 Other commitments are required to be disclosed along with capital commitments

 Disclosure of all defaults in repayment of loans and interest to be specified in each case

 Several new additional disclosures introduced

16
Overview of changes – Statement of Profit and Loss & Disclosures (1/2)

 Introduces a format for the presentation of Statement of Profit and Loss

 Format does not include any line items for appropriations on the face of the Statement. Instead, it
requires these to be presented under “Reserves and Surplus” in the Balance Sheet

 Disclosures required for stock-related quantitative details restricted to “broad heads” only

 Certain disclosure requirements have been removed including:

 Disclosures relating to managerial remuneration and computation of net profits for calculation of
commission
 Information relating to licensed capacity, installed capacity and actual production
 Information on investments purchased and sold during the year
 Commission, brokerage and non-trade discounts

17
Overview of changes – Statement of Profit and Loss & Disclosures (2/2)

 The revised Schedule VI follows the classification of expenses based on their nature

 Minimum line items of presentation specified

 Profit and loss appropriation account no more required

 Any item of income or expenditure which exceeds 1% of revenue from operations or Rs.100,000 to be
disclosed separately

 Dividend from subsidiary companies to be recognised as per principles in AS 9 – when the right to
received the dividend is established

 The profit (loss) for the period and basic as well as diluted EPS have to be shown on the face of the
statement of profit and loss

 Part IV of the old Schedule VI (Balance Sheet Abstract and General Business Profile) dispensed with

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General instructions:
Current and non-current presentation – Assets

An asset shall be classified as current when it satisfies any of the following criteria given below; All
other assets will be classified as ‘non-current’

1 2 4

Held primarily for the

Cash or cash
Expected to be purpose of being
equivalent unless
realized in, or is traded;
it is restricted from
intended for sale
being exchanged
or consumption 3
or used to settle a
in, the company’s
liability for at least
‘Normal
Expected to be realized twelve months
Operating Cycle’
within twelve months after the reporting
after the reporting date; date

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Operating cycle

Represents time between the acquisition of assets for processing and their realization
in cash or cash equivalents

 May be longer than 12 months

 Where the normal operating cycle cannot be identified, it is assumed to have a
duration of twelve months.

Where a company is engaged in multiple businesses, operating cycle could be

different for each line of business.

For e.g.
 Operating cycle for wine manufacturing companies may be more than 12 months

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General instructions:
Current and non-current presentation – Liabilities

A liability shall be classified as current when it satisfies any of the following criteria given below; All
other liabilities will be classified as ‘non-current’

1 2 4

Held primarily for the The company does

not have an
purpose of being unconditional right to
traded; defer settlement of
the liability for at least
Expected to be twelve months after
settled in the the reporting date.
3 Terms of a liability that
company’s ‘Normal could, at the option of
Operating Cycle’ the counterparty,
Due to be settled within result in its settlement
twelve months after the by the issue of equity
instruments do not
reporting date; affect its
classification.

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Class Discussion (1) – Current v/s Non-current

A. Entity A has stock of finished goods mainly for trading. However, at

the end of the year, it has excess finished goods inventory that it
does not expect to realize within the company’s normal operating
cycle of fifteen months.

B. Entity A has sold 10,000 tons of steel to its customer. The sale
contract provides for a normal credit period of three months. The
company’s operating cycle is six months. However, the company
does not expect to receive the payment within twelve months from
the reporting date.

Discuss current/ non-current classification for Entity A.

22
Class Discussion (1) – Current v/s Non-current - Solution

A. Since such finished goods inventory is held primarily for the purpose of being traded,
the same should be classified as “current”

B. The same should be classified as “Non-Current” in the Balance Sheet. In case the
company expects to realize the amount up to 12 months from the Balance Sheet date
(though beyond operating cycle), the same should be classified as “current”.

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Class Discussion (2) – Current v/s Non-current

Entity Z has taken a five year loan. The loan contains certain
debt covenants, e.g., filing of quarterly information, failing which
the bank can recall the loan and demand repayment thereof.
The company has not filed such information in the last quarter;
as a result of which the bank has the right to recall the loan.
However, based on the past experience and/or based on the
discussions with the bank the management believes that
default is minor and the bank will not demand the repayment of
loan.

Discuss current/ non-current classification for the above scenario.

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Class Discussion (2) – Current v/s Non-current - Solution

- According to the definition of current liability, its important to determine whether a borrower has
an unconditional right at the Balance Sheet date to defer the settlement irrespective of the
nature of default and whether or not a bank can exercise its right to recall the loan. If the borrower
does not have such right, the classification would be “current.”

- It is pertinent to note that as per the terms and conditions of the aforesaid loan, the loan was not
repayable on demand from day one. The loan became repayable on demand only on default in
the debt covenant and bank has not demanded the repayment of loan up to the date of
approval of the accounts.

- In the Indian context, the criteria of a loan becoming repayable on demand on breach of a
covenant, is generally added in the terms and conditions as a matter of abundant caution.
Also, banks generally do not demand repayment of loans on such minor defaults of debt
covenants. Therefore, in such situations, the companies generally continue to repay the loan as
per its original terms and conditions.

- Hence, considering that the practical implications of such minor breach are negligible in the
Indian scenario, ‘Z’ could continue to classify the loan as “non-current” as on the Balance Sheet
date since the loan is not actually demanded by the bank at any time prior to the date on which the
Financial Statements are approved.

25
Class Discussion (3) – Current v/s Non-current

Discuss current and non-current classification for the following:

A. Liability toward bonus

B. Liability towards leave encashment
C. Liability towards funded post-employment benefit obligation
D. Liability towards unfunded post-employment benefit obligation

26
Class Discussion (3) – Current v/s Non-current - Solution

A. Liability toward bonus: payable within one year from the Balance Sheet date is
classified as “current”, balance is classified as non-current

B. In case of accumulated leave outstanding as on the reporting date, the employees

have already earned the right to avail the leave and they are normally entitled
to avail the leave at any time during the year. To the extent the employee has
unconditional right to avail the leave, the same needs to be classified as “current”
even though the same is measured as ‘other long-term employee benefit’ as per AS-
15.
However, whether the right to defer the employee’s leave is available
unconditionally with the company needs to be evaluated on a case-by-case
basis – based on the terms of Employee Contract and Leave Policy, Employer’s right
to postpone/deny the leave, restriction to avail leave in the next year for a maximum
number of days, etc. In case of such complexities, the amount of Non-current and
Current portions of leave obligation should normally be determined by a qualified
Actuary.

27
Class Discussion (3) – Current v/s Non-current – Solution (contd.)

C. For funded post-employment benefit obligations, amount due for payment to the
fund created for this purpose within twelve months is treated as “current”
liability.

D. For unfunded postemployment benefit obligations, a company will have

settlement obligation at the Balance Sheet date or within twelve months for
employees such as those who have already resigned or are expected to resign
(which is factored for actuarial valuation) or are due for retirement within the next
twelve months from the Balance Sheet date. Thus, the amount of obligation
attributable to these employees is a “current” liability. The remaining amount
attributable to other employees, who are likely to continue in the services for
more than a year, is classified as “non-current” liability.
Normally the actuary should determine the amount of current & non-current liability
for unfunded post-employment benefit obligation based on the definition of Current
and Non-current assets and liabilities in the Revised Schedule VI

28
Discussion on the
Revised Schedule
VI FAQs
Balance sheet – Share Capital and Borrowings

 Where a company has only a single class of equity shares in issue; it would still be required
to disclose the rights, preferences and restrictions attached to such shares.

 Borrowings are to be classified as secured only when the assets of the company are provided
as security. Personal security would not make a borrowing secured for the company.

 NPA classification would not affect the current / non current classification of loans. The
irrevocable right to recall the loan would govern the classification.

30
Balance sheet –Borrowings (breach of covenants)

 Where there has been a breach (either minor or major) of a debt covenant as on
the balance sheet date related to a long term borrowing, the company would be
required to classify such a borrowing as current only if the borrowing has been
irrevocably recalled by the lender before authorisation of the financial statements.

 Under IFRS, if the loan can be recalled, it is classified as a current liability,

irrespective of whether the breach is minor or major and irrespective of whether
the loan is actually recalled or not.

This clarification is likely to be a significant relief for a number of

Indian companies and will potentially have a positive impact on the
Impact
Impact liquidity ratios presented.

31
Balance Sheet – Borrowings (roll over and operating cycle)

 If as per the original terms the loan is required to be repaid within the next twelve months,
it would be classified as current irrespective of the rollover/refinance arrangement. In
exceptional cases, the classification of loan as current / non-current could be subject to
judgment on substance over form. No bright lines have been prescribed.

 Borrowings with repayments falling due within the operating cycle of a company will be
classified as a current liability and included under short term borrowings. This could
have a significant impact on classification of borrowings by companies in business where
operating cycle generally exceeds 12 months such as real estate and infrastructure.

 Diversity in practice may persist for classification of rollover /

refinance arrangements.
Impact
Impact  Classification by companies that have multiple businesses with
different operating cycles but borrowings / treasury operations are
managed at a central level will require judgment.

32
Balance Sheet – Trade payables, other current liabilities and provisions

 Payables for purchase of capital goods, liability towards employees and lease
obligations are not to be classified as trade payables.

 Cancellable security deposits, deposits received from customers may in limited cases be
classified as non current if based on industry practice, they are generally not claimed in
the short term. This shall be irrespective of the fact that the deposits are legally payable
on demand.

 Provision for retirement benefits should be classified as current or non current based on
the actuarial valuation.

33
Balance Sheet – Assets and Taxes

 Fixed asset held for sale should be classified as current .

 Conversion option of an investment will not affect the current or non current

classification.

 Provision for doubtful debtors to be divided in current and non current.

 Fixed deposits having a maturity date of more than 12 months from balance sheet date

are to be treated as non-current.

 Current year tax provision (net of advance tax) will be treated as a current liability,

whereas the current year advance tax (net of provision), as well as past year’s advance

tax (net of provision) shall generally be classified as non-current asset.

 The guidance for fixed deposits is not very clear in consideration of

Impact
Impact company’s expectation of withdrawal / utilization of these fixed
deposits as a basis for current / non -current classification.

34
Statement of Profit and Loss

 Classification of liabilities / provision written back in other operating revenue / other

income has been left as matter of professional judgment.

 Exchange differences arising from foreign currency borrowings to the extent that they

are regarded as an adjustment to interest costs would need to be disclosed under

interest expense

 Net foreign exchange gain from operations will be classified as other income and not

Revenue or other operating income

 The guidance for foreign exchange will ensure consistent reporting

Impact
Impact by companies. Presently there are varied practices for reporting
foreign exchange gains/ losses.

35
Implementation
Issues
Implementation Issues – Share application money pending allotment

Issue: Presentation of ‘Share application money pending allotment’

 “Share application money pending allotment” is required to be shown as a

separate line item on the face of the Balance Sheet after Shareholders’ Funds

 Share application money which is refundable and the issued capital along with
the application money is less than authorised share capital, will be classified as
“Other current liabilities”

Guidance

 From the format as set out in the Revised Schedule VI, it appears that the
Regulator’s intention is to specifically highlight the amount of Share
application money pending allotment, though they may be, in substance, in
nature of Equity

 Accordingly, the equity element should continue to be disclosed on the face of

the Balance Sheet as a separate line item, rather than as a component of
Shareholders’ Funds

37
Implementation Issues – Shareholders’ Funds (1/2)

Issue: Presentation of ‘Preference Share Capital’

 The Revised Schedule VI states that “different classes of preference

share capital to be treated separately”

 Based on economic substance of preference shares using AS 31

Financial Instruments: Presentation, a question arises whether
preference shares should be classified as liability or equity.

38
Implementation Issues – Shareholders’ Funds (2/2)

Guidance

 The Revised Schedule VI deals only with presentation and disclosure

requirements. Accounting for various items is governed by the
applicable Accounting Standards (AS)

 However, AS 30 Financial Instruments : Recognition and

Measurement, AS 31 and AS 32 Financial Instruments: Disclosures
are yet to be notified

 Section 85(1) of the Act refers to Preference Shares as a kind of share

capital

 Hence, Preference Shares will have to be classified as Share Capital

39
Implementation Issues – Fixed Assets

Issue: Disclosure for revalued assets

 Revised Schedule VI requires an entity to disclose increased or reduced

amounts along with amount of increase or decrease for a period of 5
years subsequent to the date of revaluation

 AS 10 Accounting for Fixed Assets requires a company to disclose details

such as gross book value of revalued assets, method of revaluation,
nature of indices used, year of appraisal etc. as long as the concerned
assets are held by the enterprise

Guidance:
 Disclosure requirements of the Accounting Standards are in addition to
disclosures required under the Schedule.

 Also, in case of any conflict, the Accounting Standards will prevail over
the Schedule.

 Accordingly, details required by AS 10 will have to be given as long as

the asset is held by the company.

40
Implementation Issues – Investments (1/2)

Issue: Classification of Investments between Current & Non-current

 The Revised Schedule VI requires Investments to be classified as

‘Current’ and ‘Non-Current’. However, AS 13 ‘Accounting for Investments’
requires to classify Investments as ‘Current’ and ‘Long-Term’

 As per AS-13, the assessment of whether an Investment is “Long-term”

has to be made with respect to the date of Investment. For e.g. as per AS
13, current investment is an investment that is by its nature readily
realizable and is intended to be held for not more than one year from the
date on which such investment is made

 As per the Revised Schedule VI, “Non-current” Investment has to be

determined with respect to the Balance Sheet date. For e.g. investments
which are realizable within a period of 12 months from the date of
balance sheet will be treated as ‘current’ irrespective of its date of
investments

41
Implementation Issues – Investments (2/2)

Guidance

 Revised Schedule VI clarifies that the Accounting Standards would

prevail over the Schedule in case of any inconsistencies between the
two

 However, it is pertinent to note that AS 13 does not lay down

presentation norms, though it requires disclosures to be made for
Current and Long-term Investments

 Accordingly, presentation of all investments in the Balance Sheet

should be made based on Current/Non-current classification as
defined in the Revised Schedule VI

 The portion of long-term investment as per AS 13 which is expected

to be realized within twelve months from the Balance Sheet date
needs to be shown as Current investment under the Revised
Schedule VI

42
Implementation Issues – Investments (4/4)

Issue: ‘Basis of valuation’

 The Revised Schedule VI requires disclosure of the “basis of

valuation” of non-current investments which are carried at other than
cost. However, the term 'basis of valuation' is neither defined under
Revised Schedule VI nor used in the Pre-revised Schedule VI

Guidance:
 In absence of the guidance it can be interpreted as under:

A. Basis of valuation would mean: market value, or valuation by independent

valuer, or valuation based on investee's assets and results, or valuation
based on expected cash flows from investments, or management estimates,
etc.

B. Disclosure for 'basis of valuation' should be either at cost, at cost less

provision for other than temporary diminution or at lower of cost and fair
value.

 Making disclosure in line with point B would be sufficient compliance with

disclosure requirements

43
Implementation Issues – Investments (3/4)

Issue: Definition of the term ‘Controlled Special purpose entity’

(Controlled SPE)

 Revised Schedule VI requires an entity to disclose details of body

corporate in which investment is made providing clearly whether
such body corporate is subsidiaries, associates, joint ventures or
controlled SPE

 However, the term “Controlled SPE” is not defined in the Revised

Schedule VI, the Companies Act or notified Accounting Standards

Guidance:

 In absence of the guidance in Revised Schedule VI, the Companies

Act or the Accounting Standards, disclosure under this heading is not
currently applicable

 This will become applicable once the term “Controlled SPE” is

explained/ defined

44
Implementation Issues – Trade Receivables

Issue: Presentation of ‘trade receivables’

 Old Schedule VI required separate presentation of debtors

(i) outstanding for a period exceeding six months (i.e., based on
billing date);
(ii) other debtors.
 However, the Revised Schedule VI requires separate disclosure of
“Trade Receivables outstanding for a period exceeding six months
from the date they became due for payment” only for the current
portion of trade receivables. What happens where no due date
is agreed
Guidance:

 Where no due date is specifically agreed upon, normal credit

period allowed by the company should be taken into consideration
for computing the due date which may vary depending upon the
nature of goods or services sold and the type of customers, etc.

45
Implementation Issues – Cash and cash equivalents (1/2)

Issue: Presentation ‘Cash and cash equivalents’

 Revised Schedule VI - caption changed to 'Cash and cash equivalents' and

requires the break-up to comprise – Balances with banks held as margin money
or security against borrowings, guarantees, etc. and bank deposits with more
than 12 months maturity

 AS-3 Cash Flow Statements, defines

 Cash: cash on hand and demand deposits with banks.

 Cash Equivalents: short term, highly liquid investments that are readily
convertible into known amounts of cash and which are subject to an
insignificant risk of changes in value, includes deposits with original maturity
of three months or less

 Bank balances held as margin money or security against borrowings are not
readily available for use by the company, and accordingly, do not meet the
aforesaid definition of 'cash and cash equivalents'.

 This is an apparent conflict between the requirements of the Revised Schedule

VI and the Accounting Standards

46
Implementation Issues – Cash and cash equivalents (2/2)

Guidance:

 As per General Instructions, Para 1 of Revised Schedule VI,

requirements of the Accounting Standards would prevail over the Revised
Schedule VI and the company should make necessary modifications in
the Financial Statements which may include addition, amendment,
substitution or deletion in the head/sub-head or any other changes inter
se.

 Accordingly, the conflict should be resolved by changing the caption

“Cash and cash equivalents” to “Cash and bank balances,” which may
have two sub-headings, viz., “Cash and cash equivalents” and “Other
bank balances.”

 The former should include only the items that constitute Cash and cash
equivalents defined in accordance with AS 3, while the remaining line-
items may be included under the latter heading.

 However in practise, there are different ways of dealing with above

conflict

47
Implementation Issues – Proposed dividend (1/2)

Issue: Adjustment of ‘proposed dividend’

 The Revised Schedule VI requires disclosure of the amount of

dividends proposed to be distributed to equity and preference
shareholders for the period and the related amount per share to be
disclosed separately. This needs to be disclosed in the notes

 The Old Schedule VI specifically required proposed dividend to be

disclosed under the head “Provisions”

 Hence, a question that arises is as to whether this means that

proposed dividend is not required to be provided for when applying the
Revised Schedule VI

48
Implementation Issues – Proposed dividend (2/2)

Guidance:

 AS-4 Contingencies and Events Occurring After the Balance Sheet

date requires that dividends stated to be in respect of the period covered
by the Financial Statements, which are proposed or declared by the
enterprise after the Balance Sheet date but before approval of the
Financial Statements, should be adjusted

 Keeping this in view and the fact that the Accounting Standards
override the Revised Schedule VI, companies will have to continue
to create a provision for dividends in respect of the period covered by
the Financial Statements and disclose the same as a provision in the
Balance Sheet, unless AS-4 is revised.

 Hence, the disclosure to be made in the notes is over and above the
disclosures pertaining to a) the appropriation items to be disclosed
under Reserves and Surplus and b) Provisions in the Balance Sheet

49
 Old v/s New
schedule VI

© 2012 KPMG India Private Limited, an Indian limited liability company and a member firm
of the KPMG network of independent member firms affiliated with KPMG International
Cooperative (“KPMG International”), a Swiss entity. All rights reserved.
Key differences between Revised Schedule VI & Existing Schedule VI –
Balance Sheet (1/6)

Caption Revised Schedule VI Existing Schedule VI

EQUITY AND LIABILITIES

Shareholders’ funds

 Reconciliation of number of shares issued at the  No such requirement

beginning and at the end of reporting period is required

 Rights, preferences and restrictions on each class of  Terms of redemption or conversion (if any), of any
shares, including restrictions on the distribution of redeemable preference capital, together with
dividends and the repayment of capital earliest date of redemption or conversion to be
shown

 Disclosure of following details required for five years;  Disclosure of details of Point No. i and ii are
i. Aggregate number and class of shares allotted required but not limited to 5 years
as fully paid up pursuant to contracts without
Share capital payment being received in cash
ii. Aggregate number and class of shares allotted
as fully paid up by way of bonus shares
iii. Aggregate number and class of shares bought
back

 Disclosure of shares held by each shareholder holding  No such requirement

more than 5 % - giving details of number of shares

 Disclosure of terms of any securities issued that are  No such requirement

convertible into equity/preference shares

51
Key differences between Revised Schedule VI & Existing Schedule VI –
Balance Sheet (2/6)

Caption Revised Schedule VI Existing Schedule VI

 Debit balance of Profit and loss account shall be shown as a  Debit balance in profit and loss account is
Reserves and
negative figure under the head ‘surplus’ under ‘shareholders’ shown on the asset side
surplus
funds’

Money received  Money received against share warrants required to be  No such requirement
against share disclosed as a separate line item as part of ‘shareholder’s
warrants funds’

Share application money pending allotment

 Separate disclosure is required from Shareholder’s Funds (if  Disclosed as a part of Shareholder’s funds
Share due for refund disclosed as a part of other current liabilities)
application  No such details of terms and conditions etc.
money pending  Details such as terms and conditions, number of shares are required
allotment proposed to be issued, amount of premium to be disclosed
 This could result in share application not being
considered for calculation of net worth

Non-current liabilities

 Loans and advances from related parties required to be  Loans and advances from subsidiaries are
shown separately required to be shown separately
Long-term
borrowings
 Disclosure of any default in repayment of principal and  No such requirement under existing
interest in respect of any borrowings existing on the date of schedule VI. These details, in a limited
balance sheet is required measure are disclosed as a part of CARO

52
Key differences between Revised Schedule VI & Existing Schedule VI –
Balance Sheet (3/6)

Caption Revised Schedule VI Existing Schedule VI

Long-term  Loans guaranteed by director or others required to be  Disclosure of loans guaranteed restricted only
borrowings disclosed in aggregate. to directors or managers
(cont.)

 All deferred tax liabilities are classified as non-current  As per AS 22 requirements, disclosed
Deferred tax
liabilities and disclosed separately on the face of the separately on the face of balance sheet after
liabilities (Net)
balance sheet as part of long term borrowings unsecured loans

Other long term  Disclosure of non-current portion of trade payables and  No such requirement
liabilities others is required

 Long term provisions are required to be sub-classified in  Separate disclosure of provision for dividends,
Long-term
the notes into; Provision for Employee Benefits and Others contingencies, provident scheme, insurance,
provisions
(non-current portion) pension etc. is required

Current Liabilities

Short-term  Current portion of borrowings is required to be disclosed  No such requirement

borrowings under this category

 This would cover amounts payable in respect of goods  No such requirement

Trade payables purchased or services received in the normal course of
business (current-portion)

53
Key differences between Revised Schedule VI & Existing Schedule VI –
Balance Sheet (4/6)

Caption Revised Schedule VI Existing Schedule VI

 To be sub-classified into various categories such as current maturities of  No such requirement

Other current
long-term debt, interest accrued and due etc.
liabilities

Short-term  Current portion of provisions for employee benefits and others  No such requirement
provisions

ASSETS

Non-current assets

 Following classification on the face of balance sheet is required;  Classification of Tangible assets
a. Tangible assets and Non-tangible assets not
required on the face of the
b. Intangible assets balance sheet
Fixed assets
c. Capital work-in-progress
d. Intangible assets under development

 Sub-classified into various categories such as investment property,  Separate disclosure is required
investments in equity instruments, investments in preference shares etc. only for investments in shares or
 Under each category disclosure required for names of the bodies debentures of subsidiaries and
Non-current corporate (indicating separately whether such bodies are ;Subsidiaries, companies under same
investments Associates, JV or controlled special purpose entities) management

 Details of investments purchased and sold not required to be disclosed  Details of investments purchased
and sold within the reporting
period is required to be given

54
Key differences between Revised Schedule VI & Existing Schedule VI –
Balance Sheet (5/6)

Caption Revised Schedule VI Existing Schedule VI

Deferred tax assets  No major difference

(Net)

 Capital Advances are required to be disclosed  No such requirement

separately under Loans and Advances
 Details of amounts due from directors and  Maximum amount due from directors or other
Long term loans
dues from companies under same officers and dues from companies under same
and advances
management are not required to be disclosed management is required to be disclosed
 Loans and advances to related parties are  Loans and advances to subsidiaries are disclosed
required to be disclosed separately separately

Other non-current  Long term trade receivables are required to be  No such requirement
assets disclosed

Current assets

Current  Sub-categories are identical to non-current  No such requirement

investments investments except ‘investment properties’

Inventories  No major difference

55
Key differences between Revised Schedule VI & Existing Schedule VI –
Balance Sheet (6/6)

Caption Revised Schedule VI Existing Schedule VI

 The aggregate amount of Trade Receivables  Debts outstanding for more than six months are
(Debtors) outstanding for a period exceeding six disclosed – i.e. from the date of invoice
Trade receivables
months from the date they are due for payment
is required to be stated separately

 Bank Balances - Schedule and Non-schedule  Bank balances with Schedule banks and Non-
disclosure - not required to be disclosed Schedule Banks are required to be disclosed
 Bank deposits with maturities of more than 12 separately
months are required to be disclosed  No requirement of disclosure of bank deposits,
Cash and Cash  Repatriation restrictions in respect of cash and repatriation restrictions or margin money required
equivalents bank balances is required to be separately
stated
 Balances with banks held as margin money or
security against the borrowings, guarantees or
other commitments required to be disclosed

Short-term loans and

 Current portion of loans and advances  No such requirement
advances

Other current assets  No major difference

56
Key differences between Revised Schedule VI & Existing Schedule VI –
Contingent liabilities & Commitments

Caption Revised Schedule VI Existing Schedule VI

Contingent liabilities & Commitments

Contingent liabilities  No major difference

 Commitments are required to be classified in  Only point No. i and ii are required to be disclosed
following manner;
i. Estimated amount of contracts
remaining to be executed on capital
account and not provided for

Commitments ii. Uncalled liability on shares and other

investments partly paid
iii. Other commitments such as acquisition
of intangible assets; purchase,
construction, development of investment
property; letter of intent for purchase of
business etc.

57