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COMPANIES ACT, 1956
NOTIFICATION
Company Law : Section 642 oI the Companies Act, 1956 - Schedules,
Iorms and rules - Power oI Central Government to make rules -
Amendment in NotiIication No. S.O. 447(E), dated 28-2-2011
NOTIFICATION NO. S.O. 653(E), DATED 30-3-2011
In exercise oI the powers conIerred by clause(a) oI sub-section(1) oI
section 642 read with sub-section(1) oI section 210A and sub-section
(3C) oI section 211 oI the Companies Act,1956, (1 oI 1956), the Central
Government hereby makes the Iollowing amendment to paragraph 2 oI
the notiIication No.447(E) dated the 28th February, 2011 (Monday):-
"The notification shall come into force for the Balance Sheet and
Profit and Loss Account to be prepared for the financial year
commencing on or after 1.4.2011".
Compiled by Mohd. Atiq Qureshi
!articuIars Note No
Figures as at the end
of current reporting
period
Figures as at the end of
the previous reporting
period
I. EQUITY AND LIABILITIES
(1) SharehoIder's Funds
a) Share Capital
b) Reserves and Surplus
c) Money received against share warrants
(2) Share appIication money pending aIIotment
(3) Non-Current LiabiIities
a) Long-term borrowings
b) Deferred tax liabilities et)
c) Other Long term liabilities
d) Long term provisions
(4) Current LiabiIities
a) Short-term borrowings
b) Trade payables
c) Other current liabilities
d) Short-term provisions
TotaI
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
ME1HOD ADOP1ED IA DE1ERMIAIAC 1HE FORM OF BALAACE SHEE1 &
S1A1EMEA1 OF PROFI1 AAD LOSS
I. BALAACE SHEE1
1) Presentation is based upon :
(a) The balanced format in which the sum oI the amounts Ior liabilities and equity are
added together to illustrate that assets equal liabilities plus equity.
(b) The report form i.e. top to bottom or the vertical Iorm.
2) Classification oI assets and liabilities:
(a) ClassiIication is based upon current and non-current assets/liabilities method.
(b) Similar nature oI assets/liabilities are grouped into line items.
II. S1A1EMEA1 OF PROFI1 AAD LOSS
1) Presentation is based upon:
Multiple step format (Nature) i.e. Revenues Irom operations less cost oI sales less
operating expenses add other incomes less non operating expense less tax expense.
2) Classification of expenses is based upon:
Function of expense method-expenses are classiIied according to their Iunction as
part oI cost oI sales, selling and marketing expenses or administrative expenses.
Expenses are reallocated among various Iunctions within the company.
Compiled by Mohd. Atiq Qureshi
Sr.
No.
Particulars Old Schedule VI Revised Schedule VI
1 Rounding oII oI
Figures
appearing in
Iinancial
statement
Turnover oI less than Rs. 100 Crs - R/oII to
the nearest Hundreds, thousands or decimal
thereoI
Turnover oI Rs. 100 Crs or more but less
than Rs. 500 Crs - R/oII to the nearest
Hundreds, thousands, lakhs or millions or
decimal thereoI
Turnover oI Rs. 500 Crs or more - R/oII to
the nearest Hundreds, thousands, lakhs,
millions or crores, or decimal thereoI
Turnover oI less than Rs. 100 Crs -
R/oII to the nearest Hundreds,
thousands, lakhs or millions or
decimal thereoI
Turnover oI Rs. 100 Crs or more -
R/oII to the nearest lakhs, millions
or crores, or decimal thereoI
2 Net Working
Capital
Current assets & Liabilities are shown
together under application oI Iunds. The net
working capital appears on balance sheet.
Assets & Liabilities are to be
biIurcated in to current & Non-
current and to be shown separately.
Hence, net working capital will not
be appearing in Balance sheet.
3 Fixed Assets There was no biIurcation required in to
tangible & intangible assets.
Fixed assets to be shown under
non-current assets and it has to be
biIurcated in to Tangible &
intangible assets.
Sr.
No.
Particulars Old Schedule VI Revised Schedule VI
4 Borrowings Short term & long term
borrowings are grouped
together under the head Loan
Iunds sub-head Secured /
Unsecured
Long term borrowings to be shown under
non-current liabilities and short term
borrowings to be shown under current
liabilities with separate disclosure oI secured
/ unsecured loans.
Period and amount oI continuing deIault as
on the balance sheet date in repayment oI
loans and interest to be separately speciIied
5 Finance lease obligation Finance lease obligations are
included in current liabilities
Finance lease obligations are to be grouped
under the head non-current liabilities
6 Deposits Lease deposits are part oI
loans & advances
Lease deposits to be disclosed as long term
loans & advances under the head non-
current assets
7 Investments Both current & non-current
investments to be disclosed
under the head investments
Current and non-current investments are to
be disclosed separately under current assets
& non-current assets respectively.
Sr.
No.
Particulars Old Schedule VI Revised Schedule VI
8 Loans & Advances Loans & Advance are disclosed
along with current assets
Loans & Advances to be
broken up in long term &
short term and to be disclosed
under non-current & current
assets respectively.
9 DeIerred Tax Assets / Liabilities DeIerred Tax assets / liabilities to
be disclosed separately
DeIerred Tax assets / liabilities
to be disclosed under non-
current assets / liabilities as
the case may be.
10 Cash & Bank Balances Bank balance to be biIurcated in
scheduled banks & others
Bank balances in relation to
earmarked balances, held as
margin money against
borrowings, deposits with
more than 12 months maturity,
each oI these to be shown
separately.
11 ProIit & Loss
(Dr Balance)
P&L debit balance to be shown
under the head Miscellaneous
expenditure & losses.
Debit balance oI ProIit and
Loss Account to be shown as
negative Iigure under the head
Surplus. ThereIore, reserve &
surplus balance can be
negative.
Sr.
No.
Particulars Old Schedule VI Revised Schedule VI
12 Sundry Creditors Creditors to be broken up in
to micro & small suppliers
and other creditors.
It is named as Trade
payables and there is no
mention oI micro &
small enterprise
disclosure.
13 Other current liabilities No speciIic mention Ior
separate disclosure oI Current
maturities oI long term debt
No speciIic mention Ior
separate disclosure oI Current
maturities oI Iinance lease
obligation
Current maturities oI
long term debt to be
disclosed under other
current liabilities.
Current maturities oI
Iinance lease obligation
to be disclosed.
14 Separate line item
Disclosure criteria
any item under which expense
exceeds one per cent oI the
total revenue oI the company
or Rs. 5,000 whichever is
higher; shall be disclosed
separately
any item oI income /
expense which exceeds
one per cent oI the
revenue Irom operations
or Rs. 1,00,000,
whichever is higher; to
be disclosed separately
Sr.
No.
Particulars Old Schedule VI Revised Schedule VI
15 Expense classiIication Function wise & nature wise Expenses in Statement oI
ProIit and Loss to be
classiIied based on nature
oI expenses
16 Finance Cost Finance cost to be classiIied in
Iixed loans & other loans
Finance cost shall be
classiIied as interest
expense, other borrowing
costs & Gain / Loss on
Ioreign currency
transaction & translaton
17 Foreign exchange gain / loss Gain / Loss on Ioreign currency
transaction to be shown under
Iinance cost
Gain / Loss on Ioreign
currency transaction to be
separated into Iinance
costs and other expenses
18 Purchases The purchase made and the
opening & closing stock, giving
break up in respect oI each class oI
goods traded in by the company
and indicating the quantities
thereoI.
Goods traded in by the
company to be disclosed
in broad heads in notes.
Disclosure oI quantitative
details oI goods is diluted
Depiction of the liability side of Balance-Sheet
W Shareholders` funds
Share Capital
Reserves and surpluses
Share warrants
W Share application money pending allotment
W Non current liabilities
Long term borrowings
Deferred tax liabilities (net)
Other Long term liabilities
Long-term provisions
W Current liabilities
Short-term borrowings
Trade payables
Other current liabilities
Short-term provisions
Compiled by Mohd. Atiq Qureshi
1
Depiction of the asset side of the Balance-Sheet
Non-current assets
- Fixed assets
Tangible assets
Intangible assets
Capital work-in-progress
Intangible assets under development
- Non-current investments
- Deferred tax assets (net)
- Long-term loans and advances
- Other non-current assets
Current assets
- Current investments
- Inventories
- Trade receivables
- Cash and cash equivalents
- Short-term loans and advances
- Other current assets
Compiled by Mohd. Atiq Qureshi
1
Current Assets :
W DeIinition in Schedule VI: An asset shall be classiIied as current when it
satisIies any oI the Iollowing criteria:
it is expected to be realized in, or is intended Ior sale or consumption in, the
company`s normal operating cycle;
it is held primarily Ior the purpose oI being traded;
it is expected to be realized within twelve months aIter the reporting date; or
it is cash or cash equivalent unless it is restricted Irom being exchanged or
used to settle a liability Ior at least twelve months aIter the reporting date.
W DeIinition in IAS 1: an asset that the entity
expects to realise the asset, or intends to sell or consume it, in its
normal operating cycle;
it holds the asset primarily for the purpose of trading;
it expects to realise the asset within twelve months after the reporting
period; or
the asset is cash or a cash equivalent (as defined in IAS 7) unless the
asset is restricted from being exchanged or used to settle a liability for
at least twelve months after the reporting period
Compiled by Mohd. Atiq Qureshi
1
Current Assets :
W Meaning oI cash equivalent:
Short term, highly liquid investments that are readily convertible into cash, with insigniIicant
risk oI changes in value |IAS 7|
W Meaning oI operating cycle
W DeIined in Schedule VI: An operating cycle is the time between the acquisition oI assets
Ior processing and their realization in cash or cash equivalents. Where the normal
operating cycle cannot be identiIied, it is assumed to have a duration oI 12 months.
W IAS 1: The operating cycle oI an entity is the time between the acquisition oI assets Ior
processing and their realisation in cash or cash equivalents. When the entity`s normal
operating cycle is not clearly identifiable, it is assumed to be twelve months. Current
assets include assets (such as inventories and trade receivables) that are sold, consumed
or realised as part oI the normal operating cycle even when they are not expected to be
realised within twelve months aIter the reporting period. Current assets also include assets
held primarily Ior the purpose oI trading (examples include some Iinancial assets classiIied
as held Ior trading in accordance with IAS 39) and the current portion oI non-current
Iinancial assets.
Compiled by Mohd. Atiq Qureshi
1
Compiled by Mohd. Atiq Qureshi
1
Current Assets :
W Examples:
In case oI a Iinancial entity, loans are current assets
In case oI a distillery/winery, wines in the process oI maturing will be current assets
even iI it takes several years to mature
For a builder, buildings under construction are current assets
For a person trading in buildings, a stock oI buildings meant Ior resale is a current asset
Current liabilities
W If it satisfies any of the following criteria
it is expected to be settled in the company`s normal operating cycle;
it is held primarily Ior the purpose oI being traded;
it is due to be settled within twelve months aIter the reporting date; or
the company does not have an unconditional right to deIer settlement oI the liability Ior at
least twelve months aIter the reporting date. Terms oI a liability that could, at the option
oI the counterparty, result in its settlement by the issue oI equity instruments do not aIIect
its classiIication.
W IAS 1 deIinition:
What is current liability
W it expects to settle the liability in its normal operating cycle;
W it holds the liability primarily for the purpose of trading;
W the liability is due to be settled within twelve months after the
reporting period; or
W the entity does not have an unconditional right to defer settlement
of the liability for at least twelve months after the reporting period.
Compiled by Mohd. Atiq Qureshi
18
Details of share capital
W Share Capital Ior each class oI share capital (diIIerent classes oI preIerence shares to be
Treated separately):
W The number and amount oI shares authorized;
W the number oI shares issued, subscribed and Iully paid, and subscribed but not Iully paid
W par value per share;
W a reconciliation oI the number oI shares outstanding at the beginning and at the end oI
the reporting period;
W the rights, preIerences and restrictions attaching to each class oI shares including restrictions
on the distribution oI dividends and the repayment oI capital
W Shares in respect of each class in the company held by its holding company or its
Ultimate holding company including shares held by or by subsidiaries or associates of
the holding company or the ultimate holding company in aggregate;
W Shares in the company held by each shareholder holding more than 5 shares
specifying the number of shares held;
W Shares reserved for issue under options and contracts/commitments for the sale of
shares/disinvestment, including the terms and amounts;
Compiled by Mohd. Atiq Qureshi
19
Details of share capital
W For the period oI Iive years immediately preceding the date as at which the
Balance-Sheet is prepared
Aggregate number and class oI shares allotted as Iully paid up pursuant to
contract(s) without payment being received in cash.
Aggregate number and class oI shares allotted as Iully paid up by way oI bonus shares.
Aggregate number and class oI shares bought back.
W Terms oI any securities convertible into equity/preIerence shares issued along with
the earliest date oI conversion in descending order starting Irom the Iarthest such date.
W Calls unpaid (showing aggregate value oI calls unpaid by directors and oIIicers)
W ForIeited shares (amount originally paid up)
Compiled by Mohd. Atiq Qureshi
Z0
Details of reserves and surpluses
W Reserves and Surplus shall be classiIied as:
Capital Reserves ;
Capital Redemption Reserve;
Securities Premium Reserve;
Debenture Redemption Reserve;
Revaluation Reserve;
Share Options Outstanding Account;
Other Reserves
(speciIy the nature and purpose oI each reserve and the amount in respect thereoI);
Surplus i.e. balance in Statement oI ProIit & Loss disclosing allocations and
appropriations such as dividend, bonus shares and transIer to/Irom reserves etc.
(Additions and deductions since last balance sheet to be shown under each oI the
speciIied heads)
W A reserve speciIically represented by earmarked investments shall be termed as a Iund`.
W Debit balance oI statement oI proIit and loss shall be shown as a negative Iigure
under the head Surplus`. Similarly, the balance oI Reserves and Surplus`, aIter
adjusting negative balance oI surplus, iI any, shall be shown under the head
Reserves and Surplus` even iI the resulting Iigure is in the negative.
Compiled by Mohd. Atiq Qureshi
Z1
Details of Long term borrowings
W Long-term borrowings shall be classiIied as:
Bonds/debentures.
Term loans
W Irom banks.
W Irom other parties.
DeIerred payment liabilities.
Deposits.
Loans and advances Irom related parties.
Long term maturities oI Iinance lease obligations
Other loans and advances (speciIy nature).
W Borrowings shall Iurther be sub-classiIied as secured and unsecured.
Nature oI security (i.e. Mortgage, Pledge & Hypothecation) shall be speciIied
separately in each case.
W Where loans have been guaranteed by directors or others, the
aggregate amount oI such loans under each head shall be disclosed.
Compiled by Mohd. Atiq Qureshi
ZZ
Details of long-term borrowings -
W Bonds/debentures (along with the rate oI interest and particulars oI
redemption or conversion, as the case may be) shall be stated in
descending order oI maturity or conversion, starting Irom Iarthest
redemption or conversion date, as the case may be. Where
bonds/debentures are redeemable by installments, the date oI maturity
Ior this purpose must be reckoned as the date on which the Iirst
installment becomes due.
W Particulars oI any redeemed bonds/ debentures which the company has
power to reissue shall be disclosed.
W Terms oI repayment oI term loans and other loans shall be stated.
W Period and amount of continuing default as on the balance sheet
date in repayment of loans and interest, shall be specified
separately in each case.
W Important point: As per IAS 1, if in pursuance of default, a loan
becomes callable (recall notice), the loan will be taken as current
liability irrespective of the repayment schedule.
Compiled by Mohd. Atiq Qureshi
Z
Other long term liabilities and Provisions
W Other Long Term Liabilities
Other Long term Liabilities shall be classiIied as:
W Trade payables
W Others
W Long-term provisions: The amounts shall be
classiIied as:
Provision Ior employee beneIits.
Others (speciIy nature).
Compiled by Mohd. Atiq Qureshi
Z
Short-term borrowings
W Short-term borrowings shall be classiIied as:
Loans repayable on demand
(a) Irom banks
(b) Irom other parties.
Loans and advances Irom related parties.
Deposits.
Other loans and advances (speciIy nature).
W Borrowings shall Iurther be sub-classiIied as secured and unsecured.
Nature oI security shall be speciIied separately in each case.
W Where loans have been guaranteed by directors or others,
the aggregate amount oI such loans under each head shall
be disclosed.
W Period and amount oI deIault as on the balance sheet date
in repayment oI loans and interest, shall be speciIied
separately in each case.
Compiled by Mohd. Atiq Qureshi
Z
Other current liabilities
W Current maturities oI long-term debt;
W Current maturities oI Iinance lease obligations;
W Interest accrued but not due on borrowings;
W Interest accrued and due on borrowings;
W Income received in advance;
W Unpaid dividends
W Application money received Ior allotment oI securities and due Ior reIund
and interest accrued thereon:
Note the distinction between application money going as a part oI
shareholders` Iunds, and that coming as liability
W What is reIundable is a liability, what is due Ior allotment is quasi capital
Also see another slide Ior details oI share application money
W Unpaid matured deposits and interest accrued thereon
W Unpaid matured debentures and interest accrued thereon
W Other payables (speciIy nature)
Compiled by Mohd. Atiq Qureshi
Z
Share application money gets increased focus
W Share application money includes advances towards allotment oI share capital.
The meaning oI 'advances towards allotment is not clear
W The terms and conditions including the number oI shares proposed to be issued, the amount
oI premium ,iI any, and the period beIore which shares shall be allotted shall be disclosed.
W It shall also be disclosed whether the company has suIIicient authorized capital to cover
the share capital amount resulting Irom allotment oI shares out oI such share application money.
W Further, the period Ior which the share application money has been pending beyond the
period Ior allotment as mentioned in the document inviting application Ior shares along
with the reason Ior such share application money being pending shall be disclosed:
Quite oIten, in closely held companies, share application money remains pending Ior
IndeIinite period
OIIer document need not lay down a time limit Ior allotment
W However, it is logical that allotment must be made within reasonable period
WShare application money not exceeding the issued capital and to the extent not refundable
shall be shown under the head Equity and share application money to the extent
refundable i.e., the amount in excess of subscription or in case the requirements of
minimum subscription are not met, shall be separately shown under
:ther current liabilities'
Compiled by Mohd. Atiq Qureshi
Z
Tangible Assets :
W ClassiIication shall be given as:
Land.
Buildings.
Plant and Equipment.
Furniture and Fixtures.
Vehicles.
OIIice equipment.
Others (speciIy nature).
W Assets under lease shall be separately speciIied under each class oI asset.
W A reconciliation oI the gross and net carrying amounts oI each class oI assets at
the beginning and end oI the reporting period showing additions, disposals,
acquisitions through business combinations and other adjustments and the
related depreciation and impairment losses/reversals shall be disclosed separately.
W Where sums have been written oII on a reduction oI capital or revaluation oI
assets or where sums have been added on revaluation oI assets, every balance-sheet
subsequent to date oI such write-oII, or addition shall show the reduced or
increased Iigures as applicable and shall by way oI a note also show the amount
oI the reduction or increase as applicable together with the date thereoI Ior the
Iirst Iive years subsequent to the date oI such reduction or increase.
Compiled by Mohd. Atiq Qureshi
Z8
Intangible Assets :
W Assets to be classiIied as
W Goodwill
W Brands /trademarks.
W Computer soItware.
W Mastheads and publishing titles.
W Mining rights.
W Copyrights, and patents and other intellectual property rights, services and operating rights.
W Recipes, Iormulae, models, designs and prototypes.
W Licenses and Iranchise.
W Others (speciIy nature).
W A reconciliation oI the gross and net carrying amounts oI each class oI assets at the
beginning and end oI the reporting period showing additions, disposals, acquisitions
through business combinations and other adjustments and the related amortization
and impairment losses/reversals shall be disclosed separately.
W Where sums have been written oII on a reduction oI capital or revaluation oI assets or
where sums have been added on revaluation oI assets, every balance sheet subsequent
to date oI such write-oII, or addition shall show the reduced or increased Iigures as
applicable and shall by way oI a note also show the amount oI the reduction or increase
as applicable together with the date thereoI Ior the Iirst Iive years subsequent to the
date oI such reduction or increase.
Compiled by Mohd. Atiq Qureshi
Z9
Non-current Investments :
W Non-current investments shall be classiIied as trade investments and
other investments and Iurther classiIied as:
Investment property;
Investments in Equity Instruments;
Investments in preIerence shares
Investments in Government or trust securities;
Investments in debentures or bonds;
Investments in Mutual Funds;
Investments in partnership Iirms
Other non-current investments (speciIy nature)
Compiled by Mohd. Atiq Qureshi
0
More on non-current Investments :
W Under each classiIication, details shall be given
oI names oI the bodies corporate in whom investments have been made
and the nature and extent oI the investment so made in each such body corporate
showing separately investments which are partly-paid
indicating separately whether such bodies are
W (i) subsidiaries,
W (ii) associates,
W (iii) joint ventures, or
W (iv) controlled special purpose entities
In regard to investments in the capital oI partnership Iirms, the names oI the Iirms
(with the names oI all their partners, total capital and the shares oI each partner) shall be given.
W As the word used is 'bodies corporate, it includes LLPs too.
W Investments carried at other than at cost should be separately stated speciIying the basis
Ior valuation thereoI.
W The Iollowing shall also be disclosed
Aggregate amount oI quoted investments and market value thereoI;
Aggregate amount oI unquoted investments;
Aggregate provision Ior diminution in value oI investments
Compiled by Mohd. Atiq Qureshi
1
Long-term loans and Advances :
W Long-term loans and advances shall be classiIied as:
Capital Advances;
W What is capital advance? It would be wrong to take this to mean advances Ior
purchase oI capital assets. It should mean advances against capital subscription
since it is a long term advance
Security Deposits;
Loans and advances to related parties (giving details thereoI);
Other loans and advances (speciIy nature).
W The above shall also be separately sub-classiIied as:
Secured, considered good;
Unsecured, considered good;
DoubtIul
W Allowance Ior bad and doubtIul loans and advances shall be disclosed
under the relevant heads separately.
W Loans and advances due by directors or other oIIicers oI the company or
any oI them either severally or jointly with any other persons or amounts
due by Iirms or private companies respectively in which any director is a
partner or a director or a member should be separately stated.
Compiled by Mohd. Atiq Qureshi
Z
Other non-current assets :
W Other non-current assets shall be classiIied as:
Long Term Trade Receivables (including trade receivables on
deIerred credit terms);
Others (speciIy nature)
W Long term Trade Receivables, shall be sub-classiIied as:
Secured, considered good;
Unsecured considered good;
DoubtIul
Allowance Ior bad and doubtIul debts shall be disclosed under the
relevant heads separately.
Debts due by directors or other oIIicers oI the company or any oI
them either severally or jointly with any other person or debts due by
Iirms or private companies respectively in which any director is a
partner or a director or a member should be separately stated.
Compiled by Mohd. Atiq Qureshi
Current Investments :
W Current investments shall be classiIied as:
Investments in Equity Instruments;
Investments in preIerence shares
Investments in Government or trust securities;
Investments in debentures or bonds;
Investments in Mutual Funds;
Investments in partnership Iirms
Other non-current investments (speciIy nature)
W Investment in property is conspicuously absent as
iI property investments cannot be current investments
Compiled by Mohd. Atiq Qureshi
Inventories :
W To be classified as
Raw materials;
Work-in-progress;
Finished goods;
Stock-in-trade (in respect oI goods acquired Ior trading);
Stores and spares;
Loose tools;
Others (speciIy nature).
W Goods-in-transit shall be disclosed under the
relevant sub-head oI inventories.
W Mode oI valuation shall be stated.
Compiled by Mohd. Atiq Qureshi
Trade receivables
W Aggregate amount oI Trade Receivables outstanding Ior a period
exceeding six months Irom the date they are due Ior payment should be
separately stated.
W Trade receivables shall be sub-classiIied as:
Secured, considered good;
Unsecured considered good;
DoubtIul.
W Allowance Ior bad and doubtIul debts shall be disclosed under the
relevant heads separately.
W Debts due by directors or other oIIicers oI the company or any oI them
either severally or jointly with any other person or debts due by Iirms or
private companies respectively in which any director is a partner or a
director or a member should be separately stated.
Note old Schedule VI referred to ~companies under the same management
Compiled by Mohd. Atiq Qureshi