ArtsAutosBooksBusinessEducationEntertainmentFamilyFashionFoodGamesGenderHealthHolidaysHomeHubPagesPersonal FinancePetsPoliticsReligionSportsTechnologyTravel
  • »
  • Personal Finance»
  • Tax & Taxes

Amendments in companies Revised Schedule VI & Format

Updated on November 16, 2013
Changes related to Balance Sheet
Changes related to P/L a/c
The Revised Schedule VI prescribes only the vertical format for presentation of Financial Statements. Thus, a company will now not have an option to use horizontal format for the presentation of Financial Statements as prescribed in Old Schedule VI.
The name has been changed to Statement of Profit and Loss as against "Profit and Loss Account" as contained in the Old Schedule VI.
Any debit balance in the Statement of Profit and Loss will be disclosed under the head Reserves and surplus. Earlier, any debit balance in Profit and Loss Account carried forward after deduction from uncommitted reserves was required to be shown as the last item on the Assets side of the Balance Sheet.
In respect of companies other than finance companies, revenue from operations need to be disclosed separately as revenue from (a) sale of products, (b) sale of services and (c) other operating revenues.
Details pertaining to aggregate number and class of shares allotted for consideration other than cash, bonus shares and shares bought back will need to be disclosed only for a period of five years immediately preceding the Balance Sheet date including the current year.
The Old Schedule VI required the parent company to recognize dividends declared by subsidiary companies even after the date of the Balance Sheet if they were pertaining to the period ending on or before the Balance Sheet date. Such requirement no longer exists in the Revised Schedule VI. Accordingly, as per AS-9 Revenue Recognition, dividends should be recognized as income only when the right to receive dividends is established as on the Balance Sheet date.
The term sundry debtors has been replaced with the term trade receivables.Trade receivables are defined as dues arising only from goods sold or services rendered in the normal course of business. Hence, amounts due on account of other contractual obligations can no longer be included in the trade receivables.
In addition to specific disclosures prescribed in the Statement of Profit and Loss, any item of income or expense which exceeds one percent of the revenue from operations or Rs. 100,000 (earlier 1 % of total revenue or Rs. 5,000), whichever is higher, needs to be disclosed separately.
Tangible assets under lease are required to be separately specified under each class of asset. In the absence of any further clarification, the term under lease, should be taken to mean assets given on operating lease in the case of lessor and assets held under finance lease in the case of lessee.
Unlike the Old Schedule VI, the Revised Schedule VI lays down a format for the presentation of Statement of Profit and Loss. This format of Statement of Profit and Loss does not mention any appropriation item on its face. Further, the Revised Schedule VI format prescribes such below the line adjustments to be presented under Reserves and Surplus in the Balance Sheet.
Number of shares held by each shareholder holding more than 5 percent shares in the company now needs to be disclosed. In the absence of any specific indication of the date of holding, such information should be based on shares held as on the Balance Sheet date.
Net exchange gain/loss on foreign currency borrowings to the extent considered as an adjustment to interest cost needs to be disclosed separately as finance cost.
In the Old Schedule VI, details of only capital commitments were required to be disclosed. Under the Revised Schedule VI, other commitments also need to be disclosed.
Break-up in terms of quantitative disclosures for significant items of Statement of Profit and Loss, such as raw material consumption, stocks, purchases and sales have been simplified and replaced with the disclosure of broad heads only. The broad heads need to be decided based on considerations of materiality and presentation of true and fair view of the Financial Statements.
Specific disclosures are prescribed for Share Application money. The application money not exceeding the capital offered for issuance and to the extent not refundable will be shown separately on the face of the Balance Sheet. The amount in excess of subscription or if the requirements of minimum subscription are not met will be shown under Other current liabilities.
Following disclosures are no longer required-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; Investments, sundry debtors and loans & advances pertaining to companies under the same management; Maximum amounts due on account of loans and advances from directors or officers of the company; Commission, brokerage and non-trade discounts
The Revised Schedule VI requires disclosure of all defaults in repayment of loans and interest to be specified in each case. Earlier, no such disclosure was required in the Financial Statements. However, disclosures pertaining to defaults in repayment of dues to a financial institution, bank and debenture holders continue to be required in the report under Companies (Auditor's Report) Order, 2003 (CARO).
 
Capital advances are specifically required to be presented separately under the head Loans & advances rather than including elsewhere.
 
Current and non-current classification has been introduced for presentation of assets and liabilities in the Balance Sheet. The application of this classification will require assets and liabilities to be segregated into their current and non-current portions. For instance, current maturities of a long-term borrowing will have to be classified under the head "Other current liabilities."
 
The Revised Schedule VI introduces a number of other additional disclosures. Some examples are: Rights, preferences and restrictions attaching to each class of shares, including restrictions on the distribution of dividends and the repayment of capital; Terms of repayment of long-term loans; In each class of investment, details regarding names of the bodies corporate in whom investments have been made, indicating separately whether such bodies are (i) subsidiaries, (ii) associates, (iii) joint ventures, or (iv) controlled special purpose entities, and the nature and extent of the investment made in each such body corporate (showing separately partly-paid investments); Aggregate provision for diminution in value of investments separately for current and long-term investments; Stock-in-trade held for trading purposes, separately from other finished goods.
 

Did you liked this hub?

See results

Comments

    0 of 8192 characters used
    Post Comment

    No comments yet.