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RevisedScheduledVI
Dhinal Shah
Chartered Accountant
CharteredAccountant
Structure of Presentation
StructureofPresentation
SettingtheContext
Setting
the Context
StructureofRevisedScheduleVI
KeyChanges
Ch
KeyPoints
Setting
the
Context
Concept of Materiality
ConceptofMateriality
RevisedscheduleVIspecificallyrecognizesconceptofmateriality
ExistingscheduleVImaterialitythreshold
Expensesexceeding1%ofthetotalrevenueorRs.5,000,whicheverishigher,
p
shallbeshownasaseparateanddistinctitem
RevisedscheduleVImaterialitythreshold
Itemsofincomeorexpensewhichexceeds1%oftherevenuefromoperations
or Rs 100,000 whichever is higher
orRs100,000whicheverishigher
Structure
of
RevisedScheduleVI
BalanceSheet RevisedFormat
(Rupeesin)
BalanceSheet RevisedFormat
(Rupeesin)
P&L RevisedFormat
(Rupeesin)
P&L RevisedFormat
(Rupeesin)
p
EquityandLiabilityClassification
AssetsClassification
KeyChanges
New Disclosures
NewDisclosures
Current/noncurrentclassification
Ifanassetoraliabilityhasboththeportions,company
willneedtobreakthesameintocurrentandnon
current portions e.g., Current maturities of a long term
currentportionse.g.,Currentmaturitiesofalongterm
borrowingwillhavetobeseparatedandclassified
undertheheadothercurrentliabilities
WillImpactWorkingCapital,CurrentRatio&Debt
Will Impact Working Capital Current Ratio & Debt
EquityRatios
LoansandAdvancesfromRelatedParties
RevisedscheduleVIrequiresseparatedisclosurefor
loansandadvancereceivedfromandgiventorelated
p
parties
New Disclosures
NewDisclosures
Commitments
Requiresdisclosureofallcommitments(includingcommitments
otherthancapitalcommitments)
LoanDefaults
Requiresdisclosureofalldefaultsinrepaymentofloansand
d l
f ll d f l
fl
d
interest
CurrentlyCAROrequiresonlydefaultsinrepaymentofduesto
financial institutions banks and debenture holders to be specified
financialinstitutions,banksanddebentureholderstobespecified
Termsofrepaymentoftermloans&otherloanstobedisclosed
(earlieronlydebentures)
Shares of each class held by:
Sharesofeachclassheldby:
HoldingCompany
UltimateHoldingCompany
SubsidiariesorAssociatesofAbove2
Subsidiaries or Associates of Above 2
New Disclosures
NewDisclosures
ShareholdersFunds AdditionalDisclosures
Reconciliationofno.ofsharesoutstandingatbeginningandendof
reportingperiod
Rights,preferencesandrestrictionsofeachclassofsharesincluding
p y
p
restrictionsondistributionofdividendsandrepaymentofcapital
Detailsofshareholdersholdingmorethan5%shares
Detailsofsharesissuableunderoptionsandcontracts/commitments
Unpaidcallsbydirectorsandofficersshallbeshownseparately
For5yearsimmediatelyprecedingthedateofBSdiscloseaggregatenumber
&classofshares:
pursuanttocontract(s)withoutpaymentbeingreceivedincash(presently
to be given throughout the life of the Company)
tobegiventhroughoutthelifeoftheCompany)
bonusshares(presentlytobegiventhroughoutthelifeoftheCompany)
boughtback(presentlynotrequired)
New Disclosures
NewDisclosures
ShareApplicationmoneypendingallotment
Notexceedingissuedcapitalandnotrefundable
N t
di i
d
it l d t f d bl disclosureaftershareholders
di l
ft h h ld
fundandbeforeliability
Ifrefundable othercurrentliability
AdditionalDisclosuresofShareApplicationMoney
Terms&Conditions
Numberofsharestobeissued
Amountofpremium
periodbeforewhichshareswillbeallotted
period before which shares will be allotted
Whethercompanyhassufficientauthorizedcapitaltoallotthesharesoutof
applicationmoney
Periodforwhichitispendingbeyondthedateofallotmentmentionedin
offerdocumentwithreasons
offer document with reasons
Investments
WithrespecttoInvestments,separatedisclosurerequiredforinvestmentin
controlledspecialpurposeentitiesWhatismeantbycontrolledspecialpurpose
entities
Disclosures Modified
DisclosuresModified
Debtors
Currently,debtorsOutstandingforaperiodexceeding6monthsbasedonbilling
C
tl d bt O t t di f
i d
di 6
th b d
billi
date
RevisedscheduleVIrequiresdebtorsoutstandingforaperiodexceeding6months
fromthedatetheybecamedueforpayment
C i l d
Capitaladvances
Currently,capitaladvancescanbepresentedaspartofCapitalWorkinProgress/
FixedAssets
RevisedScheduleVIrequiresthesametobepresentedseparatelyunderthe
headLoans&Advances
Profit&LossAccountAppropriation/Reserves&Surplus
AppropriationofProfit&LosstobepresentedunderReserves&Surplus
DebitBalanceofProfit&Losstobeshownasa
Debit Balance of Profit & Loss to be shown as a negative
negative figureunderSurplus
figure under Surplus
Reserves&SurplusbalancewillbeshownafteradjustingnegativebalanceofP&L,
evenifnegative
KeyPoints
Important Definitions
ImportantDefinitions
Current/NonCurrentasset Anassetisclassifiedascurrentwhenitsatisfiesanyof
the following criteria:
thefollowingcriteria:
Itisexpectedtoberealizedin,orisintendedforsaleorconsumptionin,the
companysnormaloperatingcycle;
Itisheldprimarilyforthepurposeofbeingtraded;
Itisexpectedtoberealizedwithintwelvemonthsafterthereportingdate;or
I i
d b
li d i hi
l
h f
h
i d
Itiscashorcashequivalentunlessitisrestrictedfrombeingexchangedorusedto
settlealiabilityforatleasttwelvemonthsafterthereportingdate.
Current/NonCurrentliability Aliabilityshallbeclassifiedascurrentwhenit
satisfiesanyofthefollowingcriteria:
Itisexpectedtobesettledinthecompanysnormaloperatingcycle;
p
y
p p
g
;
Itisheldprimarilyforthepurposeofbeingtraded;
Itisduetobesettledwithintwelvemonthsafterthereportingdate;or
Thecompanydoesnothaveanunconditionalrighttodefersettlementofthe
liabilityforatleasttwelvemonthsafterthereportingdate.
Important Definitions
ImportantDefinitions
OperatingCycle
Itisthetimebetweentheacquisitionofassetsforprocessingandtheir
realizationincashorcashequivalents.Wherethenormaloperatingcycle
cannotbeidentified,itisassumedtohaveadurationof12month
TradeReceivable
AreceivableshallbeclassifiedasaTradeReceivableifitisinrespectof
theamountdueonaccountofgoodssoldorservicesrenderedinthe
normal course of business
normalcourseofbusiness
TradePayable
Apayableshallbeclassifiedasa
A payable shall be classified as a Trade
TradePayable
Payableifitisinrespectofthe
if it is in respect of the
amountdueonaccountofgoodspurchasedorservicesreceivedinthe
normalcourseofbusiness
Key Points
KeyPoints
Commitments
EarlierScheduleVIonlycapitalcommitments.RevisedScheduleVI
requiresthedisclosureofallcommitments,i.e.,includingother
commitments.Whatisthenatureofcommitmentsthatwillgetcovered
underthisdisclosurerequirement?
TradeReceivable/Payableclassification
Liabilityforpurchaseoffixedassets/receivableforsaleofFixedAssetsnot
to be classified as Trade Payable/ Trade Receivable
tobeclassifiedasTradePayable/TradeReceivable
Investment
Investments
Investments Basisofvaluation(Revised)VsModeofValuation(earlier)
Basis of valuation (Revised) Vs Mode of Valuation (earlier)
LongTerminvestmentscarriedatotherthancost
CurrentInvestment(individualinvestments)
Key Points
KeyPoints
CurrentandNonCurrentClassification
DeferredTaxshouldalwaysbeclassifiedasNonCurrent
Capitaladvancestobeclassifiedasnoncurrentassets
Unconditionalrighttodefersettlementofliability
Noncomplianceofdebtcovenantse.g.quarterlyinformation,non
paymentofmonthlyinterest.
Mostloanagreementshaveaclausethatincaseofnoncomplianceof
any clause the loan will be payable on demand
anyclausetheloanwillbepayableondemand.
ClassificationofLongterminvestmentexpectedtoberealized
within12monthsfromtheBSdateascurrentinvestment
EmployeeBenefitslikeBonus/Incentives,Postemployment
p y
/
,
p y
obligationse.g.GratuityandPension,Otherlongtermbenefitse.g.
Accumulatedcompensatedabsence
KeyissuesrelatedtoBalanceSheet
Currentandnoncurrentclassification somequestions
CompanyAhastakenaloanwhichisrepayableondemand.However,basedon
p y
p y
,
thepastexperience,itisnotexpectedthatthelenderwilldemandtherepayment
withinnext12months.
CompanyBhastakena5yearloan.Theloancontainscertaindebtcovenants,e.g.,
filingofquarterlyinformation.Thecompanydefaultedinfilingofsuchinformation
inthepreviousquarter,withtheeffectthatloanhasbecomerepayableon
demand.However,basedonthepastexperience,themanagementbelievesthat
d f l i i
defaultisminorandthebankwillnotdemandtherepaymentofloan.Ithasalso
d h b k ill
d
d h
fl
h
l
startedtheprocessofgettingwaiverforthisdefault.Afterthereportingperiod
andbeforetheapprovalofthefinancialstatementsforissue,thebankagreedto
waive the default and not to demand payment as a consequence of the default
waivethedefaultandnottodemandpaymentasaconsequenceofthedefault.
Acompanyhastakena5yeartermloan.Outofabundantcaution,thebank
includesacovenantthatithasarighttorecalltheloanondemandevenwhere
the company has not violated any of the debt covenants.
thecompanyhasnotviolatedanyofthedebtcovenants.
Key Points
KeyPoints
ShareCapital
Shareholderholdingmorethan5%shares
Classificationofpreferenceshares
Classification
of preference shares
DifferentclassesofPreferenceSharestobetreatedseparately.
Doesitmeanthatacompanyshouldcompulsorilyclassifypreference
shares based on their substance i e redeemable preference shares
sharesbasedontheirsubstance,i.e.,redeemablepreferenceshares
shouldalwaysbeclassifiedasliability?
DisclosureofPreferenceSharesforcompaniesfollowingAS30to32on
Financial Instruments
FinancialInstruments.
DisclosuresRequired
Manufacturingcompanies
RawmaterialsunderbroadheadsGoods
purchasedunderbroadheads
Tradingcompanies
Purchasesofgoodstradedunderbroad
heads
Companiesrenderingor
supplyingservices
l i
i
Grossincomederivedfromservices
renderedunderbroadheads
d d d b dh d
Companythatfallsinmorethanone
category
Itwillbesufficientcompliancewiththe
requirements,ifpurchases,salesand
consumption of raw material and the
consumptionofrawmaterialandthe
grossincomefromservicesrenderedare
shownunderbroadheads
Accountinganddisclosureofshareofprofit/lossinPartnershipFirms
WhetherdisclosuresforNamesofallPartners,TotalCapitalandShare
(Profit/LossSharingRatio)ofEachPartnershouldbedisclosedforLLP
also?
Proposeddividend accountinganddisclosure
Whetherdividendincomeforfinancecompaniesshouldbetakentomain
revenueorOtherIncome?
Meaningofotheroperatingrevenuesfornonfinancecompanies
WhereshouldProfitonSaleofFixedAssetsbeclassified Other
OperatingRevenue/OtherIncome?
Shouldthenetgainsarisingonforeignexchangefluctuationsbeincluded
g
g
g
g
undertheheadOtherOperatingRevenuesorOtherIncome?
Disclosureofvalueofimportsandexpenditureinforeigncurrency
whetheraccrualorcash?
DoesSmallandMediumCompanyasdefinedunderCompanies
(AccountingStandards)Rules,2006needtodiscloseDilutedEPS?
ComparativeNumbers Tocommenceexerciseofvalidatingpreviousyear
numbersinRevisedScheduleVIFormat
ChangestobemadeMIS/ITsystemstocollateinformationofcurrent/
noncurrentportionsofeachassetandliabilities
BreakupofEmployeeBenefitLiabilitiesinCurrentandNonCurrenttobe
obtainedfromIndependentActuary.
ReviewLoanAgreementstoavoidbecomingcurrentliabilityincaseofnon
g
g
y
complianceofminorclauses
AdditionaltimeandeffortsfortheCompaniesandAuditorstounderstand
andimplementchanges
p
g
Useofjudgmenttomaintainbalancebetweenexcessiveinformationand
overaggregation
Differential Comparison
DifferentialComparison
SN
Particular
Existing
Revised
NetWorking
Capital
CurrentassetsandLiabilitiesareshown
togetherunderapplicationoffunds.Net
WorkingCapitalappearsonbalance
sheet
Assets&Liabilitiesaretobebifurcated
intocurrent&Noncurrentandshown
separately.Hence,NetWorkingCapital
willnotbeappearinginBalancesheet
FixedAssets
Nobifurcationrequiredinto
Tangible&Intangibleassets
Fixedassetstobeshownundernon
currentassetsandithastobebifurcated
intoTangible&Intangibleassets
Borrowings
Shortterm&longterm
borrowingsaregroupedtogetherunder
theheadLoanfundssubheadSecured/
Unsecured
Longtermborrowingstobe
shownundernoncurrent
liabilitiesandshortterm
borrowingstobeshownunder
currentliabilitieswithseparate
disclosureofsecured/unsecured
loans.
Periodandamountofcontinuing
defaultasonthebalancesheet
p y
dateinrepaymentofloansand
interesttobeseparatelyspecified
Differential Comparison
DifferentialComparison
SN
Particular
Existing
Revised
Financelease
obligation
Financeleaseobligationsare
includedincurrentliabilities
Financeleaseobligationsaretobe
groupedundertheheadnoncurrent
Liabilities
Deposits
Leasedepositsarepartofloans&
advances
Leasedepositstobedisclosedaslong
termloans&advancesunderthehead
noncurrentassets
Investments
Bothcurrent&noncurrent
investmentstobedisclosed
under the head investments
undertheheadinvestments
Currentandnoncurrentinvestments
aretobedisclosedseparatelyunder
current assets & noncurrent assets
currentassets&noncurrentassets
respectively
Loans&Advances
Loans&Advancesaredisclosedalong
withcurrentassetsLoans&Advanceto
subsidiaries & others to be disclosed
subsidiaries&otherstobedisclosed
separately
Loans&Advancestobebrokenupin
longterm&shorttermandtobe
disclosed under noncurrent
disclosedundernon
current¤t
& current
assetsrespectively.Loans&Advance
fromrelatedparties&otherstobe
disclosedseparately.
Differential Comparison
DifferentialComparison
SN
Particular
Existing
Revised
DTA/
DTL
DeferredTaxassets/liabilitiestobe
disclosedseparately
DTA/DTLtobedisclosedundernon
currentassets/liabilitiesasapplicable
Cash&Bank
Balances
Bankbalancetobebifurcatedin
scheduledbanks&others
Bankbalancesinrelationtoearmarked
,
g
y,
balances,heldasmarginmoney,
depositswithmorethan12months
maturity,eachtobeshownSeparately.
10
Profit&Loss
(DrBalance)
P&Ldebitbalancetobeshownunder
theheadMiscellaneousexpenditure&
l
losses
DebitbalanceofProfitandLossAccount
tobeshownasnegativefigureunderthe
h d
headSurplus.Therefore,reserve&
l
h f
&
surplusbalancecanbenegative
11
Format
Acompanyhasanoptiontouse
horizontalformatforpresentationof
financialstatements.
Acompanywillnothaveoptiontouse
horizontalformatforpresentationof
financialstatements.
Differential Comparison
DifferentialComparison
SN
Particular
Existing
Revised
13
Othercurrent
liabilities
p
NoseparatedisclosureofCurrent
maturitiesoflongtermdebt.No
separatedisclosureofCurrentmaturities
offinancelease
Obligation
Currentmaturitiesoflongtermdebtto
g
bedisclosedunderothercurrent
Liabilities.Currentmaturitiesoffinance
leaseobligationtobedisclosed
14
P h
Purchases
Purchases,Opening&closingstock,
P
h
O
i & l i
t k
givingbreakupinrespectofeachclass
ofgoodstradedinindicatingthe
quantitiesthereof
Goodstradedinbythecompanytobe
G
d t d d i b th
t b
disclosedinbroadheadsnotes.
Disclosureofquantitativedetailsof
goodsismuchdiluted.
15
Expense
ClassificationinP&L
A/c.
Classificationbasedonnatureof
Classification
based on nature of
expenses
16
FinanceCost
Tobeclassifiedinfixedloans&other
loans
Tobeclassifiedasinterestexpense,
otherborrowingcosts&Gain/Losson
forex transactions/translations.
17
Foreignexchange
gain/loss
Gain/Lossonforeigncurrency
transactiontobeshownunderfinance
cost
Gain/Lossonforeigncurrency
transactiontobeseparatedintofinance
costsandotherexpenses
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