Schedule III of new Companies Act 2013 : - Schedule III specifies the general instruction on format for preparation of balance sheet ,statement of profit and loss of the company and the financial statements of subsidiaries. In Companies Act 2013 changes are made in the disclosure requirements with relevant addition, amendment, substitution or deletion in the head or sub-head of the financial statements with main focus on the compliance with the Accounting Standards. Financial statement will be prepared in consensus with the Sec 129 of Companies Act 2013 which prescribe that the financial statement should show true and fair view for the state of affairs of the company, Statement of accounts comply with accounting standards and disclose the reasons along with financial effect of deviations if any. If a company has one or more subsidiaries than a consolidated financial statement shall be prepared. Subsidiaries include associate company and joint venture. Financial statement should be prepared at the year end. Small companies, dormant companies or one person companies are not required to prepare cash flow statements. As per Sec 2(40) of the Companies Act 2013, financial statement includes Balance sheet, Statement of Profit and loss, Cash flow statements, statement of changes in equity and notes of accounts. Financial Year as specified in Sec 2(14) of the Companies Act 2013, in relation to any company or body corporate can be only from April to March and where it has been incorporated on or after the 1st day of January of a year, the period ending on 31st day of march of the following year, in respect where of financial statement of the company or body corporate is made. Now 2 financial years cannot be there as done earlier by companies except in case of companies which are holding company or subsidiary company of a company incorporate outside India and are required to follow a different financial year for consolidation of its accounts outside India. Section 2(13) defines the books of accounts. Books of account include deeds, vouchers, minutes and registers maintained on paper or in electronic form. FEATURES OF SCHEDULE –III All the elements should be classified as assets, liability or equity.Assests means resources controlled by enterprise having future economic benefit. Liability means present obligations arising from past events whose settlement is expected to result in outflow of resources. Schedules are now named as notes to accounts. A company will disclose the list of subsidiaries or associates or joint ventures which are not consolidated with the reasons for non-consolidation. Balance sheet or Profit and loss account should not be prepared in T- shape. Profit or loss attributable to minority interest and to owners of the parent in the statement of profit and loss shall be presented as allocation for the period. Minority interests in the balance sheet within equity shall be presented separately from the equity of the owners of the parent. FORMAT OF THE BALANCE SHEET The Format of the Balance Sheet as per the new Companies Act has been attached herewith and the explanations for the same have been given below:- EXPLANATIONS: CURRENT LIABILITY: Liability is classified as current liability if following condition are satisfied: Liability is settled within operating cycle. Liability is due to be settled within 12 months from reporting date . Liability is held to be traded. Enterprise does not have unconditional right to defer settlement of liability beyond 12 months. CURRENT ASSETS: Asset is classified as current asset if following condition are satisfied: Asset is realised within operating cycle i.e.intended to sale or consumption within operating cycle. Asset is due to be settled within 12 months. Asset is held for being traded. Cash and Cash Equivalent. “Operating cycle” means period from date of acquisition of materials,processing of material till its realisation in cash or cash equivalent. A receivable shall be classified as a “trade receivable” if amount is due in respect of goods sold or services rendered in the normal course of business. They include debtors exceeding 6 months. A payable shall be classified as a “trade payable” if amount is due in respect of the goods purchased or services received in the normal course of business. These include creditors arising from trade payable within 12 months or normal operating cycle. SHARE CAPITAL: For each class of share capital specify the following: The authorised share capital, issued shares capital, paid up share capital and subscribed but not fully paid along with par value per share. Shares in the company held by each shareholder holding more than5 % shares specifying the number of shares held. Aggregate number and class of shares allotted as fully paid-upby way of bonus shares.A Aggregate number and class of shares bought back. Convertible securities. Calls unpaid Forfeited shares Preference share capital will be shown as part of equity capital. Debentures will be classified as liability. Shareholdings held by holding company, associates, Joint ventures etc. Money received against share warrant are shown as part of shareholders fund as it is not a liability. RESERVES AND SURPLUS Reserves and Surplus includes: Capital Reserves Capital Redemption Reserve Securities Premium Reserve Debenture Redemption Reserve Revaluation Reserve Share Options Outstanding Account Debit balance of statement of profit and loss shall be shown as a negative. ESOP is shown in reserves. Deferred revenue expenditures are shown in Reserve and surplus as a negative item. Proposed dividend is not a reserve, it is shown as liability. Now Profit and Loss account is not required as all distributions will be shown in reserve and surplus as deletions or additions. LONG TERM AND SHORT TERM BORROWINGS: They are classified as secured and unsecured borrowings along with the amount, restrictions, rights and nature. Fixed Aseests: Fixed assets include: Opening Balance, additions, deletions, depreciation. Interest capitalised should be disclosed. Exchange difference capitalised should be disclosed. INVESTMENT: Investments are of 2 types – Current and Non-Current investments. Relevant disclosures like restrictions, rights, quoted investment, unquoted investment, non - trade investments should be made. LOANS AND ADVANCES: These include advances given to Employees, suppliers or directors. INVENTORY: Inventory shall be classified as Raw-material, work in progress, finished goods, stock in trade, spare parts etc. CASH AND CASH EQUIVALENTS: These include cash balance, bank balance and bank deposits, margin money, security against guarantees or borrowings. SEPARATE DISCLOSURE Separate disclosure is required for income and expenditure exceeding 1% of turnover or Rs 100000 whichever is higher. NOTES TO ACCOUNTS: All necessary disclosures as required in accounting standards or companies act shall be made in notes to accounts. CONCLUSION Schedule III provides general instructions for preparation of Balance sheet and Statement of profit and loss of a company. Provisions relating to accounts are defined inSection 128 to Section 137.New format- Schedule III is introduced to bring more transparency and to make financial statement more comprehensive by including more disclosure requirements. ***anu***
Posted on: Sun, 12 Oct 2014 10:55:39 +0000
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