GUIDANCE NOTE ON
DIVISION III - SCHEDULE III
TO THE COMPANIES ACT, 2013
FOR
NBFC THAT IS REQUIRED TO
COMPLY WITH IND AS
GUIDANCE NOTE
ON
DIVISION III - SCHEDULE III
TO THE COMPANIES ACT, 2013 FOR
NBFC THAT IS REQUIRED TO
COMPLY WITH IND AS
The Institute of Chartered Accountants of India
(Set up by an Act of Parliament)
New Delhi
© The Institute of Chartered Accountants of India
All rights reserved. No part of this publication may be reproduced, stored in a
retrieval system or transmitted in any form or by any means electronic,
mechanical, photocopying, recording or otherwise without prior permission in
writing from the publisher.
First Edition : October 2019
Committee/Department : Corporate Laws & Corporate Governance
Committee
E-mail : clcgc@icai.in
Website : www.icai.org
Price : Rs. 200/-
ISBN No. :
Published by : The Publication Department on behalf of the
Institute of Chartered Accountants of India. ICAI
Bhawan, Post Box No. 7100, Indraprastha Marg,
New Delhi 110 002, India.
Printed by : Sahitya Bhawan Publications, Hospital Road,
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Foreword
The Ministry of Corporate Affairs (MCA) has earlier amended the formats for
Division I and Division II to Schedule III to the Companies Act and has also
notified the formats of Division III to Schedule III pertaining to Non-Banking
Financial Companies (NBFCs) that are required to comply with Indian
Accounting Standards (Ind AS).
The revised formats of Division III have brought changes with regard to the
classification of trade payables, trade receivables and loan receivables. Also,
with the amendments, there is change in the terminology of Schedule III to
align it with Ind AS. As the Ind AS has become applicable on NBFCs that fall
within the prescribed criteria w.e.f. 1st April, 2018, with the prescription of
Division III to Schedule III, the presentation of the financial results will be in
line with the Indian Accounting Standards.
In light of the changes to Division III to Schedule III, a need was felt by the
Institute of Chartered Accountants of India (ICAI) for providing appropriate
guidance to the members so that the requirements of Schedule III can be
complied with by the NBFCs that are required to prepare their financial
statements as per Ind AS in letter and spirit.
I am happy that the Corporate Laws & Corporate Governance Committee of
ICAI has undertaken the task of preparing the Guidance Note on the Division
III to Schedule III of the Companies Act, 2013 for necessary guidance of
NBFCs and all others involved. Detailed notes have also been provided on
various items of the Schedule III and issues and intricacies involved therein
which will surely help the readers.
I commend the efforts of CA. (Dr.) Debashis Mitra, Chairman, CA.
Chandrashekhar V. Chitale, Vice-Chairman and all the members of the
Corporate Laws & Corporate Governance Committee who have made
invaluable contribution in preparing this Guidance Note.
I am confident that the members and other stakeholders would find the
Guidance Note immensely useful.
CA Prafulla P. Chhajed
President ICAI
Preface
The Institute of Chartered Accountants of India (ICAI) through the Corporate
Laws & Corporate Governance Committee (CLCGC) had issued Guidance
Notes on Division I and Division II to Schedule III to the Companies Act 2013
and the same were revised on the basis of amendments which were notified
by the Ministry of Corporate Affairs vide Notification dated 11.10.2018.
In October, 2018, the Ministry of Corporate Affairs notified Division III to
Schedule III to the Companies Act, 2013 which contained the format of
Financial Statements as well as Disclosure Requirements for Non- Banking
Financial Companies (NBFCs) that are required to comply with the Indian
Accounting Standards (Ind AS).
In view of the above, CLCGC of ICAI decided to bring out a Guidance Note
on Division III to Schedule III to the Companies Act 2013. The Note provides
guidance on each of the items of the Balance Sheet & Statement of Profit
and Loss. Few illustrations have also been included on application of the
principles provided in the Guidance Note.
We would like to convey our sincere gratitude to the President of ICAI, CA.
Prafulla P. Chhajed, and the Vice President ICAI, CA. Atul Kumar Gupta for
supporting us in bringing out the publication. We are also thankful to all our
Central Council Colleagues & other Members /Special Invitees of the
Committee for their valuable inputs in giving shape to this Guidance Note.
Our special thanks to CA. Shriniwas Y. Joshi, Central Council Member and
Convenor of the Study Group comprising of CA. Charanjit Attra, CA.
Sandeep Shah, CA. Ritesh Goyal, Shri Avinash Chander, CA. Krishna Vyas
and CA. Manan Lakhani for their sincere efforts in bringing out this
Publication.
The Committee would like to acknowledge the valuable inputs received from
the Nominees of Reserve Bank of India to the Study Group namely Shri P.K.
Chophla, Shri Anuj Sharma and Shri Sandeep Parmar.
We would also like to thank Secretary to the Committee CA. Sarika Singhal
and Ms Seema Jangid and CA. Deepa Agarwal for their technical and
administrative support.
We trust that this Guidance Note would be very useful to the members of the
Institute and others interested in the subject.
CA. (Dr.) Debashis Mitra CA. Chandrashekhar V. Chitale
Chairman, Vice- Chairman,
Corporate Laws & Corporate Laws &
Corporate Governance Committee Corporate Governance Committee
Index
Sr. Contents Page
No. No.
1. Introduction 1
2. Objective and Scope 2
3. Applicability 4
4. Main Principles Summary of Division III to Schedule III' 5
5. Structure of Division III to Schedule III 9
6. General Instructions for Preparation of Financial 10
Statements: Notes
7. Part I Notes General Instructions for Preparation of 13
Balance Sheet
8. Part I Form of Balance Sheet and Notes General 13
Instructions for Preparation of Balance Sheet: Notes 6 to
11
9. Part II Statement of Profit and Loss and Notes General 71
Instructions for Preparation of Statement of Profit and
Loss: Notes 1 to 10
10. Other Comprehensive Income 89
11. Additional information to be disclosed by way of Notes to 91
Statement of Profit and Loss
12. Part III General Instructions for Preparation of 93
Consolidated Financial Statements
Annexures
Annexure A Division III to Schedule III to the Companies 101
Act, 2013
Annexure B Changes between Division I and Division II 143
to Schedule III
Annexure C Illustrative List of Disclosures required 171
under the Companies Act, 2013
Annexure D List of Indian Accounting Standards notified 174
as on date
Annexure E General Circular No. 39 / 2014 dated 14th 176
October 2014
Glossary 177
1. Introduction
1.1 Schedule III to the Companies Act, 2013 (`the Act') was notified along
with the Act itself on August 29, 2013 thereby providing the manner in which
every company registered under the Act shall prepare its Financial
Statements. Financial Statements as defined under the Act include Balance
Sheet, Statement of Changes in Equity for the period, the Statement of Profit
and Loss for the period, Cash flow statement as applicable for the financial
year and Notes.
1.2 Ministry of Corporate Affairs (`MCA') notified Indian Accounting
Standards (`Ind AS') on February 16, 2015 thereby laying down the roadmap
for all companies, except insurance companies, banking companies and non-
banking finance companies, for adoption of Ind AS (`MCA roadmap'). Further,
MCA notified amendments to Schedule III to the Act on April 6, 2016
whereby:
1.2.1 The existing Schedule III was renamed as `Division I' to
Schedule III (`Non-Ind AS Schedule III') which gives a format
of Financial Statements for Non-Ind AS companies, that are
required to comply with the Companies (Accounting Standards)
Rules, 2006. In other words, Non-Ind AS companies, will be
required to prepare Financial Statements as per Companies
(Accounting Standards) Rules, 2006, as per the format of
Division I to Schedule III to the Act;
1.2.2 `Division II' - `Ind AS Schedule III' was inserted to give a format
of Financial Statements for companies that are required to
comply with the Companies (Indian Accounting Standards)
Rules, 2015, as amended from time to time (`Companies Ind AS
Rules'). This was newly inserted into Schedule III for companies
that adopt Ind AS as per Rule 4(1)(i) or Rule 4(1)(ii) or Rule
4(1)(iii) of the Companies Ind AS Rules. Accordingly, such
Companies, while preparing its first and subsequent Ind AS
Financial Statements, would apply Division II to Ind AS
Schedule III to the Act.
1.3 The MCA issued a notification dated March 30, 2016 announcing the
Ind AS roadmap for non-banking financial companies (`NBFC'). Further, MCA
notified amendments to Schedule III to the Act on October 11, 2018 whereby:
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1.3.1 `Division III' to Schedule III' (Refer Annexure A, Page 101)
was inserted to give a format of Financial Statements for
NBFC's that are required to comply with the Companies
(Indian Accounting Standards) Rules, 2015, as amended from
time to time (`Companies Ind AS Rules'). As per the
Companies Ind AS Rules, "Non-Banking Financial Company"
means a Non-Banking Financial Company as defined in
clause (f) of section 45-I of the Reserve Bank of India Act,
1934 and includes Housing Finance Companies, Merchant
Banking companies, Micro Finance Companies, Mutual
Benefit Companies, Venture Capital Fund Companies, Stock
Broker or Sub-Broker Companies, Nidhi Companies, Chit
Companies, Securitisation and Reconstruction Companies,
Mortgage Guarantee Companies, Pension Fund Companies,
Asset Management Companies and Core Investment
Companies.' Accordingly, NBFC's while preparing its first and
subsequent Ind AS Financial Statements, would apply
Division III to Schedule III to the Act.
1.4 It may, however, be clarified that for companies engaged in the
generation or supply of electricity, neither the Electricity Act, 2003, nor the
rules framed thereunder, prescribe any specific format for presentation of
Financial Statements by an electricity company. Section 1(4) of the Act
states that the Act will apply to electricity companies, to the extent it is not
inconsistent with the provisions of the Electricity Act. Keeping this in view,
Division III to Schedule III, Division I or Division II as applicable may be
followed by such companies till the time any other format is prescribed by the
relevant statute.
2. Objective and Scope
2.1 The objective of this Guidance Note is to provide guidance in the
preparation and presentation of Financial Statements in accordance with
various aspects of Division III to Schedule III, for NBFC's adopting Ind AS.
The disclosure requirements under Ind AS, the Companies Act, 2013, other
pronouncements of the Institute of Chartered Accountants of India (ICAI),
other statutes, etc., would be in addition to the guidance provided in this
Guidance Note. Paragraph 9 of Division III of Schedule III further states that
where any Act, Regulation, Guidelines or Circulars issued by the relevant
regulators from time to time requires specific disclosures to be made in the
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standalone financial statements of an NBFC, the said disclosures shall be
made in addition to those required under this Schedule.
2.2 Guidance given in `Guidance Note on Division I to the Schedule III to
the Companies Act, 2013' published in February 2016 and revised in July
2019 would continue to be applied by Non-Ind AS companies which are
required to prepare Financial Statements as per the format of Non-Ind AS
Schedule III.
2.3 In preparing this Guidance Note, reference has been made to Ind AS
notified under Section 133 of the Act read together with Paragraph 3 of the
Companies Ind AS Rules given in Annexure D (Pg 174) and various other
pronouncements of the ICAI. The primary focus of the Guidance Note is to
lay down broad guidelines to deal with practical issues that may arise in the
implementation of Division III to Schedule III while preparing Financial
Statements as per Ind AS. The Guidance Note would primarily provide
guidance on the line items contained in the Division III to the Schedule III
rather than the specific issues which an NBFC may face.
2.4 This Guidance Note includes changes to presentation and disclosure
requirements of Division III to Schedule III pursuant to Ind AS notified up to
May 31, 2019. Ind AS 116 Leases, is notified on March 30, 2019 and will be
effective from 1st April 2019. It changes the current accounting requirements
of differentiating between lease arrangements as an `Operating Lease' and
`Finance Lease' for the lessees. It requires recognition of a `Right-to-use'
(ROU) and a corresponding lease liability where the lessee, at the
commencement date, has a financial obligation to make lease payments to
the lessor for its right to use the underlying asset during the lease term.
While the requirements (including presentation and disclosures) for lessor
remains substantially unchanged from Ind AS 17, the requirements for lessee
changes significantly as compared to Ind AS 17. An entity shall present and
disclose rights and obligations arising from lease arrangements as per Ind
AS 116 and the requirements under this schedule stand modified accordingly
(Refer Paragraph 2 of General Instructions for preparation of Financial
Statements of a Non-Banking Financial Company (NBFC) that are required to
comply with Indian Accounting Standards (Ind AS)).
2.5 As per the clarification issued by ICAI regarding the authority attached
to the Documents issued by ICAI, `Guidance Notes' are primarily designed to
provide guidance to members on matters which may arise in the course of
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their professional work and on which they may desire assistance in resolving
issues which may pose difficulty. Guidance Notes are recommendatory in
nature. A member should ordinarily follow recommendations in a guidance
note relating to an auditing matter except where he is satisfied that in the
circumstances of the case, it may not be necessary to do so. Similarly, while
discharging his attest function, a member should examine whether the
recommendations in a guidance note relating to an accounting matter have
been followed or not. If the same have not been followed, the member should
consider whether keeping in view the circumstances of the case, a disclosure
in his report is necessary.
3. Applicability
3.1 As per the Government Notification no. S.O. 902 (E) dated 26 th March,
2014, Schedule III is applicable for the Financial Statements prepared for the
financial year commencing on or after April 1, 2014. As per the Government
Notification no. G.S.R. 404(E) dated April 6, 2016, Schedule III is amended
to include a format of Financial Statements for a company preparing
Financial Statements in compliance with the Companies Ind AS Rules.
Further, as per the Government Notification no. G.S.R. 1022 (E) dated
October 11, 2018, the Schedule III is amended to include a format of
Financial Statements for an NBFC preparing Financial Statements in
compliance with the Companies Ind AS Rules. Every Non-Banking Financial
company as defined in the Companies (Indian Accounting Standards)
(Amendment) Rules, 2016 to which Indian Accounting Standards apply, shall
prepare its financial statements in accordance with this Schedule or with
such modification as may be required under certain circumstances. Division
III to Schedule III requires that except in the case of the first Financial
Statements laid before the company after incorporation, the corresponding
amounts (i.e. comparatives) for the immediately preceding period are to be
disclosed in the Financial Statements including the Notes to Accounts. Thus,
for the Financial Statements prepared for the financial year 2018-19 (i.e.
1stApril 2018 to 31st March 2019), corresponding amounts need to be given
for the financial year 2017-18. As per Ind AS 101, a company's first Ind AS
financial statements shall include at least three balance sheets, two
statements of profit and loss, two statements of cash flows and two
statements of changes in equity and related notes. This Guidance Note does
not deal with the presentation aspects of reconciliations that are required to
be provided as a part of a company's first Ind AS financial statements.
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3.2 For applicability, in the first and subsequent years, of Division III to
Schedule III format by a company to its interim Financial Statements (other
than quarterly, half-yearly and annual financial results published as per SEBI
guidelines), relevant paragraphs of Ind AS 34 Interim Financial Reporting
are quoted below:
"9. If an entity publishes a complete set of Financial Statements in
its interim financial report, the form and content of those
statements shall conform to the requirements of Ind AS 1 for a
complete set of Financial Statements.
10. If an entity publishes a set of condensed Financial Statements
in its interim financial report, those condensed statements shall
include, at a minimum, each of the headings and subtotals that
were included in its most recent annual Financial Statements
and the selected explanatory notes as required by this
Standard. Additional line items or notes shall be included if their
omission would make the condensed interim Financial
Statements misleading."
In case, a company is presenting condensed interim Financial Statements,
its format should also conform to that used in the company's most recent
annual Financial Statements, i.e., which would be as per Division III to
Schedule III. However in case, a company is presenting condensed interim
Financial Statements in its first year of applicability of Ind AS reporting the
company's most recent annual financial statements would be Indian GAAP
and hence, the same may be applied for its Interim Financial reporting.
3.3 Listed entities shall follow guidelines issued by SEBI by way of
circulars prescribing formats for publishing financial results (quarterly, half-
yearly and annual) which are guided by the relevant provisions of the Ind AS
and Division III to Schedule III and may make suitable modifications, as
applicable.
4. Main principles Summary of Division III to
Schedule III
4.1 Every Non-Banking Financial company as defined in the Companies
(Indian Accounting Standards) (Amendment) Rules, 2016 to which Indian
Accounting Standards apply, shall prepare its financial statements in
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accordance with this Schedule or with such modification as may be required
under certain circumstances.
4.2 As per Paragraph 1 of Part III of Division III where a Non-Banking
Financial Company (NBFC) is required to prepare Consolidated Financial
Statements, i.e., consolidated balance sheet, consolidated statement of
changes in equity and consolidated statement of profit and loss, the NBFC
shall mutatis mutandis follow the requirements of this Schedule as applicable
to an NBFC in the preparation of balance sheet, statement of changes in
equity and statement of profit and loss. However, where the consolidated
financial statements contain elements pertaining to NBFCs and other than
NBFCs, mixed basis of presentation may be followed for consolidated
financial statements where both kinds of operations are significant.
4.3 Financial Statements include Balance Sheet, Statement of Changes in
Equity for the period, Statement of Profit and Loss for the period and Notes.
Cash Flow Statement shall be prepared in accordance with the requirements
of the relevant Ind AS.
4.4 Balance sheet
-- Division III provides a format of the balance sheet and sets out
the minimum requirements of disclosure on the face of the
balance sheet for NBFCs.
-- Items presented in the balance sheet are to be classified as
financial and non-financial.
-- It permits NBFCs to avail of the option of presenting assets and
liabilities in the order of liquidity, as provided by Ind AS 1,
Presentation of Financial Statements .
-- It requires an NBFC to disclose such information that enables
users of its financial statements to evaluate the NBFC's
objectives, policies and processes for managing capital.
4.5 Statement of Profit and Loss
-- The division provides a format of the statement of profit and loss
and sets out the minimum requirements of disclosure on the
face of the statement of profit and loss.
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-- Items comprising `revenue from operations' and `other
comprehensive income' have to be disclosed on the face of the
statement of profit and loss.
4.6 Statement of changes in equity
-- The statement of changes in equity would reconcile opening to
closing amounts for each component of equity including
reserves and surplus and items of other comprehensive income.
-- NBFCs are specifically required to disclose the statutory
reserves as part of `other equity' in the statement of changes in
equity.
-- Additionally, the conditions or restrictions for distribution
attached to statutory reserves have to be separately disclosed
in the notes as stipulated by the relevant statute.
4.7 Materiality
NBFCs are required to disclose all `material' items in their financial
statements i.e., the items if they could, individually or collectively, influence
the economic decisions that users make on the bases of financial
statements. Materiality depends on the size and nature of the item judged in
particular circumstances. However, while preparing the statement of profit
and loss, it specifies that an NBFC should disclose a note for any item of
`other income' or `other expenditure' which exceeds 1 per cent of the total
income, in addition to the consideration of materiality.
A General Instruction on `Materiality' has been included in Note 7 to General
Instructions for Preparation of Financial Statements requiring Financial
Statements to disclose items that could, individually or collectively, influence
the economic decisions that users make on the bases of the Financial
Statements. Materiality depends on the size or nature of the item or a
combination of both, to be judged based on particular facts and in particular
circumstances. Moreover, Paragraph 29 of Ind AS 1 states w.r.t. `materiality'
that an entity shall present separately each material class of similar items. An
entity shall present separately items of a dissimilar nature or function unless
they are immaterial except when required by law. Further, reference to
Paragraph 29 to 31 of Ind AS 1 should be considered when determining
materiality and aggregation.
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The General Instructions for Preparation of Financial Statements also lay
down the principle that in preparing Financial Statements including Notes, a
balance shall be maintained between providing excessive detail that may not
assist users of Financial Statements and not providing important information
as a result of too much aggregation. Compliance with this requirement is a
matter of professional judgement and may vary on a case to case basis
based on facts and circumstances. However, it is necessary to strike a
balance between overburdening Financial Statements with excessive detail
that may not assist users of Financial Statements and obscuring important
information as a result of too much aggregation. For example, a company
should not obscure important information by including it among a large
amount of insignificant detail or in a way that it obscures important
differences between individual transactions or associated risks.
4.8 As per Paragraph 60 of Ind AS 1, an entity shall present current and
non-current assets, and current and non-current liabilities, as separate
classifications in its balance sheet except if a presentation based on liquidity
provides information that is reliable and more relevant. The format prescribed
by Division III is currently a liquidity based format. Thus the assets and
liabilities are classified as financial and non-financial instead of current, non-
current classification as required by Division I and Division II of Schedule III.
However as per Paragraph 61 of Ind AS 1 whichever method of presentation
is adopted, an entity shall disclose the amount expected to be recovered or
settled after more than twelve months for each asset and liability line item.
Disclosure regarding recovery or settlement within 12 months after the
reporting date (current) and more than 12 months after the reporting date
(noncurrent) shall be provided separately in the financial statements.
4.9 Division III to Schedule III clarifies that the requirements mentioned
therein for disclosure on the face of the Financial Statements or in the notes
are the minimum requirements and in addition to the disclosure requirements
specified in the Ind AS. Line items, sub-line items and sub-totals shall be
presented as an addition or substitution on the face of the Financial
Statements when such presentation is relevant to an understanding of the
NBFC's financial position or performance or to cater to categories of NBFCs
as prescribed by the relevant regulator or sector-specific disclosure
requirements or when required for compliance with the amendments to the
relevant statutes or under the Indian Accounting Standards. For e.g., line
items required by Paragraph 54 and Paragraph 82 of Ind AS 1 should be
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included, as an addition to or substitution of the Division III to Schedule III
line items on the face of Balance Sheet and Statement of Profit and Loss,
respectively.
4.10 Disclosures required under Ind AS (for e.g., fair value measurement
reconciliation, fair value hierarchy, risk management and capital
management, disclosure of interests in other entities, components of other
comprehensive income, reconciliations on first-time adoption of Ind AS, etc.)
shall be made in the Notes or by way of additional statement(s) unless
required to be disclosed on the face of the Financial Statements.
4.11 Where any Act, Regulation, Guidelines or Circulars issued by the
relevant regulators from time to time requires specific disclosures to be made
in the standalone and consolidated financial statements of an NBFC, the said
disclosures shall be made in addition to those required under Division III to
Schedule III.
4.12 Note 8 to General Instructions for Preparation of Financial Statements
in Division III to Schedule III states that the terms used in Division III to
Schedule III will carry the same meaning as defined by the applicable Ind AS.
For example, the terms such as `associate', `related parties', etc. will have
the same meaning as defined in Ind AS notified under the Companies Ind AS
Rules.
4.13 For any terms which are not specifically defined in Ind AS, attention
may also be drawn to the Framework for the Preparation and Presentation of
Financial Statements in accordance with Indian Accounting Standards (`Ind
AS Framework') issued by ICAI. However, if any term is not defined in the
Ind AS Framework, the entity may consider the principles described in
paragraph 10 to paragraph 12 of Ind AS 8 for developing and applying an
accounting policy.
4.14 An NBFC preparing financial statements as per this Schedule may
change the order of presentation of line items on the face of financial
statements or order of line items within the notes in order of liquidity, if
appropriate, considering the operations performed by the NBFC.
5. Structure of Division III to Schedule III
The Structure of Division III to Schedule III is as under:
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A. General Instructions for Preparation of Financial Statements of a Non-
Banking Financial Company (NBFC) that is required to comply with Ind
AS (`General Instructions for Preparation of Financial Statements')
B. Part I Form of Balance Sheet and Statement of Changes in Equity
C. Part I Notes General Instructions for Preparation of Balance Sheet
D. Part II Form of Statement of Profit and Loss
E. Part II Notes General Instructions for Preparation of Statement of
Profit and Loss
F. Part III General Instructions for the Preparation of Consolidated
Financial Statements
6. General Instructions for Preparation of Financial
Statements: Notes 1 to 10
6.1 The General Instructions lay down the broad principles and guidelines
for preparation and presentation of Financial Statements.
6.2 As laid down in Part A of the Annexure to Companies Ind AS Rules,
Ind AS, which are specified, are intended to be in conformity with the
provisions of applicable laws. However, if due to subsequent amendments in
the law, a particular Ind AS is found to be not in conformity with law, the
provisions of the said law will prevail and the Financial Statements should be
prepared in conformity with such law. In such a scenario, the statement of
compliance with Ind AS should be considered in the light of the principle of
overriding effect of law over Ind AS when applying the presentation or
disclosure requirements of Division III to Schedule III.
6.3 Division III to Schedule III requires that if compliance with the
requirements of the Act, Regulation, Guidelines or Circulars issued by the
relevant regulators from time to time including applicable Ind AS require any
change in the presentation or disclosure including addition, amendment,
substitution or deletion in the head/sub-head or any changes in the Financial
Statements or Notes to Accounts thereof, the same shall be made and the
requirements of Division III to Schedule III shall stand modified accordingly.
6.4 Note 3 of the General Instructions for Preparation of Financial
Statements state that the disclosure requirements of Division III to Schedule
III are in addition to and not in substitution of the disclosure requirements
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specified in Ind AS. They further clarify that the disclosures specified in Ind
AS shall be made in the Notes or by way of additional statement(s) unless
required to be disclosed on the face of the Financial Statements. Similarly, all
other disclosures as required by the Act shall be made in the Notes in
addition to the requirements set out in this Schedule.
6.5 Examples to illustrate the above point are:
(a) Specific disclosure is required by Paragraph 33 of Ind AS-105
Non-current Assets Held for Sale and Discontinued Operations
which has not been incorporated in Division III to Schedule III.
(b) Ind AS-107 Financial Instruments: Disclosures , which requires
disclosure of information that enable users of the Financial
Statements to evaluate the significance of financial instruments
for its financial position and performance.
6.6 Disclosures required by Ind AS as well as by the Act will continue to
be made in the Financial Statements and in the Notes to Accounts. An
example of this is the separate disclosure required by Sub Section (3) of
Section 182 of the Act for donations made to political parties. Such
disclosures would be made in the Notes. An illustrative list of disclosures
required under the Act is enclosed as Annexure C (Pg 171).
6.7 The above principle would apply to disclosures to be made in
compliance with other regulatory requirements such as, disclosures required
under Regulation 34 (including Schedule V) of the SEBI (Listing Obligations
and Disclosure Requirements) Regulations, 2015; the statutory requirements
by RBI such as Asset-Liability Management, Concentration of exposure,
Asset Quality etc.; any additional disclosure requirements created by NHB
directions issued by National Housing Bank and any pronouncements by
ICAI etc.
6.8 Division III to Schedule III requires all information relating to each item
on the face of the Balance Sheet and Statement of Profit and Loss to be
cross-referenced to the Notes. The manner of such cross-referencing to
various other information contained in the Financial Statements has been
retained as "Note No." in Division III to Schedule III. The instructions state
that the Notes to Accounts should provide where required with narrative
descriptions or disaggregation of items recognized in those statements.
Hence, presentation of all narrative descriptions and disaggregation should
preferably be presented in the form of Notes rather than in the form of
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Schedules. Such style of presentation is also in line with the manner of
presentation of Financial Statements followed by companies internationally
and would facilitate comparability of Financial Statements.
6.9 Note 4 of the General Instructions for Preparation of Financial
Statements also states that the Notes should also contain information about
items that do not qualify for recognition in Financial Statements. These
disclosures normally refer to items such as Contingent Liabilities and
Commitments which do not get recognised in the Financial Statements.
These have been dealt with in Paragraph 8.2.12.
6.10 Division III to Schedule III requires using the same unit of
measurement uniformly across the Financial Statements. Such requirement
should be taken to imply that all figures disclosed in the Financial Statements
including Notes should be of the same denomination, except where a
different denomination may be required for ratios or metrics in order to
increase its understandability.
6.11 Division III to Schedule III has specified the rounding off requirements
as Non-Ind AS Schedule III, as given below:
Division III to Schedule III
· Total Income < Rs. 100 Crores - Round off to the nearest hundreds,
thousands, lakhs or millions or decimal thereof.
· Total Income >= Rs. 100 Crores - Round off to the nearest lakhs,
millions or crores, or decimal thereof
6.12 A Note below Note 10 of the General Instructions for Preparation of
Financial Statements clarifies that Division III to Schedule III sets out the
minimum requirements for disclosure in the Financial Statements including
notes. It states that line items, sub-line items and sub-totals shall be
presented as an addition or substitution on the face of the Financial
Statements when such presentation is relevant to the understanding of the
NBFC's financial position or performance or to cater to categories of NBFC's
as prescribed by the relevant regulator or sector-specific disclosure
requirements, apart from, when required for compliance with amendments to
the relevant statutes or Ind AS.
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7. Part I Notes: General Instructions for Preparation of
Balance Sheet
7.1 Financial/ Non-financial assets and liabilities:
Division III to Schedule III requires all items in the Balance Sheet of an NBFC
to be classified as either Financial or Non-financial and be reflected as such.
Further Paragraph 54 of Ind AS 1 also specifies a requirement of presenting
financial assets and liabilities as line items on the balance sheet separately
from other items.
8. Part I Form of Balance Sheet and Notes General
Instructions for Preparation of Balance Sheet: Notes
6 to 11
Framework for the Preparation and Presentation of Financial Statement
under Indian Accounting Standards' issued by ICAI (hereinafter referred to as
Ind AS Framework) defines the terms asset, liability and equity which are as
follows:
An asset is a resource controlled by the entity as a result of past events and
from which future economic benefits are expected to flow to the entity.
A liability is a present obligation of the entity arising from past events, the
settlement of which is expected to result in an outflow from the entity of
resources embodying economic benefits.
Equity is the residual interest in the assets of the entity after deducting all its
liabilities.
8.1 Assets
On the face of the Balance Sheet, Division III to Schedule III requires the
following items to be presented under financial assets and non-financial
assets:
Financial assets
(a) Cash and cash equivalents
(b) Bank Balance other than included in (a) above
(c) Derivative financial instruments
(d) Receivables
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(I) Trade Receivables
(II) Other Receivables
(e) Loans
(f) Investments
(g) Other Financial assets (to be specified)
Non-financial assets
(a) Inventories
(b) Current Tax Assets (Net)
(c) Deferred Tax Assets (Net)
(d) Investment Property
(e) Biological assets other than bearer plants
(f) Property, Plant and Equipment
(g) Capital work-in-progress
(h) Intangible assets under development
(i) Goodwill
(j) Other Intangible assets
(k) Other non-financial assets (to be specified)
Financial Assets
8.1.1. Cash and cash equivalents:
Cash and cash equivalents shall be classified as:
(a) Cash on hand;
(b) Balances with banks (of the nature of cash and cash equivalents);
(c) Cheques, drafts on hand; and
(d) Others (specify nature).
The term `Cash and cash equivalents' is not defined in Division III to
Schedule III. According to Ind AS-7, Statement of Cash Flows, Cash is
defined to include cash on hand and demand deposits with banks. Cash
Equivalents are defined as short term, highly liquid investments that are
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readily convertible into known amounts of cash and which are subject to an
insignificant risk of changes in value.
Ind AS 7 further explains that an investment normally qualifies as a cash
equivalent only when it has a short maturity of, say, three months or less
from the date of acquisition. This would include term deposits with banks that
have an original maturity of three months or less. However, bank balances
(including term deposits) held as margin money or security against
borrowings are neither in the nature of demand deposits, nor readily
available for use by the company, and accordingly, do not meet the aforesaid
definition of cash equivalents.
Further, interest accrued on a fixed deposit is included in the carrying value
of fixed deposit.
Generally, there should not be a difference in the amount of cash and cash
equivalents as per Ind AS 1 and as per Ind AS 7. However, as per Paragraph
8 of Ind AS 7 "where bank overdrafts which are repayable on demand form
an integral part of an entity's cash management, bank overdrafts are
included as a component of cash and cash equivalents. A characteristic of
such banking arrangements is that the bank balance often fluctuates from
being positive to overdrawn." Although Ind AS 7 permits bank overdrafts to
be included as cash and cash equivalents, however for the purpose of
presentation in the balance sheet, it is not appropriate to include bank
overdraft as a component of cash and cash equivalents unless the offset
conditions as given in paragraph 42 of Ind AS 32 are complied with. Bank
overdraft, in the balance sheet, should be included as `borrowings' under
Financial Liabilities.
8.1.2. Bank Balances other than cash and cash equivalents
Bank balances other than cash and cash equivalents as above, i.e. having a
maturity of more than three months shall be disclosed as Bank Balances
other than cash and cash equivalents on the face of the Balance Sheet.
Further, Note (A) of General Instructions for Preparation of Balance Sheet
requires the following disclosures with regard to Bank Balance other than
cash and cash equivalents:
(a) Earmarked balances with banks (for e.g., for unpaid dividend) shall be
separately stated;
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(b) Balances with banks to the extent held as margin money or security
against the borrowings, guarantees, other commitments shall be
disclosed separately;
(c) Repatriation restrictions, if any, in respect of cash and bank balances
shall be separately stated.
The disclosure regarding `bank balances other than cash and cash
equivalents' should include items such as balances with banks held as
margin money or security against borrowings, guarantees, etc.
8.1.3. Derivative Financial Instruments:
As per Appendix A of Ind AS 109, `derivative' is defined as "A financial
instrument or other contract within the scope of the Standard with all three of
the following characteristics:
(a) its value changes in response to the change in a specified interest
rate, financial instrument price, commodity price, foreign exchange
rate, index of prices or rates, credit rating or credit index, or other
variable, provided in the case of a non-financial variable that the
variable is not specific to a party to the contract (sometimes called the
`underlying').
(b) it requires no initial net investment or an initial net investment that is
smaller than would be required for other types of contracts that would
be expected to have a similar response to changes in market factors.
(c) it is settled at a future date."
The following should be disclosed in the note for Derivative Financial
Instruments:
An explanation should be given for the use of derivatives, how the risk is
mitigated and for what purpose has the company entered into derivative
contracts in accordance with Paragraphs 21A to 21F of Ind AS 107. Eg. to
hedge its foreign currency risks, interest rate risks and equity price risks a
company may enter into the following kinds of derivative contracts such as -
interest rate swaps, cross-currency swaps, forward foreign exchange
contracts, futures and options on interest rates, foreign currencies and
equities etc.
A cross-reference to the financial risks section for management of risks
arising from derivatives should be done. As per paragraphs 31 to 33 of Ind
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AS 107, an entity shall disclose information that enables users of its financial
statements to evaluate the nature and extent of risks arising from financial
instruments to which the entity is exposed at the end of the reporting period.
Disclosures should explain what the financial risks are, how the entity
manages the risks and why the entity enters into various derivative contracts
to hedge the risks, i.e, Credit risk, liquidity risk, market risk and other risk.
Derivatives are measured at fair value and carried as assets when their fair
value is positive and as liabilities when their fair value is negative. The
notional amount and fair value of such derivatives are disclosed separately in
the Notes to Accounts. Changes in the fair value of derivatives are included
in net gain on fair value changes in the statement of profit and loss unless
hedge accounting is applied.
Embedded derivative separated from host contract and accounted separately
as per Ind AS 109 requirements should be disclosed under the relevant
heading, for example, options, etc.
Part I below caters to disclosure of all derivative financial instruments held by
the Company.
Part II below requires analysis of derivatives included in Part I above into
different categories of hedge accounting specified in Ind AS 109 and risk
management purposes.
The notional amounts, fair value assets, and fair value liabilities shall be
disclosed for each category and sub-category of derivative financial
instruments as:
1. Part I
(i) Currency Derivatives
-- Spot and forwards
-- Currency futures
-- Currency swaps
-- Options purchased
-- Options sold (written)
-- Others
Subtotal (i)
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(ii) Interest Rate Derivatives
-- Forward rate agreements and interest rate swaps
-- Options purchased
-- Options sold (written)
-- Futures
-- Others
Subtotal (ii)
(iii) Credit Derivatives
(iv) Equity Linked Derivatives
(v) Other Derivatives (Please specify)
Total Derivative financial instruments (i) + (ii) + (iii) + (iv) + (v)
2. Part II
Included in above (Part I) are derivatives held for hedging and risk
management purposes as follows
(i) Fair value hedging
-- Currency Derivatives
-- Interest rate derivatives
-- Credit derivatives
-- Equity linked derivatives
-- Others
Subtotal (i)
(ii) Cash flow hedging
-- Currency Derivatives
-- Interest rate derivatives
-- Credit derivatives
-- Equity linked derivatives
-- Others
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Subtotal (ii)
(iii) Net investment hedging
(iv) Undesignated derivatives
Total Derivative financial instruments (i) + (ii) + (iii) + (iv)
With respect to hedges and hedge accounting, NBFCs may provide a
description in accordance with the requirements of Indian Accounting
Standards, of how derivatives are used for hedging, explain types of hedges
recognized for accounting purposes and their usage/ application by the
entity.
8.1.4. Receivables:
Receivables are classified as `Trade and Other Receivables'.
A receivable should be classified as 'trade receivable' if it is in respect of the
amount due on account of goods sold or services rendered in the normal
course of business and the company has a right to an amount of
consideration that is unconditional (i.e. if only the passage of time is required
before payment of that consideration is due).
Other receivables would generally mean receivables emanating from items
that are classified as `others' under `Revenue from Operations'. Other
receivables shall also include debts due by directors or other officers of the
NBFC or any of them either severally or jointly with any other person or debts
due by firms including limited liability partnerships (LLPs), private companies
respectively in which any director is a partner or a director or a member if the
same is not in the nature of trade receivables, however, the same is required
to be disclosed separately in the financial statements.
Refer Paragraph 8.1.7 for items that may be classified as `other financial
assets'.
Receivables shall be sub-classified as:
(i) (a) Receivables considered good - Secured;
(b) Receivables considered good - Unsecured;
(c) Receivables which have significant increase in credit risk; and
(d) Receivables credit impaired
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(ii) Allowance for impairment loss shall be disclosed under the relevant
heads separately.
(iii) Debts due by directors or other officers of the NBFC or any of them
either severally or jointly with any other person or debts due by firms
including limited liability partnerships (LLPs), private companies
respectively in which any director is a partner or a director or a
member should be separately stated.
Impairment of Trade Receivables
As per Ind AS 109, a company is required to recognize a loss allowance (i.e.
impairment) for expected credit losses on financial assets including trade
receivables.
The impairment requirements in Ind AS 109 are based on forward-looking
expected credit loss (ECL) model which requires an application of one of the
following:
(a) The general approach, where an entity recognises ECL in the following
stages viz.,
· credit exposures for which there has not been a significant
increase in credit risk since initial recognition;
· credit exposures for which there has been a significant increase
in credit risk since initial recognition but not credit-impaired;
· credit exposures that are credit impaired;
(b) The simplified approach, where an entity does not separately track
changes in credit risk.
(c) The purchased or originated credit-impaired approach.
For trade receivables that do not contain a significant financing component, it
is a requirement to apply a simplified approach, while for trade receivables
that contain a significant financing component, and for lease receivables, a
choice between a general approach or simplified approach is available.
Application Guidance to Ind AS 109 allows using practical expedients when
measuring expected credit losses if they are consistent with the
measurement principles reflecting a probability-weighted outcome, the time
value of money and reasonable and supportable information that is available
without undue cost or effort at the reporting date about past events, current
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conditions and forecasts of future economic conditions, for e.g., using a
provision matrix based calculation of expected credit loss on trade
receivables.
Disclosures under the general approach
If a company chooses to calculate impairment loss under the general
approach for trade receivables containing significant financing component,
then the disclosures representing the following different categories of Trade
Receivables would be provided (amounts are illustrative only):
Trade Receivables
Particulars Exposure Loss Net
Allowance Amount
Rs. Rs. Rs.
Considered good Secured -- -- --
Considered good Unsecured* 1,25,000 13,000 1,12,000
Trade Receivables which have 20,000 10,000 10,000
significant increase in credit risk
Trade Receivables credit 5,000 4,000 1,000
impaired
Total 1,50,000 27,000 1,23,000
* It is assumed for simplicity that all the Trade Receivables considered good
are Unsecured.
Similar table as mentioned above would be required for any debts due which
are in the nature of trade receivables and where general approach has been
used by the company for any debts due by any directors or other officers of
the NBFC or any of them either severally or jointly with any other person or
debts due by firms including limited liability partnerships (LLPs), private
companies respectively in which any director is a partner or a director or a
member
Except in case of purchased or originated credit-impaired trade receivables
where a company only recognises cumulative changes in lifetime expected
credit losses since initial recognition, the impairment loss allowance does not
reduce the carrying amount of the trade receivables.
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In disclosing `Trade Receivables which have significant increase in credit
risk', the company shall disclose the amount of trade receivables that have
experienced significant increase in credit risk since initial recognition but are
not credit-impaired.
In disclosing `Trade Receivables credit impaired', the company shall
disclose the amount of trade receivables which are credit impaired as
defined in Ind AS- 109 .
The balance amount of trade receivables which have neither experienced
significant increase in credit risk nor are credit impaired as per Ind AS 109,
shall be disclosed as `good'.
For calculating the loss allowance, reference shall be drawn from Ind
AS 109.
Disclosures under the simplified approach
If a company chooses to calculate impairment under the simplified approach
for trade receivables containing significant financing component and for the
impairment calculated on trade receivables that do not contain significant
financing component, then the company is not required to separately track
changes in credit risk of trade receivables as the impairment amount
represents "lifetime" expected credit loss.
Accordingly, based on a harmonious reading of Ind AS 109 and the break-up
requirements under Schedule III, the disclosures for all such trade
receivables would be made as below, irrespective of whether they contain a
significant financing component or not (amounts are illustrative only):
Trade Receivables
Particulars Exposure Loss Net
Allowance Amount
Rs. Rs. Rs.
Considered Good Secured -- -- --
Considered Good 2,00,000 25,000 1,75,000
Unsecured*
Trade Receivables which have -- -- --
significant increase in credit
risk
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Trade Receivables credit -- -- --
impaired
Total 2,00,000 25,000 1,75,000
* It is assumed for simplicity that all the Trade Receivables are Unsecured.
Break-up of trade receivables into `significant increase in credit risk'
and `credit impaired'
Ind AS 109 neither prohibits nor mandates a company to perform individual
assessment of credit risk for some of its financial assets. If a company
performs individual credit risk assessment on specific parties despite the
normal collective pool-based assessment for a group of parties falling under
a particular credit exposure bucket (e.g., ageing, rating, etc.) and if it
indicates that a trade receivable has experienced a significant increase in
credit risk or is credit impaired then disclosures to be provided are as under.
The disclosure of trade receivables in the manner as required by Schedule III
shall be made specifically where the company has a trade receivable for
which credit risk is assessed individually. However, the disclosure of `trade
receivables credit impaired' shall be made if such a trade receivable meets
the definition of `credit impaired' as per Ind AS 109.
When a company has assessed credit risk on an individual basis irrespective
of recognition of a loss allowance on collective basis, it is recommended that
a company should disclose the following by way of a footnote just after the
illustrative table given below:
· The amount of trade receivables for which the company has assessed
credit risk on an individual basis; and
· The amount of loss allowance recognized for such trade receivables.
Trade Receivables
Particulars Exposure Loss Net
Allowance Amount
Rs. Rs. Rs.
Considered Good Secured -- -- --
Considered Good 1,50,000 25,000 1,25,000
Unsecured*
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Trade Receivables which have -- -- --
significant increase in credit
risk
Trade Receivables credit 50,000 50,000 --
impaired
Total 2,00,000 75,000 1,25,000
*Where a company has performed credit assessment on an individual basis
and the assessment indicates that the trade receivable has experienced
significant increase in credit risk but is not credit impaired, in that case the
exposure of such a trade receivable and its respective loss allowance would
be shown as part of Considered good - secured and Considered good
Unsecured as the case may be. This is because, in case of `trade
receivables' under the simplified approach, a company is not required to
separately track the changes in credit risk and even if the company does
individual assessment it will not be possible for a company to establish that
there has been significant increase in credit risk. Hence, any exposure of
trade receivables other than that which is credit impaired and the respective
loss allowance will be shown as part of Considered Good Secured /
Unsecured as the case may be.
Similar tables as mentioned above would be required for any debts due by
directors or other officers of the NBFC or any of them either severally or
jointly with any other person or debts due by firms including limited liability
partnerships (LLPs), private companies respectively in which any director is a
partner or a director or a member.
Presentation of loss allowance
Except in case of purchased or originated credit-impaired trade receivables
where a company only recognises cumulative changes in lifetime expected
credit losses since initial recognition, the impairment loss allowance does not
reduce the carrying amount of the trade receivables. Accordingly, the total
expected credit loss allowance is presented as a deduction in a single line
item from the total carrying amount of the trade receivables, as shown above.
The above disclosures are consistent with the requirements of Ind AS 109
and the requirements under Division III to Schedule III may be modified in
the light of Paragraph 2 of `General Instructions for Preparation of Financial
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Statements of a Company Required to comply with Ind AS' to Division III to
Schedule III.
Impairment of Other Receivables
Similar disclosures as mentioned above under the general approach may be
made for impairment of Other Receivables.
8.1.5. Loans
An NBFC shall disclose the following in the Notes under the head `Loans':
(i) Bills purchased and bills discounted
(ii) Loans repayable on demand
(iii) Term Loans
(iv) Leasing
(v) Factoring
(vi) Others (to be specified, example of `Others' could be Intercorporate
Deposits, Staff loans , loans to related parties, etc)
Loans should be classified as per Ind AS 109 as measured at amortised cost,
at fair value through Other Comprehensive Income, fair value through Profit
or Loss, or designated at fair value through Profit or Loss.
The impairment loss allowance as per Ind AS 109 should be disclosed as a
separate line item under the aforesaid measurement categories as
applicable.
A break up of the total loans should also be disclosed as:
(a) Secured by tangible assets
(b) Secured by intangible assets
(c) Covered by Bank/ Government Guarantee
(d) Unsecured
As per Guidance Note on Terms Used in Financial Statements, `Secured
loan' is defined as loan secured wholly or partly against an asset.
The security wise break-up of loans as mentioned above shall additionally
disclose as a separate line item of loans secured by book debts, fixed
deposits and other working capital items as applicable. Loans to the extent
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they are covered by guarantees of Indian/ foreign governments and Indian/
foreign banks shall be included in line item (c) above. Government refers to
government, government agencies, and similar bodies whether local, national
or international. All loans or parts thereof that are not classified under the
previous sub-heads shall be included in line item (d) above. For instance, if
an advance is secured by tangible assets to the extent of 75 percent, the
secured component should be reflected under secured advance, while the
balance 25 percent unsecured component would be included under this sub-
head. The total of the above line items, after deducting impairment loss
allowance in a separate line item, should match with the net loans and
advances.
Additional disclosure of loans within India and outside India is required to be
made. Further, within India, loans should be classified as those from public
sector and others (to be specified). Advances to Central and State
Governments and other Government undertakings including Government
Companies and statutory corporations are to be included in the category
`Public Sector'. All other loans are included in `Others' category for example
loans to retail or Corporate or industry-wise classification etc. based on the
business of the company.
All the above mentioned disclosures are required to be given for each of the
measurement categories, namely, measured at amortised cost, at fair value
through other comprehensive income, fair value through Profit or Loss or
designated at fair value through Profit or Loss.
As per Ind AS 109, in case of loans measured at fair value through other
comprehensive income, the fair value changes shall be presented in other
comprehensive income. A company shall estimate a portion of fair value
change, if any, attributable to a change in credit risk of such loans, by
applying the impairment requirements of Ind AS 109 in recognising and
measuring the loss allowance, and disclose the same in the statement of
profit and loss with a corresponding impact in other comprehensive income.
In other words, the company shall not reduce/increase the carrying amount of
such loans in the balance sheet on account of change in the credit risk as the
loan needs to be presented at fair value.
For finance lease receivables, an entity shall apply the presentation and
disclosure requirements under Ind AS 116 in addition to the requirements of
Division III to Schedule III. The disclosure requirements of Ind AS 107 would
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also apply to such receivables and the requirements under this schedule
stand modified accordingly (Refer Paragraph 2 of General Instructions for
preparation of Financial Statements of a Non-Banking Financial Company
(NBFC) that are required to comply with Indian Accounting Standards (Ind
AS))
Ind AS 107 has prescribed extensive disclosures (qualitative and
quantitative) pertaining to Credit Risk on financial instruments of an entity.
The same will be required over and above the disclosure requirements stated
in the Division III of Schedule III.
8.1.6. Investments
Investments shall be classified as:
(i) Investments in Mutual funds
(ii) Investments in Government securities
(iii) Investments in Other approved securities
(iv) Investments in Debt Securities
(v) Investments in Equity Instruments
(vi) Investments in Subsidiaries
(vii) Investments in Associates
(viii) Investments in Joint Ventures
(ix) Others (Specify)
Investments should further be classified as:
(a) Measured at amortised cost,
(b) Fair value through Other Comprehensive Income,
(c) Fair value through Profit or Loss, and
(d) Designated at fair value through Profit or Loss.
Additional disclosure of Investments within and outside India is required to be
provided.
Where the NBFC has used a basis other than amortised cost or fair value,
the same may be included in column `Others', with the basis of measurement
to be disclosed as a footnote. e.g. Investment in subsidiaries measured at
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cost under Ind AS 27 shall be classified under `Others' in the Separate
Financial Statements of the NBFC.
The impairment loss allowance as per Ind AS 109 should be disclosed as a
separate line item under the sub-heads (measurement categories) mentioned
above.
8.1.6.1 Aggregate amount of impairment in value of investments
As per Division III to Schedule III, this amount should be disclosed
separately. As per Ind AS 109, the company is required to recognize a loss
allowance (i.e. impairment) for expected credit losses on investments
measured at amortized cost. Such loss allowance should be presented as an
adjustment to the amortized cost of the investment.
As per Ind AS 109, in case of debt investments measured at fair value
through other comprehensive income, the fair value changes will be
presented in other comprehensive income. A company should estimate a
portion of fair value change, if any, attributable to a change in credit risk of
such investment, by applying the impairment requirements of Ind AS 109 in
recognising and measuring the loss allowance, and disclose the same in the
statement of profit and loss with a corresponding impact in other
comprehensive income. In other words, the company shall not
reduce/increase the carrying amount of such investment in the balance sheet
on account of change in the credit risk as the investment needs to be
presented at fair value. Disclosure pertaining to impairment shall be
disclosed by way of Notes in accordance with the requirements of Ind AS
107.
As per Ind AS 109, equity instruments measured at other than at cost and
debt instruments measured at fair value through profit or loss do not require
a separate evaluation of impairment amount. Hence, in such cases, the
disclosure pertaining to impairment shall not be applicable.
For the purpose of disclosing aggregate provision for impairment in the value
of investments, an entity shall disclose an amount equal to the aggregate
amount of impairment recognized and measured in accordance with Ind AS
109, as stated in the paragraphs above.
The aggregate provision for impairment should be presented in totality for
each measurement category.
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8.1.6.2 Investments in Subsidiaries / Associates / Joint Ventures
The terms `subsidiary', `associate' and `joint venture' shall be as defined in
the respective Ind AS. Ind AS 32, Ind AS 107 and Ind AS 109 scope out
those interests in subsidiaries, associates, joint ventures that are accounted
for in accordance with Ind AS 110 Consolidated Financial Statements , Ind AS
27 Separate Financial Statements or Ind AS 28 Investments in Associates
and Joint Ventures.
In some cases, Ind AS 110, Ind AS 27 or Ind AS 28 require or permit an
entity to account for an interest in a subsidiary, associate or joint venture in
accordance with Ind AS 109. Accordingly, only in its Separate Financial
Statements, the entity shall present such interests in a subsidiary, associate
or joint venture under `Others' if an entity uses a basis for measurement for
the same other than that specified under Ind AS 109.
As per Part III, General Instructions for the Preparation of Consolidated
Financial Statements, the Consolidated Financial statements shall further
disclose the information as per the requirements specified in the applicable
Indian Accounting Standards notified under the Companies (Indian Ac-
counting Standards) Rules 2015. Thus, for an entity's Consolidated Financial
Statements, investments accounted using the equity method (i.e. associates
and joint ventures) need to be shown as a separate line item outside
`Financial Assets', as per the requirements of Ind AS 1, Paragraph 54.
Structured Entities
Division III to Schedule III does not require an entity to specifically disclose
investments in `structured entities'. However in case a company has
investments in `structured entities' then the same may be disclosed in
addition to investments in subsidiaries, associates, and joint ventures.
Ind AS-112 Disclosure of Interests in Other Entities states that a "structured
entity" is an entity that has been designed so that voting or similar rights are
not the dominant factor in deciding who controls the entity, such as when any
voting rights are related to administrative tasks only and the relevant
activities are directed by means of contractual arrangements.
Non-Ind AS Schedule III requires details to be given for only "controlled
special purpose entities" whereas, under Division II of Schedule III,
investments in all structured entities need to be given, irrespective of whether
controlled or not.
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Division II to Schedule III also requires disclosure of the `nature and extent'
of the investments so made. In case of an investment in other than a
structured entity, the nature and extent would imply the number of such
instruments held and the face value of such instrument. In case of a
Structured Entity, rights are mainly established by way of contractual
arrangements and therefore as a part of `nature and extent', a brief
description of the nature of contracts may be provided along with the rights
held in such entities as evidenced by such contracts.
8.1.7. Other Financial assets:
Other financial assets should include items such as dues in respect of
insurance claims, sale of Property, Plant and Equipment, contractually
reimbursable expenses, security deposits etc. In case advances are of the
nature of a financial asset as per Ind AS 32, these are to be disclosed under
`other financial assets' separately.
Other financial assets may also include receivables emanating from items
that are classified as `other Income'.
Application money paid towards securities
Any application money paid towards securities, where security has not been
allotted on the date of the Balance Sheet, shall be disclosed as a separate
line item under `other financial assets'. If the amount is material, details about
the date of allotment or when the allotment is expected to be completed may
also be disclosed.
Non-Financial Assets
8.1.8. Inventories:
(i) Inventories shall be classified as:
(a) Raw materials;
(b) Work-in-progress;
(c) Finished goods;
(d) Stock-in-trade (in respect of goods acquired for trading);
(e) Stores and spares;
(f) Loose tools;
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(g) Others (specify nature).
(ii) Goods-in-transit shall be disclosed under the relevant sub-head of
inventories.
(iii) Mode of valuation shall be stated.
As per Division III to Schedule III, goods in transit should be included under
relevant heads with suitable disclosure. Further, mode of valuation for each
class of inventories should be disclosed.
The heading Finished goods should comprise all finished goods other than
the stock-in-trade acquired for trading purposes.
8.1.9. Current Tax Assets (Net):
If amount of tax already paid in respect of current and prior periods exceeds
the amount of tax due for those periods (assessment year-wise and not
cumulative unless tax laws allow e.g., say tax laws in the country of overseas
subsidiary permits), then such excess tax shall be recognised as an asset.
8.1.10. Investment property:
Ind AS 40, Investment Property, defines Investment Property as the property
(land or a building--or part of a building--or both) held (by the owner or by
the lessee as a right of use asset) to earn rentals or for capital appreciation
or both, rather than for: (a) use in the production or supply of goods or
services or for administrative purposes; or (b) sale in the ordinary course of
business.
Division III to Schedule III requires a reconciliation of the gross and net
carrying amounts of each class of property at the beginning and end of the
reporting period showing additions, disposals, acquisitions through business
combinations and other adjustments and the related depreciation and
impairment losses or reversals shall be disclosed separately.
The guidance given below on Property, Plant and Equipment, to the extent
applicable, is also to be used for Investment Property.
8.1.11. Biological assets other than bearer plants:
As per Ind AS-41 Agriculture, a biological asset is a living animal or plant.
Examples of biological assets are sheep, Trees in a timber plantation, Dairy
Cattle, Cotton plants, Tea bushes, Oil palms, Fruit trees, etc. Some plants,
for example, cotton plants, tea bushes, oil palms, fruit trees, grape vines,
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usually meet the definition of a bearer plant. However, the produce growing
on bearer plants, viz., cotton, tea leaves, oil palm fruit, fruits and grapes are
biological assets other than bearer plants.
As per Ind AS 41, an entity shall present a reconciliation of changes in the
carrying amount of biological assets between the beginning and the end of
the current period. The reconciliation shall include:
(i) the gain or loss arising from changes in fair value less costs to sell;
(ii) increases due to purchases;
(iii) decreases attributable to sales and biological assets classified as held
for sale (or included in a disposal group that is classified as held for
sale) in accordance with Ind AS 105;
(iv) decreases due to harvest;
(v) increases resulting from business combinations;
(vi) net exchange differences arising on the translation of financial
statements into a different presentation currency, and on the
translation of a foreign operation into the presentation currency of the
reporting entity; and
(vii) other changes.
The guidance given below on Property, Plant and Equipment, to the extent
applicable, is also to be used for Biological Assets other than bearer plants.
8.1.12. Property, Plant and Equipment:
The company shall disclose the following in the Notes under the head
`Property, Plant and Equipment':
(i) Classification shall be given as:
(a) Land;
(b) Buildings;
(c) Plant and Equipment;
(d) Furniture and Fixtures;
(e) Vehicles;
(f) Office equipment;
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(h) Bearer Plants;
(g) Others (specify nature).
(ii) Assets under lease shall be separately specified under each class of
asset as part of Notes.
For assets under lease, an entity shall apply the presentation and
disclosure requirements under Ind AS 116 in addition to the
requirements of Division III to Schedule III.
(iii) A reconciliation of the gross and net carrying amounts of each class of
assets at the beginning and end of 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.
As per Paragraph 47 of Ind AS 116 a lessee shall either present in the
balance sheet or disclose in the notes: right-of-use assets separately from
other assets. If a lessee does not present right-of-use assets separately in
the balance sheet, the lessee shall:
(i) include right-of-use assets within the same line item as that within
which the corresponding underlying assets would be presented if they
were owned; and
(ii) disclose which line items in the balance sheet include those right-of-
use assets.
Illustrative Table
Particulars Buildings
Freehold Owner Right of
Occupied Use under
property a lease
Current Year
At cost or fair value at the beginning of
the year
Additions
Revaluation adjustment, if any
Disposals
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Reclassification from/to held for sale
Other adjustments (please specify)
At cost or fair value at the end of the
year
Accumulated depreciation and
impairment as at the beginning of the
year
Depreciation for the year
Disposals
Impairment/(reversal) of impairment
Reclassification from/to held for sale
Other adjustments (please specify)
Accumulated depreciation and
impairment as at the end of year
Net carrying amount as at the end of the
year (A)
Total
Similar presentation may be provided for all the above mentioned assets.
8.1.12.1 Since reconciliation of gross and net carrying amounts of Property,
Plant and Equipment, Investment Property and Other Intangible assets is
required, the corresponding depreciation/amortization for each class of asset
should be disclosed in terms of Opening Accumulated Depreciation,
Depreciation / amortization for the year, Deductions / Other adjustments and
Closing Accumulated Depreciation / Amortization. Similar disclosures should
also be made for Impairment, if any, as applicable.
8.1.12.2 As per Ind AS 101, Paragraph D5 and D6, an entity may elect to
measure an item of property, plant and equipment at the date of transition to
Ind ASs at its fair value or use a previous GAAP revaluation as deemed cost.
Further, as per Paragraph D7AA of Ind AS 101, an entity may also consider
previous GAAP carrying amount of all its property, plant and equipment as its
deemed cost on the date of transition. In case when a company applies
Paragraph D5 or Paragraph D7AA, the deemed cost considered on the date
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of transition shall become the new `gross block' and accordingly presented in
the reconciliation statement as required by Division III to Schedule III.
8.1.12.3 In case a company wants to disclose information regarding gross
block of assets, accumulated depreciation and provision for impairment as
per previous GAAP, the same may only be disclosed as an additional
information by way of a note forming part of the financial statements.
8.1.12.4 All acquisitions, whether by way of an asset acquisition or through a
business combination are to be disclosed as part of the reconciliation in the
note on Property, Plant and Equipment (refer Paragraph 8.1.12), Investment
Property (refer Paragraph 8.1.10) Other Intangible assets (refer Paragraph
8.1.16) and Biological Assets other than bearer plants (refer Paragraph
8.1.11). Acquisitions through `Business Combinations' need to be disclosed
separately for each class of assets. Similarly, though not specifically
required, it is advisable that asset disposals through demergers, etc. may
also be disclosed separately for each class of assets.
8.1.12.5 Other adjustments may include items as required by disclosure
requirements of Ind AS 16 and such disclosure should be made in the
manner prescribed therein. It may also include, for example net exchange
gain / loss arising on the translation of the financial statements from the
functional currency into a presentation currency.
8.1.12.6 Under Division III to Schedule III, land and building are presented as
two separate classes of property, plant and equipment. In contrast,
paragraph 37 of Ind AS 16 gives an example of grouping land and building
under same class for revaluation purposes. The Paragraph states that a
class of property, plant and equipment is a grouping of assets of a similar
nature and use in an entity's operations. However, companies should
continue to present land and building separately as given in Division III to
Schedule III and such presentation needs to be followed consistently.
8.1.13. Capital work-in-progress
As per Division III to Schedule III, capital advances should be included under
other non-financial assets and hence, cannot be included under capital work-
in-progress. The capital work-on-progress shall be disclosed as a separate
line-item on the face of the balance sheet.
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8.1.14. Intangible assets under development
Intangible assets under development should be disclosed under this head
provided they can be recognized based on the criteria laid down in Ind AS-38
Intangible Assets.
8.1.15. Goodwill
Division III to Schedule III requires a company to present Goodwill as a
separate line item on the face of the balance sheet apart from `Other
Intangible Assets'. Further, it requires a reconciliation of the gross and net
carrying amount of goodwill at the beginning and end of the reporting period
showing additions, impairments, disposals and other adjustments.
8.1.16. Other Intangible assets
The company shall disclose the following in the Notes to Accounts:
(i) Classification shall be given as:
(a) Brands / trademarks;
(b) Computer software;
(c) Mastheads and publishing titles;
(d) Mining rights;
(e) Copyrights, patents, other intellectual property rights, services
and operating rights;
(f) Recipes, formulae, models, designs and prototypes;
(g) Licenses and franchises;
(h) Others (specify nature).
(ii) A reconciliation of the gross and net carrying amounts of each class of
assets at the beginning and end of the reporting period showing
additions, disposals, acquisitions through business combinations and
other adjustments and the related amortization and impairment losses
or reversals shall be disclosed separately.
The guidance given above on Property, Plant and Equipment, to the extent
applicable, is also to be used for Other Intangible Assets.
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8.1.17. Contract assets and impairment thereof
Ind AS 115 requires in case of a contract with customer, when either party
has performed, to present a contract asset in the balance sheet as a line item
separate from trade receivables. Contract asset arises if an entity performs
by transferring goods or services to a customer before the customer pays
consideration or before payment is due. It excludes any amounts presented
as a receivable.
The presentation requirements of trade receivables (viz., secured and
unsecured, considered good, significant increase in credit risk and credit
impaired) may be applied to contract assets if a company has sufficient and
appropriate information.
Ind AS 115 also requires impairment of contract assets to be measured,
presented and disclosed on the same basis as a financial asset that is
within the scope of Ind AS 109.
Accordingly, all the impairment related requirements as outlined above for
trade receivables (Paragraph 8.1.4) shall be applied to contract assets as
well.
8.1.18. Other non-financial assets (to be specified)
Capital advances are advances given for procurement of Property, Plant and
Equipment including bearer plants, Investment Property, Other Intangible
Assets or Biological Assets which are non-financial assets. Typically,
companies do not expect to realize them in cash. Rather, over the period,
these get converted into Property, Plant and Equipment including bearer
plants, Investment Property, Other Intangible assets or Biological Assets,
respectively, which are non-financial assets. Hence, capital advances should
be treated as other non-financial assets irrespective of when the Property,
Plant and Equipment including bearer plants, Investment Property, Other
Intangible assets or Biological Assets are expected to be received.
Security Deposits under Other non-financial assets should include those
deposits which do not meet the definition of a financial asset.
`Other advances' include all other items in the nature of advances which do
not meet the definition of a financial asset viz., Prepaid expenses, GST
receivable, etc.
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It may be noted that in case advances are of the nature of a financial asset
as per Ind AS 32, these are to be disclosed under `Other financial assets'
separately.
Non-current Assets and disposal group held for sale
As per Paragraph 38 of Ind AS 105, Non-current Assets Held for Sale and
Discontinued Operations, an entity shall present a non-current asset
classified as held for sale and the assets of a disposal group classified as
held for sale separately from other assets in the balance sheet. The major
classes of assets classified as held for sale shall be separately disclosed
either in the balance sheet or in the notes.
8.2 Liabilities and Equity
Liabilities
On the face of the Balance Sheet, Division III to Schedule III requires the
following items to be presented under financial liabilities as well as non-
financial liabilities:
Financial Liabilities
(a) Derivative financial instruments
(b) Payables
(I) Trade Payables
(i) total outstanding dues of micro enterprises and small
enterprises
(ii) total outstanding dues of creditors other than micro
enterprises and small enterprises
(II) Other Payables
(i) total outstanding dues of micro enterprises and small
enterprises
(ii) total outstanding dues of creditors other than micro
enterprises and small enterprises
(c) Debt Securities
(d) Borrowings (Other than Debt Securities)
(e) Deposits
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(f) Subordinated Liabilities
(g) Other financial liabilities (to be specified)
Non-financial Liabilities
(a) Current tax liabilities (Net)
(b) Provisions
(c) Deferred tax liabilities (Net)
(d) Other non-financial liabilities (to be specified)
Financial Liabilities
8.2.1 Payables
Division III to Schedule III requires presenting `Payables' as a separate line
item on the face of the Balance Sheet under `Financial Liabilities'. The
following shall be disclosed as sub-heads on the face of the Balance Sheet
under payables as per Division III of Schedule III:
(I) Trade Payables
(i) Total outstanding dues of micro enterprises and small
enterprises
(ii) Total outstanding dues of creditors other than micro
enterprises and small enterprises
(II) Other Payables
(i) Total outstanding dues of micro enterprises and small
enterprises
(ii) Total outstanding dues of creditors other than micro
enterprises and small enterprises
8.2.1.1 A payable shall be classified as 'trade payable' if it is in respect of
the amount due on account of goods purchased or services received in the
normal course of business. Amounts due under contractual obligations other
than purchase of goods and services or statutory payables shall not be
included within Trade Payables. Such items may include dues payable in
respect of statutory obligations like contribution to provident fund or
contractual obligations like contractually reimbursable expenses, amounts
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due towards purchase of capital goods, etc. These amounts should be shown
under Non-financial liabilities.
8.2.1.2 Unpaid Creditors for Capital goods and Debts due to directors or
other officers of the NBFC or any of them either severally or jointly with any
other person or debts due to firms including LLPs, Private companies
respectively in which director is a partner or a director or a member, if they
are not in the nature of `Trade Payables', should be classified as `Other
payables'.
As per Schedule III, the Payables should present separately the portion
representing outstanding dues of micro and small enterprises and others.
Amount due from `Medium enterprises' shall form part of `Others'.
8.2.1.3 As per the requirements of Schedule III the following shall be
disclosed:
(a) the principal amount and the interest due thereon (to be shown
separately) remaining unpaid to any supplier at the end of each
accounting year;
(b) the amount of interest paid by the buyer in terms of section 16 of the
Micro, Small and Medium Enterprises Development Act, 2006, along
with the amount of the payment made to the supplier beyond the
appointed day during each accounting year;
(c) the amount of interest due and payable for the period of delay in
making payment (which has been paid but beyond the appointed day
during the year) but without adding the interest specified under the
Micro, Small and Medium Enterprises Development Act, 2006;
(d) the amount of interest accrued and remaining unpaid at the end of
each accounting year; and
(e) the amount of further interest remaining due and payable even in the
succeeding years, until such date when the interest dues above are
actually paid to the small enterprise, for the purpose of disallowance of
a deductible expenditure under section 23 of the Micro, Small and
Medium Enterprises Development Act, 2006.
Similar requirements are given under The Micro, Small and Medium
Enterprises Development (MSMED) Act, 2006.
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8.2.1.4 The terms ''appointed day'', ''buyer'', ''enterprise'', ''micro enterprise'',
"medium enterprise", ''small enterprise'' and'' supplier'', shall be as defined
under clauses (b), (d), (e), (h), (m) and (n) respectively of section 2 of the
Micro, Small and Medium Enterprises Development Act, 2006.
8.2.2 Debt Securities
8.2.2.1 The head `Debt Securities' under `Financial Liabilities' will include
securities (secured or unsecured) other than those which are classified as
`Subordinated debt'. Debt securities shall comprise of liability component of
Compound Financial instruments as per Ind AS and Other such as Bonds
and Debentures. Debt securities should be further classified into the
following measurement categories such as
(a) Amortised Cost,
(b) Fair Value through Profit or Loss and
(c) Designated at Fair Value through Profit or Loss.
8.2.2.2 Additional disclosures of Debt securities within India and Outside
India are required to be made.
8.2.2.3 Refer Paragraph 8.2.14.8 on guidance on liability component of
compound financial instrument. Moreover disclosure requirements as
applicable to other debt securities shall be applicable to `liability component
of compound financial instrument' under the heading `Debt securities'
8.2.2.4 Bonds or debentures (along with the rate of interest, and particulars
of redemption or conversion, as the case may be) shall be stated in
descending order of maturity or conversion, starting from earliest redemption
or conversion date, as the case may be. Where bonds/debentures are
redeemable by instalments, the date of maturity for this purpose must be
reckoned as the date on which the first instalment becomes due.
8.2.2.5 Particulars of any redeemed bonds or debentures which an NBFC
has power to reissue shall be disclosed.
8.2.2.6 Liabilities arising out of Securitisation transactions resulting into
issue of debt securities shall be classified as debt securities.
8.2.3 Borrowings (Other than Debt Securities)
Borrowings (Other than Debt Securities) shall be classified as:
(a) Term Loans
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(i) From banks
(ii) From other parties
(b) Deferred payment liabilities
(c) Loans from related parties
(d) Finance lease obligations*
(e) Liability component of compound financial instruments
(f) Loans repayable on demand
(i) From banks
(ii) From other parties
(g) Other loans (specify nature) example securitization liabilities.
*Division III to Schedule III requires finance lease obligation to be disclosed
under Borrowings; however basis the facts and circumstances of the case
the presentation may be different i.e. if it is presented as other financial
liabilities instead of Borrowings under Ind AS 116.
8.2.3.1 The borrowings should be further classified into the following
measurement categories such as:
(a) Amortised Cost,
(b) Fair value through Profit or Loss and
(c) Designated at Fair Value through Profit or Loss.
Additional disclosures of Borrowings within India and Outside India are
required to be made.
8.2.3.2 Borrowings shall further be sub-classified as secured and
unsecured. Nature of security shall be specified separately in each case.
8.2.3.3 Where borrowings have been guaranteed by directors or others, the
aggregate amount of such borrowings under each head shall be disclosed.
The word "others" used in the phrase "directors or others" would mean any
person or entity other than a director. Therefore, this is not restricted to mean
only parties related to the directors.
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8.2.3.4 Terms of repayment of term loans and other loans are also required
to be stated.
8.2.3.5 Period and amount of default as on the Balance Sheet date in
repayment of borrowings and interest shall be specified separately in each
case.
8.2.3.6 The phrase "term loan" has not been defined in Schedule III. Term
loans normally have a fixed or pre-determined maturity period and / or
repayment schedule.
8.2.3.7 Deferred payment liabilities would include any liability for which
payment is to be made on deferred credit terms. E.g. deferred payment for
acquisition of Property, Plant and Equipment, etc.
8.2.3.8 Division III to Schedule III also stipulates that the nature of security
shall be specified separately in each case. A blanket disclosure of different
securities covering all loans classified under the same head such as `All
Term loans from banks' will not suffice. However, where one security is given
for multiple loans, the same may be clubbed together for disclosure purposes
with adequate details or cross referencing.
8.2.3.9 Disclosure about the nature of security should also cover the type of
asset given as security e.g. inventories, plant and machinery, land and
building, etc. This is because the extent to which loan is secured may vary
with the nature of asset against which it is secured.
8.2.3.10 When promoters, other shareholders or any third party have given
any personal security for any borrowing, such as shares or other assets held
by them, disclosure should be made thereof, though such security does not
result in the classification of such borrowing as secured.
8.2.3.11 Division III to Schedule III requires that under the head "Borrowings,"
period and amount of default as on the Balance Sheet date, in repayment of
borrowings and interest shall be specified separately in each case. Even one
default by a company would create an obligation to disclose the period and
amount of default. Further, in line with Paragraph 18 of Ind AS 107, if there
was a default during the reporting period, an entity shall provide a disclosure
even if the default was remedied before the financial statements were
approved for issue.
8.2.3.12 The word "loan" has been used in a generic sense. Hence, the
disclosures relating to default should be made for all items listed under the
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category of borrowings such as deferred payment liabilities, lease
obligations, etc. and not only to items classified as "loans" such as term
loans, etc.
8.2.3.13 Division III to Schedule III requires separate disclosure for default,
as on the balance sheet date, in repayment of borrowings and interest but
does not require any disclosure of breaches. However, Paragraph 18 of Ind
AS 107 would require an entity to disclose those breaches made during the
reporting period, which permitted the lender to demand accelerated
repayment and, were not remedied on or before the end of the reporting
period.
8.2.3.14 Terms of repayment of term loans and other loans shall be
disclosed. The term `other loans' is used in general sense and should be
interpreted to mean all categories listed under the heading `Borrowings' as
per Division III to Schedule III. Disclosure of terms of repayment should be
made for each loan unless the repayment terms of individual loans within a
category are similar in which case these may be aggregated.
8.2.3.15 Disclosure of repayment terms should include the period of maturity
with respect to the Balance Sheet date, number and amount of instalments
due, the applicable rate of interest, other significant and relevant terms, if
any.
8.2.3.16 Loans from related parties are required to be disclosed. All the
disclosure requirements of borrowings would be applicable to such loans
from related parties.
8.2.3.17 Refer Paragraph 8.2.14.8 for guidance on liability component of
compound financial instruments. Moreover, disclosure requirements as
applicable to Other Borrowings shall be applicable to `liability component of
compound financial instruments' under the heading `Borrowings'.
8.2.3.18 Liabilities arising out of Securitisation transactions resulting into
issue of borrowings shall be classified as borrowings.
8.2.4 Deposits
8.2.4.1 Deposits shall be classified as Public Deposits, from Banks, and from
others. `Others' would also include Inter corporate deposits. Deposits should
be further classified into the following measurement categories such as:
(a) Amortised Cost,
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(b) Fair Value through Profit or Loss and
(c) Designated at Fair Value through Profit or Loss.
8.2.5 Subordinated Liabilities
Subordinated Liabilities shall be classified as:
(i) Perpetual Debt Instruments to the extent that do not qualify as equity;
(ii) Preference Shares other than those that qualify as equity;
(iii) Others (Specifying the nature and type of instrument issued).
The subordinated liabilities shall be disclosed both within and outside India.
`Others' will include those liabilities which are considered as subordinated by
the respective regulator, e.g. RBI has defined "subordinated debt" as
instrument, which is fully paid up, is unsecured and is subordinated to the
claims of other creditors and is free from restrictive clauses and is not
redeemable at the instance of the holder or without the consent of the
supervisory authority of the non-banking financial company.
Disclosures as required in respect of `debt securities' will have to be given
and also additional disclosures as required by the RBI will have to be
provided.
8.2.6 Other Financial liabilities (to be specified)
Division III to Schedule III requires presenting `Other Financial Liabilities' as
a separate line item on the face of the Balance Sheet under `Financial
Liabilities'. Items which meet the definition of financial liabilities as per Ind
AS 32 should be presented under this heading as under:
(i) Interest accrued;
(ii) Unpaid dividends;
(iii) Application money received for allotment of securities to the extent
refundable and interest accrued thereon;
(iv) Unpaid matured deposits and interest accrued thereon;
(v) Unpaid matured debentures and interest accrued thereon;
(vi) Margin money (to be specified); and
(vii) Others (specify nature)
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Items which meet the definition of financial liabilities as per Ind AS 32, like
contingent consideration, derivative contracts, financial guarantee contracts
issued, contractually reimbursable expenses etc. should be presented under
other financial liabilities.
Interest Accrued
Interest accrued on financial liabilities shall form part of their carrying amount
whether it is at amortized cost (i.e. as per effective interest method), or at fair
value. Accordingly, an entity shall not present `Interest Accrued' separately
from the related financial liability.
Offsetting a Financial Asset and a Financial Liability
In accordance with Paragraph 42 of Ind AS 32, to offset a financial asset and
a financial liability, an entity must have a currently enforceable legal right to
set off the recognised amounts and the intention to either settle on a net
basis or to realize the asset and settle the liability simultaneously.
Non-financial liabilities
8.2.7 Current Tax Liabilities
Current tax is the amount of income taxes payable (recoverable) in respect of
the taxable profit (tax loss) for a period. The tax for current and prior periods
shall, to the extent unpaid, be recognised as a liability.
If the amount already paid in respect of current and prior periods exceeds the
amount due for those periods, the excess shall be recognised as an asset.
8.2.8 Provisions
The provisions shall be classified as:
(a) Provision for employee benefits;
(b) Others (specify nature).
`Others' would include all provisions other than provisions for employee
benefits such as provision for litigation, provision for decommissioning
liabilities, loan commitments etc. These amounts should be disclosed
separately specifying nature thereof.
For loan commitments and financial guarantee contracts as per Ind AS 109
the loss allowance is recognised as a provision. An entity should disclose
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information about the changes in the loss allowance for financial assets
separately from those for loan commitments and financial guarantee
contracts. However, if a financial instrument includes both a loan (i.e.
financial asset) and an undrawn commitment (i.e. loan commitment)
component and the entity cannot separately identify the expected credit
losses on the loan commitment component from those on the financial asset
component, the expected credit losses on the loan commitment should be
recognised together with the loss allowance for the financial asset. To the
extent that the combined expected credit losses exceed the gross carrying
amount of the financial asset, the expected credit losses should be
recognised as a provision.
8.2.9 Deferred Tax Liability (Net)
Ind AS 12 requires companies to recognise deferred tax assets or liabilities
using a balance sheet approach, i.e. comparing the Ind AS carrying value of
the asset or liability to its tax base.
8.2.10 Other non-financial liabilities (to be specified)
The amounts shall be classified as:
(a) Revenue received in advance;
(b) Other advances (specify nature);
(c) Others (specify nature).
Other advances that satisfy the requirements for being classified as non-
financial liabilities should be classified under this head. The definition of the
terms `financial instruments', `financial asset', `financial liability' and `equity'
as defined in Ind AS 32 may be referred to in order to determine items that
may get classified as financial and non-financial liabilities for example,
amount received in advance. `Others' should include items under other non-
financial liabilities e.g., statutory dues payable, legal claims outstanding.
Trade Deposits and Security Deposits, which do not meet the definition of
financial instruments, should be classified as `Others' grouped under this
head. `Others' may also include liabilities in the nature of statutory dues such
as Withholding taxes, Goods and Services Tax (GST), etc.
Contract Liability
Ind AS 115 requires in case of a contract with customer, when either party
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has performed, to present a contract liability in the balance sheet. Contract
liability arises if a customer pays consideration, or an entity has a right to an
amount of consideration that is unconditional (i.e. a receivable), before the
entity transfers a good or service to the customer, the entity shall present the
contract as a contract liability when the payment is made or the payment is
due (whichever is earlier).
A company shall apply the requirements of Ind AS 1 and Ind AS 32 to
determine whether it is appropriate to offset contract assets and liabilities
against other balance sheet items (e.g., receivables).
8.2.11 Liabilities for assets held for sale
As per Paragraph 38 of Ind AS 105, the liabilities of a disposal group
classified as held for sale shall be presented separately from other liabilities
in the balance sheet. Those assets and liabilities shall not be offset and
presented as a single amount. The major classes of assets and liabilities
classified as held for sale shall be separately disclosed either in the balance
sheet or in the notes.
8.2.12 Contingent liabilities and commitments
(i) Contingent liabilities shall be classified as:
(a) Claims against the company not acknowledged as debt;
(b) Guarantees excluding financial guarantees; and
(c) Other money for which the company is contingently liable.
(ii) Commitments shall be classified as:
(a) Estimated amount of contracts remaining to be executed on
capital account and not provided for;
(b) Uncalled liability on shares and other investments partly paid
(c) Other commitments (specify nature)
The provisions of Ind AS-37 Provisions, Contingent Liabilities and Contingent
Assets, will be applied for determining contingent liabilities.
8.2.12.1 Division III to Schedule III requires guarantees other than financial
guarantees to be disclosed as a part of contingent liabilities, since financial
guarantees are recognized on the balance sheet in accordance with Ind AS
109. Ind AS 107 specifies certain disclosure in respect of the exposure to
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credit risk on financial guarantee contracts as a part of the disclosures on
`credit risk exposures', which an entity should provide in its Notes to
Accounts.
Where a company undertakes to perform its own obligations, and for this
purpose issues, what is called a "guarantee", it does not represent a
contingent liability and it is misleading to show such items as contingent
liabilities in the Balance Sheet. For various reasons, it is customary for
guarantees to be issued by Bankers e.g. for payment of insurance premium,
deferred payments to foreign suppliers, letters of credit, etc. For this
purpose, the company issues a "counter-guarantee" to its Bankers. Such a
"counter-guarantee" is not really a guarantee at all, but is an undertaking to
perform what is, in any event, the obligation of the company, namely, to pay
the insurance premium when demanded or to make deferred payments when
due. Hence, such performance guarantees and counter guarantees should
not be disclosed as contingent liabilities.
8.2.12.2 Division III to Schedule III also requires disclosures pertaining to
various commitments such as capital commitments not provided for and
uncalled liability on shares. It also requires disclosures pertaining to `Other
commitments', with specification of nature thereof.
8.2.12.3 The word `commitment' has not been defined in Schedule III. The
Guidance Note on Terms Used in Financial Statements issued by ICAI
defines `Capital Commitment' as future liability for capital expenditure in
respect of which contracts have been made. Hence, drawing inference from
that definition, the term `commitment' would simply imply future liability for
contractual expenditure. Accordingly, the term `Other commitments' would
include all expenditure related to contractual commitments apart from capital
commitments such as employee contracts, lease commitments, etc.
However, the disclosure of all contractual commitments should be made
bearing in mind the overarching principle under Note 4(ii) in General
Instructions for Preparation of Financial Statements that "a balance shall be
maintained between providing excessive detail that may not assist users of
Financial Statements and not providing important information as a result of
too much aggregation."
8.2.12.4 Disclosures relating to lease commitments are required to be
disclosed as per Ind AS-116 Leases, for example short term leases as per
Paragraph 55 of Ind AS 116.
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8.2.12.5 Accordingly, the disclosures required to be made for `other
commitments' should include only those non-cancellable contractual
commitments (i.e. cancellation of which will result in a penalty
disproportionate to the benefits involved) based on the professional
judgement of the management which are material and relevant in
understanding the Financial Statements of the company and impact the
decision making of the users of Financial Statements. Examples may include
commitments in the nature of buy-back arrangements, commitments to fund
subsidiaries and associates, non-disposal of investments in subsidiaries and
undertakings, derivative related commitments, etc. Care should be taken to
ensure that items that are to be reflected as liabilities under Ind AS do not
get disclosed under this head and appropriate disclosure required by Ind AS
should be complied with.
8.2.12.6 Division III to Schedule III 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.
Though, the Act prohibits issue of irredeemable preference shares, Division
III to Schedule III requires separate disclosure of the arrears of fixed
cumulative dividends on irredeemable preference shares. The term
`irredeemable' is used in the context of compulsorily convertible preference
shares rather than in the context of perpetual preference shares which are
neither convertible nor redeemable. Ind AS-10 Events after the Reporting
Period, requires that dividends 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 not be adjusted but should be disclosed in accordance with Ind AS-1
Presentation of Financial Statements .
Division III to Schedule III requires that where, in respect of an issue of
securities made for a specific purpose, the whole or part of the amount has
not been used for the specific purpose at the Balance Sheet date, then the
company shall indicate by way of note, how such unutilized amounts have
been used or invested.
8.2.13 Equity
Under this head, following line items are to be disclosed on the face of the
Balance Sheet:
· Equity Share Capital and
· Other Equity;
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Division III to Schedule III, Part I Format of Balance Sheet, includes not
only the format of Balance Sheet but also includes a `Statement of Changes
in Equity' comprising (A) Equity Share Capital and (B) Other Equity.
Presentation and Disclosures for both of these are included in Note (S) and
(T) to General Instructions for Preparation of Balance Sheet.
In the Statement of Changes in Equity, the portion for `Equity Share Capital'
provides reconciliation of:
(a) Balance at the beginning of the reporting period;
(b) Changes in equity share capital during the year;
(c) Balance at the end of the reporting period.
As a part of Statement of Changes in Equity, the portion for `Other Equity'
requires an entity to provide a reconciliation during a particular reporting
period, as a part of one single statement, of all items other than equity share
capital, that are attributable to the holders of equity instruments of an entity.
The items included in columnar form are listed below:
(a) Share application money pending allotment;
(b) Equity component of compound financial instruments;
(c) Reserves and Surplus:
(i) Capital Reserve;
(ii) Securities Premium;
(iii) Other Reserves (specify nature);
(iv) Retained Earnings;
(d) Debt instruments at fair value through other comprehensive income;
(e) Equity instruments at fair value through other comprehensive income;
(f) Effective portion of Cash Flow Hedges;
(g) Revaluation Surplus;
(h) Exchange differences on translating the financial statements of a
foreign operation;
(i) Other items of other comprehensive income (specify nature);
(j) Money received against share warrants;
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(k) Non-controlling interests (for Statement of Changes in Equity of
Consolidated Financial Statements)
The reconciliation of above line items needs to be provided by way of the
following line items:
(i) Balance at the beginning of the reporting period;
(ii) Changes in accounting policy or prior period errors;
(iii) Restated balance at the beginning of the reporting period;
(iv) Total comprehensive income for the year;
(v) Dividends;
(vi) Transfer to retained earnings;
(vii) Any other change (to be specified);
(viii) Balance at the end of the reporting period.
Reconciliation as described in Paragraph 109 of Ind AS 1 provides that,
"changes in an entity's equity between the beginning and the end of the
reporting period reflect the increase or decrease in its net assets during the
period. Except for changes resulting from transactions with owners acting in
their capacity as owners (such as equity contributions, reacquisitions of the
entity's own equity instruments and dividends) and transaction costs directly
related to such transactions, the overall change in equity during a period
represents the total amount of income and expenses, including gains and
losses, generated by the entity's activities during that period."
8.2.14. Equity Share Capital
8.2.14.1 Notes to the General Instructions for Preparation of Balance Sheet
require a company to disclose in the Notes items referred to in Note (S).
Such disclosures are required for each class of equity share capital. The
disclosure requirements for share capital are common under Non-Division III
to Schedule III as well as Division III to Schedule III. However, Division III
restricts the disclosures to `Equity' while Division I makes it applicable to all
kinds of `Share Capital' but states an exception that different classes of
preference shares are to be treated separately.
8.2.14.2 As per ICAI Guidance Note on Terms Used in Financial
Statements, `Capital' refers "to the amount invested in an enterprise by its
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owners e.g. paid-up share capital in a corporate enterprise. It is also used to
refer to the interest of owners in the assets of an enterprise."
8.2.14.3 The said Guidance Note defines `Share Capital' as the "aggregate
amount of money paid or credited as paid on the shares and/or stocks of a
corporate enterprise."
8.2.14.4 Section 2(84) of the Act defines "share" as "a share in the share
capital of a company and includes stock". While, section 2(30) of the Act
defines "debenture" to "include debenture stock, bonds or any other
instrument of a company evidencing a debt, whether constituting a charge on
the assets of the company or not". Further, section 43 of the Act gives two
kinds of share capital of a company limited by shares viz.,
(a) Equity share capital;
(b) Preference share capital.
8.2.14.5 On the other hand, Ind AS 32 defines an equity instrument as "any
contract that evidences a residual interest in the assets of an entity after
deducting all of its liabilities". The accounting definition of `Equity' is principle
based as compared to the legal definition of `Equity' or `Share', such that any
contract that evidences residual interest in an entity's net assets is termed as
`Equity' irrespective of whether it is legally recognized as a `Share' or not.
Accordingly, all instruments (including convertible preference shares and
convertible debentures) that meet the definition of `Equity' as per Ind AS 32
in its entirety and when they do not have any component of liability, should
be considered as having the nature of `Equity' for the purpose of Division III
to Schedule III. Such instruments shall be termed as `Instruments entirely
equity in nature'.
As per Paragraph 11 of Ind AS 32 "The issuer of a financial instrument shall
classify the instrument, or its component parts, on initial recognition as a
financial liability, a financial asset or an equity instrument in accordance with
the substance of the contractual arrangement and the definitions of a
financial liability, a financial asset and an equity instrument." A preference
share, for example, may display either equity or liability characteristics
depending on the substance of the rights attaching to it.
8.2.14.6 Instruments entirely equity in nature, may be presented as a
separate line item on the face of the Balance Sheet under `Equity' after
`Equity Share Capital' but before `Other Equity', as shown below:
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Name of the Company..........
Balance Sheet as at...............
(Rupees in.............)
Particulars Note Figures Figures
No. as at the as at the
end of end of
current previous
reporting reporting
period period
EQUITY AND LIABILITIES
Equity
(a) Equity Share Capital
(b) Instruments entirely equity in
nature
(c) Other Equity
In the Statement of Changes in Equity, the reconciliation for instruments
entirely equity in nature should be presented as below:
STATEMENT OF CHANGES IN EQUITY
Name of the Company.......................
Statement of Changes in Equity for the period ended....................
(Rupees in...............)
A. Equity Share Capital
Balance at the Changes in equity Balance at the end of
beginning of the share capital during the reporting period
reporting period the period
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B. Instruments entirely equity in nature *
(a) Compulsorily Convertible Preference Shares
Balance at the Changes in Balance at the end of
beginning of the compulsorily the reporting period
reporting period convertible preference
shares during the
period
(b) Compulsorily Convertible Debentures
Balance at the Changes in Balance at the end of
beginning of the compulsorily the reporting period
reporting period convertible debentures
during the period
(c) [Instrument] (Any other instrument entirely equity in nature)
Balance at the Changes in Balance at the end of
beginning of the [Instrument] during the the reporting period
reporting period period
C. Other Equity
[Table providing reconciliation of Other Equity]
* It is assumed that Instruments entirely equity in nature have such terms and
conditions that qualify them for being entirely equity in nature based on the
criteria given in Paragraph 16 of Ind AS 32. It is assumed that Compulsorily
Convertible Preference Shares and Compulsorily Convertible Debentures in
the above illustrative disclosure qualify for classification as entirely equity;
however, companies should assess terms and conditions specific to their
instruments for deciding whether they are entirely equity in nature.
All the disclosures as required by Note (S) to General Instructions in
Preparation of Balance Sheet shall be provided for all instruments entirely
equity in nature, to the extent applicable.
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8.2.14.7 Premium received on Compulsorily Convertible Preference Shares
which are entirely equity in nature shall be classified and presented as a part
of `Other Equity' under `Securities Premium'.
8.2.14.8 As per Paragraph 28 of Ind AS 32, "The issuer of a non-derivative
financial instrument shall evaluate the terms of the financial instrument to
determine whether it contains both a liability and an equity component. Such
components shall be classified separately as financial liabilities, financial
assets or equity instruments in accordance with paragraph 15" . Hence, all
those compound financial instruments which have both `Equity' and `Liability'
components, shall be split and their `Equity component' shall be presented
under `Other Equity' portion of Statement of Changes in Equity while their
`Liability component' shall be presented as a separate line item under either
`Debt Securities' or `Borrowings'.
8.2.14.9 Division III to Schedule III, Notes 3 and 4 of Other Classification
related General Instructions highlight that the disclosure and presentation
requirements as applicable to the relevant class of `Equity' or `Liability' shall
be applicable mutatis mutandis to the instruments (including, their
components) classified and presented under the relevant heads in `Equity'
and `Liabilities'. Accordingly, it is recommended that the companies provide
all the relevant disclosures for `Equity component of a compound financial
instruments' as applicable to `Equity Share Capital' (given in Note (S) of
General Instructions for Preparation of Balance Sheet), to the extent
applicable. An example could be to disclose, for equity component of a
compound financial instrument, terms as per Clause (j) i.e. terms of any
securities convertible into equity shares issued along with the earliest date of
conversion in descending order starting from the farthest such date, etc. For
the liability component of compound financial instruments, all the disclosures
applicable to `Debt Securities' and `borrowings' (refer Paragraph 8.2.2 and
8.2.3) shall be made, to the extent applicable. An example could be to
disclose the rate of interest, particulars of redemption or conversion stated in
descending order of maturity or conversion, etc. However, for those
instruments which are entirely liability in nature, all disclosures applicable to
`Borrowings' or `Debt Securities' should be made.
8.2.14.10 Clause (a) of Note (S) - the number and amount of shares
authorized:
As per the Guidance Note on Terms Used in Financial Statements,
`Authorised Share Capital' means "the number and par value, of each class
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of shares that an enterprise may issue in accordance with its instrument of
incorporation. This is sometimes referred to as nominal share capital."
This disclosure is to be provided for instruments entirely equity in nature as
well as for compound instruments that have an equity component, to the
extent applicable.
8.2.14.11 Clause (b) of Note (S) - the number of shares issued,
subscribed and fully paid, and subscribed but not fully paid:
The disclosure is for shares:
· Issued;
· Subscribed and fully paid;
· Subscribed but not fully paid.
Though the disclosure is only for the number of shares under each of the
above three categories, to make the disclosure relevant to understanding the
company's share capital, even the amount for each category above should
be disclosed. Issued shares are those which are offered for subscription
within the authorised limit. It is possible that all shares offered are not
subscribed to and to the extent of unsubscribed portion, there will be
difference between shares issued and subscribed. As per the Guidance Note
on Terms Used in Financial Statements, the expression `Subscribed Share
Capital' is "that portion of the issued share capital which has actually been
subscribed and allotted. This includes any bonus shares issued to the
shareholders."
Though there is no requirement to disclose the amount per share called, if
shares are not fully called, it should be appropriate to state the amount per
share called.
As per the definition contained in the Guidance Note on Terms Used in
Financial Statements, the expression ` Paid-up Share Capital' is "that part of
the subscribed share capital for which consideration in cash or otherwise has
been received. This includes bonus shares allotted by the corporate
enterprise."
This disclosure is to be provided for instruments entirely equity in nature as
well as for compound instruments that have an equity component, to the
extent applicable.
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8.2.14.12 Clause (c) of Note (S) par value per share:
Par value per share is the face value of a share as indicated in the Capital
Clause of the Memorandum of Association of a company. It is also referred
to as `face value' per share. In the case of a company having share capital,
(unless the company is an unlimited company), the Memorandum shall also
state the amount of share capital with which the company is registered and
their division thereof into shares of fixed amount as required under clause
(e)(i) to the sub-section (1) of section 4 of the Act. In the case of a company
limited by guarantee, Memorandum shall state that each member undertakes
to contribute to the assets of the company in the event of winding-up while
he is a member or within one year after he ceases to be a member, for
payment of debts and liabilities of the company, as the case may be. There is
no specific mention for the disclosure by companies limited by guarantee and
having share capital, and companies limited by guarantee and not having
share capital. Such companies need to consider the requirement so as to
disclose the amount each member undertakes to contribute as per their
Memorandum of Association.
This disclosure is to be provided for instruments entirely equity in nature as
well as for compound instruments that have an equity component, to the
extent applicable.
8.2.14.13 Clause (d) of Note (S) a reconciliation of the number of
shares outstanding at the beginning and at the end of the reporting
period:
As per Division III to Schedule III, opening number of shares outstanding,
shares issued, shares bought back, other movements, etc. during the year
and closing number of outstanding shares should be shown. Though the
requirement is only for a reconciliation of the number of shares, as given for
the disclosure of issued, subscribed capital, etc. [Clause (b) of Note (S)]
above, to make the disclosure relevant for understanding the company's
share capital, the reconciliation is to be given even for the amount of share
capital. Reconciliation for the comparative previous period is also to be
given. Further, the above reconciliation should be disclosed separately for
each class of Equity Shares issued.
This disclosure is to be provided for instruments entirely equity in nature.
Also, for compound instruments having both equity and liability components,
the reconciliation should be given for total number of shares / debentures
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outstanding, which will facilitate understanding the movement of compound
instruments upon either redemption or conversion or when both occur partly.
8.2.14.14 Clause (e) of Note (S) the rights, preferences and restrictions
attaching to each class of shares including restrictions on the
distribution of dividends and the repayment of capital:
As per the Guidance Note on Terms Used in Financial Statements, the
expression `Preference Share Capital' means "that part of the share capital of
a corporate enterprise which enjoys preferential rights in respect of payments
of fixed dividend and repayment of capital. Preference shares may also have
full or partial participating rights in surplus profits or surplus capital." The
rights, preferences and restrictions attached to shares are based on the
classes of shares, terms of issue, etc., whether equity or preference. In
respect of Equity Share Capital, it may be with voting rights or with
differential voting rights as to dividend, voting or otherwise in accordance
with such rules and subject to such conditions as may be prescribed under
Companies (Share Capital and Debentures) Rules, 2014. In respect of
Preference Shares, the rights include (a) with respect to dividend, a
preferential right to be paid a fixed amount or at a fixed rate and, (b) with
respect to capital, a preferential right of repayment of amount of capital on
winding up. For Compulsorily Convertible Debentures, the rights could be
with the holder to convert into Equity Shares.
This disclosure is to be provided for instruments entirely equity in nature as
well as for compound instruments that have an equity component, to the
extent applicable.
8.2.14.15 Clause (f) of Note (S) 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:
The requirement is to disclose shares of the company held by -
· Its holding company;
· Its ultimate holding company;
· Subsidiaries of its holding company;
· Subsidiaries of its ultimate holding company;
· Associates of its holding company; and
· Associates of its ultimate holding company.
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Aggregation should be done for each of the above categories.
The terms `subsidiary' and `associate' should be understood as defined
under Ind AS 110 and Ind AS 28. The term `holding company' is not defined
in Ind AS, therefore, it may be referred from the definition as per Section 2
(46) of the Act. The equivalent term `parent' is defined in Ind AS 110.
Notwithstanding the aforesaid definitions, for the purposes of the above
disclosures, shares held by the entire chain of subsidiaries and associates
starting from the holding company and going right up to the ultimate holding
company would have to be disclosed.
In case of a joint arrangement viz., a joint venture or a joint operation
conducted through a separate legal entity, disclosure may be made for
shares of such joint arrangement held by its venturers.
This disclosure is to be provided for instruments entirely equity in nature, to
the extent applicable.
8.2.14.16 Clause (g) of Note (S)shares in the company held by each
shareholder holding more than 5 percent shares specifying the number
of shares held:
In the absence of any specific indication of the date of holding, the date for
computing such percentage should be taken as the Balance Sheet date. For
example, if during the year, any shareholder held more than 5% Equity
shares but does not hold as much at the Balance Sheet date, disclosure is
not required. Though it is not specified as to whether the disclosure is
required for each class of shares or not, companies should disclose the
shareholding for each type of Equity Instruments. Accordingly, such
percentage should be computed separately for each class of shares
outstanding within Equity Shares. This information should also be given for
the comparative previous period.
This disclosure is to be provided for instruments entirely equity in nature, to
the extent applicable.
8.2.14.17 Clause (h) of Note (S) shares reserved for issue under
options and contracts or commitments for the sale of shares or
disinvestment, including the terms and amounts:
Shares under options generally arise under promoters or collaboration
agreements, loan agreements or debenture deeds (including convertible
debentures), agreement to convert preference shares into equity shares,
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ESOPs or contracts for supply of capital goods, etc. The disclosure would be
required for the number of shares, amounts and other terms for shares so
reserved. Such options are in respect of unissued portion of share capital.
This disclosure is to be provided for instruments entirely equity in nature as
well as for compound instruments that has an equity component and liability
component, to the extent applicable.
8.2.14.18 Clause (i) of Note (S) For the period of five years
immediately preceding the date as at which the Balance Sheet is
prepared: (a) Aggregate number and class of shares allotted as fully
paid up pursuant to contract(s) without payment being received in cash.
(b) Aggregate number and class of shares allotted as fully paid up by
way of bonus shares. (c) Aggregate number and class of shares bought
back:
(a) Aggregate number and class of shares allotted as fully paid up
pursuant to contract(s) without payment being received in cash.
The following illustrate the allotments which are considered as shares
allotted for payment being received in cash and not as without
payment being received in cash and accordingly, the same are not to
be disclosed under this Clause:
(i) If the subscription amount is adjusted against a bona fide debt
payable in money at once by the company;
(ii) Conversion of loan into shares in the event of default in
repayment.
(b) Aggregate number and class of shares allotted as fully paid up by way
of bonus shares.
As per the Guidance Note on Terms Used in Financial Statements,
`Bonus shares' are defined as shares allotted by capitalisation of the
reserves or surplus of a corporate enterprise. The requirement of
disclosing the source of bonus shares is omitted in Schedule III.
(c) Aggregate number and class of shares bought back.
The total number of shares bought back for each class of shares
needs to be disclosed.
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All the above details pertaining to aggregate number and class of shares
allotted for consideration other than cash, bonus shares and shares bought
back need to be disclosed only if such event has occurred during a period of
five years immediately preceding the Balance Sheet date. Since disclosure is
for the aggregate number of shares, it is not necessary to give the year-wise
break-up of the shares allotted or bought back, but the aggregate number for
the last five financial years needs to be disclosed.
This disclosure is to be provided for instruments entirely equity in nature, to
the extent applicable.
8.2.14.19 Clause (j) of Note (S) Terms of any securities convertible into
equity/preference shares issued along with the earliest date of
conversion in descending order starting from the farthest such date:
Under this Clause, disclosure is required for any security, when it is either
convertible into equity or preference shares. In this case, terms of such
securities and the earliest date of conversion are required to be disclosed. If
there are more than one date of conversion, disclosure is to be made in the
descending order of conversion. If the option can be exercised in different
periods then earlier date in that period is to be considered. In case of
compulsorily convertible securities, where conversion is done in fixed
tranches, all the dates of conversion have to be considered. Terms of
convertible securities are required to be disclosed under this Clause.
However, in case of Convertible debentures/bonds, etc., for the purpose of
simplification, reference may also be made to the terms disclosed under the
note on borrowings where these are required to be classified in the Balance
Sheet, rather than disclosing the same again under this clause.
This disclosure is to be provided for instruments entirely equity in nature and
compound instruments that have an equity component and a liability
component. In other words, this disclosure is not required for instruments
entirely liability in nature (for e.g., those instruments which entirely meet the
definition of a financial liability as per Paragraph 11 of Ind AS 32) since
similar disclosure needs to be provided as a part of `Borrowings'.
Accordingly, duplication of disclosures is not intended.
8.2.14.20 Clause (k) of Note (S) - Calls unpaid (showing aggregate value
of calls unpaid by directors and officers):
A separate disclosure is required for the aggregate value of calls unpaid by
directors and also officers of the company.
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However, the unpaid amount towards shares subscribed by the subscribers
of the Memorandum of Association should be considered as 'subscribed and
paid-up capital' in the Balance Sheet and the debts due from the subscriber
should be appropriately disclosed as an asset in the balance sheet.
This disclosure is to be provided for instruments entirely equity in nature, to
the extent applicable.
8.2.14.21 Clause (m) of Note (S) - An NBFC shall disclose information
that enables users of its financial statements to evaluate the NBFC's
objectives, policies and processes for managing capital.
Paragraph 134 of Ind AS 1 also requires an entity to disclose information that
enables users of its financial statements to evaluate the entity's objectives,
policies and processes for managing capital. Hence guidance as stated in
Paragraph 135 and 136 of Ind AS 1 may be referred upon for this disclosure.
8.2.15 Other Equity
Note (T) of the General Instructions for Preparation of Balance Sheet deals
with the disclosures of "Other Equity" in the Notes. Disclosure should be
made for the nature and amount of each item.
Disclosures in `Other Equity' are required to be made for the following:
(i) Share application money pending allotment
Share Application money pending allotment is to be disclosed as a
separate line item under Other Equity. Note 2 of Other Classification
related General Instructions states that share application money
pending allotment shall be classified into equity or liability in
accordance with relevant Ind AS. Share application money to the
extent not refundable shall be shown in this line item and share
application money to the extent refundable shall be separately shown
under `other financial liabilities'.
(ii) Equity component of compound financial instruments
For compound financial instruments that have both equity as well as
liability component, Ind AS 32 requires splitting the two components
and separately recognizing `equity component of compound financial
instrument'. Such equity component is required to be presented as a
part of `Other Equity' under this head. On the other hand, the `liability
component of compound financial instrument' is required to be
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presented as a part of `Borrowings' (refer Paragraph 8.2.3.). For
recommended disclosures for equity component of compound financial
instruments, refer to the guidance given in Paragraph 8.2.14.8.
(iii) Reserves and Surplus these shall be further disclosed as (discussed
in Paragraph 8.2.15.1):
(a) Capital Reserve;
(b) Securities Premium;
(c) Other Reserves
(i) Capital Redemption Reserve;
(ii) Debenture Redemption Reserve;
(iii) Share Options Outstanding Account;
(iv) Statutory Reserves;
(v) Others (specify the nature and purpose of each reserve
and the amount in respect thereof);
(d) Retained Earnings.
(iv) Debt Instruments through Other Comprehensive Income
As per Ind AS 109, investments are subsequently measured at FVOCI
based on the company's business model for managing the portfolio of
debt instruments as well as the debt instruments' contractual cash flow
characteristics. Any fair value gain or loss on debt instruments
measured at FVOCI is presented as a part of Other Equity under this
heading until the debt instrument is derecognized;
(v) Equity Instruments through Other Comprehensive Income
As per Ind AS 109, companies have an option to designate
investments in equity instruments to be measured at FVOCI. For such
instruments, the cumulative fair value gain or loss is presented as a
part of Other Equity under this heading;
(vi) Effective portion of Cash Flow Hedges
For all qualifying cash flow hedges, this component of Other Equity
associated with the hedged item (i.e. cash flow hedge reserve) is
adjusted to the lower of the cumulative change in the fair value of the
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hedging instrument and the cumulative change in the fair value of the
hedged item attributable to the hedged risk. The portion of the gain or
loss on the hedging instrument that is determined to be an effective
hedge (i.e. the portion that is offset by the change in the cash flow
hedge reserve) is recognized in Other Comprehensive Income. Also,
Ind AS 109 requires that exchange differences on monetary items that
qualify as hedging instruments in a cash flow hedge are recognized
initially in other comprehensive income to the extent that the hedge is
effective;
(vii) Revaluation Surplus
As per Ind AS 16 and Ind AS 38, if an asset's carrying amount is
increased as a result of revaluation, the increase shall be recognized
in other comprehensive income and accumulated in equity under the
heading of revaluation surplus. However, such increase shall be
recognized in profit or loss to the extent that it reverses a revaluation
decrease of the same asset previously recognized in profit or loss.
Correspondingly, decreases as a result of revaluation are recognized
in other comprehensive income thereby reducing the amount
accumulated under this heading of revaluation surplus, to the extent of
any credit balance existing in the revaluation surplus in respect of that
asset.
(viii) Exchange differences on translating the Financial Statements of a
foreign operation
In accordance with Ind AS 21 The Effects of Changes in Foreign
Exchange Rates, the exchange differences arising on translation of the
financial statements of foreign operation from functional currency to
presentation currency needs to be included in this head of OCI.
(ix) Other items of Other Comprehensive Income (specific nature)
Any other items that need to be presented in Other Comprehensive
Income as per the relevant Ind AS shall be included under this head of
Other Comprehensive Income.
Refer Paragraph 8.2.15.3. for guidance on presentation of `re-
measurement of defined benefit plans'.
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(x) Money received against share warrants
Generally, in case of listed companies, share warrants are issued to
promoters and others in terms of the Guidelines for preferential issues
viz., SEBI (Issue of Capital and Disclosure Requirements), Guidelines,
2009. Ind AS 33, Earnings per Share, defines `warrants' as "financial
instruments which give the holder the right to acquire equity shares".
Thus, effectively, warrants are nothing but the amount which would
ultimately form part of the Shareholders' funds. Since shares are yet to
be allotted against the same, these are not reflected as part of Share
Capital but as a separate line item `Money received against share
warrants.'
8.2.15.1 Reserves & Surplus:
Ind AS 103, Appendix C on Business Combinations under Common Control
defines the term `Reserve' as "the portion of earnings, receipts or other
surplus of an entity (whether capital or revenue) appropriated by the
management for a general or a specific purpose other than a provision for
depreciation." `Reserves' should be distinguished from `provisions'. For this
purpose, reference may be made to the definition of the term `provision' in
Ind AS 37 Provisions, Contingent Liabilities and Contingent Assets.
As per Ind AS 37, a `provision' is "a liability of uncertain timing or amount". A
`liability' is "a present obligation of the entity arising from past events, the
settlement of which is expected to result in an outflow from the entity of
resources embodying economic benefits." `Present obligation' "an
obligation is a present obligation if, taking account of all available evidence, it
is more likely than not that a present obligation exists at the end of the
reporting period".
(a) Capital Reserves:
It is necessary to make a distinction between capital reserves and revenue
reserves in the accounts. A revenue reserve is a reserve which is available
for distribution. The term "Capital Reserve" has not been defined under
Division III to Schedule III. However, as per the Guidance Note on Terms
Used in Financial Statements, the expression `capital reserve' is defined as
"a reserve of a corporate enterprise which is not available for distribution as
dividend". Though Division III to Schedule III does not have the requirement
of "transferring capital profit on reissue of forfeited shares to capital reserve",
since profit on re-issue of forfeited shares is basically transaction with the
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shareholders / owners of the entity, it should be recognized in equity as a
credit to Capital Reserve.
A gain on bargain purchase arising in a business combination where clear
evidence of the underlying reasons does not exist, shall be recognized
directly in equity as Capital Reserve as per Paragraph 36 of Ind AS 103.
Further as per Paragraph 34 of Ind AS 103 where clear evidence of the
underlying reasons exists the acquirer shall recognise the resulting gain in
other comprehensive income on the acquisition date and accumulate the
same in equity as capital reserve.
(b) Securities Premium:
The Guidance Note of Terms Used in Financial Statements defines `Share
Premium' as "the excess of the issue price of shares over their face value."
Other Reserves (specify the nature and purpose of reserve and the
amount in respect thereof):
Every other reserve which is not covered in above paragraphs is to be
reflected as `Other Reserves'. However, since the nature, purpose and the
amount are to be shown, each reserve under `Other Reserves' is to be
shown separately in Notes to Accounts. This would include e.g., reserves to
be created under other statutes.
(i) Capital Redemption Reserve:
Under the Act, Capital Redemption Reserve is required to be created
in the following two situations:
(a) Under the provisions of Section 55 of the Act, where the
redemption of preference shares is out of profits, an amount
equal to nominal value of shares redeemed is to be transferred
to a reserve called `capital redemption reserve'.
(b) Under Section 69 of the Act, if the buy-back of shares is out of
free reserves, the nominal value of the shares so purchased is
required to be transferred to capital redemption reserve from
distributable profit.
(ii) Debenture Redemption Reserve:
According to Section 71 of the Act where a company issues
debentures, it is required to create a debenture redemption reserve for
the redemption of such debentures. The company is required to credit
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adequate amounts, out of its profits every year to debenture
redemption reserve, until such debentures are redeemed.
On redemption of the debentures for which the reserve is created, the
amounts no longer necessary to be retained in this account need to be
transferred to the Retained Earnings. The Ministry of Corporate Affairs
on 19th August 2019 has amended the Companies (Share Capital &
Debentures) Rules by removing Debenture Redemption Reserve
requirement for Listed Companies, NBFCs and HFCs.
(iii) Share Options Outstanding Account:
Division III to Schedule III requires Share Options Outstanding
Account to be shown as a part of `Reserves and Surplus' under `Other
Reserves'.
(iv) Statutory Reserves:
Division III to Schedule III requires Statutory Reserves to be shown as
a part of `Reserves and Surplus' under `Other Reserves'. For instance,
Section 29C (i) of The National Housing Bank Act, 1987 defines that
every housing finance institution which is a Company shall create a
reserve fund and transfer therein a sum not less than twenty percent
of its net profit every year as disclosed in the statement of profit and
loss before any dividend is declared. For this purpose, any special
reserve created by the Company under Section 36(1) (viii) of Income
tax Act 1961, is considered to be an eligible transfer.
Similarly, section 45-IC of Reserve Bank of India Act, 1934 requires
every non-banking financial company to create a reserve fund to
transfer a sum not less than twenty per cent of its net profit every year
as disclosed in the profit and loss account and before any dividend is
declared.
Thus, the amounts transferred to such reserve and the nature and
purpose of the reserve shall be disclosed.
(c) Additions and deductions since the last Balance Sheet to be
shown under each of the specified heads:
This requires the company to disclose the movement in each of the reserves
and surplus since the last Balance Sheet.
Further, as per Division III to Schedule III, a reserve specifically represented
by earmarked investments shall disclose the fact that it so represented.
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(d) Debit balance of Statement of Profit and Loss and negative
balance of Other Equity:
Debit balance of Statement of Profit and Loss which would arise in case of
accumulated losses, is to be shown as a negative figure under the head
`Retained Earnings'. The aggregate amount of the balance of `Other Equity',
is to be shown after adjusting negative balance of retained earnings, if any. If
the net result is negative, the negative figure is to be shown under the head
`Other Equity'.
8.2.15.2 Gain/Loss on changes in the proportion held by non-
controlling interests
Ind AS 110, Paragraph B96 requires that an entity shall recognize directly in
`Equity' any difference between the amount by which the non-controlling
interests are adjusted and the fair value of the consideration paid or
received, and attribute it to the owners of the parent.
Ind AS 1, Paragraph 106(d)(iii) requires that for each component of equity, a
reconciliation between the carrying amount at the beginning and the end of
the period, separately disclosing changes resulting from changes in
ownership interests in subsidiaries that do not result in a loss of control, shall
be made.
For such difference, which is a gain / loss on changes in the proportion held
by non-controlling interests, Ind AS does not specify whether such gain / loss
should be presented separately under `Capital Reserve' or under `Other
Reserves'. Division III to Schedule III also does not specify anything in this
regard. An entity may present such gain / loss separately as `Gain/Loss on
change in proportion held by NCI' shown under `Other Reserves' by
specifying the nature.
8.2.15.3 Reconciliation of items in Other Equity
Reconciliations for each component of other equity are required to be made
in the following manner (to the extent applicable):
(i) Balance at the beginning of the reporting period
(ii) Changes in accounting policy or prior period error
(iii) Restated balance at the beginning of the reporting period
(iv) Total Comprehensive Income for the year
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(v) Dividends
(vi) Transfer to retained earnings
(vii) Any other change (to be specified)
(viii) Balance at the end of reporting period
Apart from the above items, Division III to Schedule III requires that:
· Re-measurement of defined benefit plans; and
· Fair value changes relating to own credit risk of financial liabilities
designated at fair value through profit or loss,
shall be recognised as a part of retained earnings with separate disclosure of
such items along with the relevant amounts in the Notes.
Ind AS 19 requires that re-measurements of the net defined benefit liability
(asset) recognized in other comprehensive income shall not be reclassified to
profit or loss in a subsequent period. However, the entity may transfer those
amounts recognized in other comprehensive income within equity.
Division III to Schedule III requires `re-measurements of defined benefit
plans' during the reporting period to be shown as a separate line item in
other comprehensive income. (Refer Paragraph 10.2)
As per Division III to Schedule III requirement mentioned above, such re-
measurements of defined benefit plans, when accumulated at the end of
every reporting period, shall be recognized as a part of retained earnings
with separate disclosure of this item along with the relevant amounts in the
Notes to Accounts.
Accordingly, a company shall present the accumulated re-measurements of
defined benefit plans at the end of each reporting period as a part of retained
earnings.
8.3 Regulatory Deferral Account Balances
Regulatory Deferral Account Balances are defined in Ind AS 114 as those
arising when an entity provides goods or services to customers at a price or
rate that is subject to rate regulation.
Note 5 of Other Classification Related General Instructions requires
Regulatory Deferral Account Balances to be presented in the Balance Sheet
in accordance with the relevant Ind AS.
Accordingly, as per Ind AS 114, the separate line items for the totals of all
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regulatory deferral account debit balances and the totals of all regulatory
deferral account credit balances shall be distinguished from the assets and
liabilities that are presented in accordance with other Standards by the use of
sub-totals, which are drawn before the regulatory deferral account balances
are presented.
8.4 Presentation of earlier comparative period
Note 1 to Other Classification Related General Instructions states that when
a company applies an accounting policy retrospectively or makes a
restatement of items in the financial statements or when it reclassifies items
in its financial statements, the company shall attach to the Balance Sheet, a
Balance Sheet as at the beginning of the earliest comparative period
presented.
Similar requirement is also in Paragraph 40A of Ind AS 1, which requires an
entity to present a third balance sheet as at the beginning of the preceding
period in addition to the minimum comparative financial statements required
if:
(a) An entity applies an accounting policy retrospectively, makes a
retrospective restatement of items in its financial statements or
reclassifies items in its financial statements; and
(b) The retrospective application, retrospective restatement or the
reclassification has a material effect on the information in the balance
sheet at the beginning of the preceding period.
9. Part II Statement of Profit and Loss and Notes
General Instructions for Preparation of Statement of Profit
and Loss: Notes 1 to 10
Part II deals with disclosures relating to the Statement of Profit and Loss.
The format prescribed is the vertical form wherein disclosures for revenues
and expenses have been given in various line items. Part II contains items I
to XVIII which lists items of Revenue, Expenses, Profit / (Loss) and Other
Comprehensive Income. "General Instructions for Preparation of Statement
of Profit and Loss" govern the other disclosures and presentation aspects
related to the Statement of Profit and Loss.
As per Note 1 of "General Instructions for Preparation of Statement of Profit
and Loss", the provisions of this part also apply to the income and
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expenditure account referred to in sub-clause (ii) of clause (40) of section 2
of the Act in the same manner as they apply to a Statement of Profit and
Loss.
As per Note 2 of "General Instructions for Preparation of Statement of Profit
and Loss", the Statement of Profit and Loss shall include:
(1) Profit or loss for the period;
(2) Other Comprehensive Income for the period.
The sum of (1) and (2) above is `Total Comprehensive Income'.
`Profit or Loss' is defined in Ind AS 1 as ` the total of income less expenses,
excluding the components of other comprehensive income.
`Other comprehensive income' is defined in Ind AS 1 as `comprising items of
income and expense (including reclassification adjustments) that are not
recognised in profit or loss as required or permitted by other Ind ASs .
Other comprehensive income shall be presented as:
(a) Items that will not be reclassified to profit or loss and its related
income tax effects;
(b) Items that will be reclassified to profit or loss and its related income
tax effects.
`Reclassification adjustments' are defined in Ind AS 1 as amounts
reclassified to profit or loss in the current period that were recognised in
other comprehensive income in the current or previous periods.
The Statement of Profit and Loss is a single statement of profit and loss, with
profit or loss and other comprehensive income presented in two sections, as
per Part II of Division III to Schedule III. The sections are presented together,
with the profit or loss section presented first followed directly by the other
comprehensive income section. This is in sync with Paragraph 10A of Ind
AS 1.
Ind AS 1 prohibits an entity from presenting any items of income or expense
as extraordinary items, in the statement of profit and loss or in the notes.
Accordingly, there are no line items like `Extraordinary items' and `Profit
before extraordinary items and tax' in this Schedule.
The specific format laid down for presentation of various items of Income and
Expenses in the Statement of Profit and Loss indicates that expenses should
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be aggregated based on their nature, which is in sync with Ind AS 1
Paragraph 99. Accordingly, functional classification of expenses is
prohibited.
As per the Ind AS Framework for the Preparation and Presentation of
Financial Statements, income and expenses are defined as follows:
(a) Income encompasses both revenue and gains. Revenue arises in the
course of the ordinary activities of an entity. Gains represent other
items that meet the definition of income and may or may not, arise in
the course of the ordinary activities of an entity. Gains represent
increases in economic benefits and as such are no different in nature
from revenue.
(b) Expenses encompass losses as well as those expenses that arise in
the course of the ordinary activities of the entity. Losses represent
other items that meet the definition of expenses and may or may not,
arise in the course of the ordinary activities of the entity. Losses
represent decreases in economic benefits and as such they are no
different in nature from other expenses.
Further, separate line items should be included in the profit or loss section of
the Statement of Profit and Loss to present the following items in line with
Paragraph 82 of Ind AS 1:
(a) Revenue, presenting separately interest revenue calculated using the
effective interest method;
(b) Gains and losses arising from the de-recognition of financial assets
measured at amortized cost;
(c) Finance costs;
(d) Impairment losses (including impairment gains or reversals of
impairment losses) determined as per Ind AS 109, Section 5.5;
(e) Share of profit or loss of associates and joint ventures accounted for
using the equity method;
(f) Any gain or loss arising from a difference between the previous
amortized cost of the financial asset and its fair value at the date when
the financial asset is reclassified from amortized cost to fair value
through profit or loss;
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(g) Any cumulative gain or loss previously recognized in other
comprehensive income that is reclassified to profit or loss, when the
financial asset is reclassified from fair value through other
comprehensive income to fair value through profit or loss;
(h) A single amount for the total of discontinued operations, as per Ind AS
105.
In separately disclosing the above, consideration should be given to Note 5
and Note 9 of General Instructions for Preparation of Statement of Profit and
Loss, that requires disclosure of any item of `Other Income' or `Other
Expenses' exceeding one percent of the total income, in addition to the
consideration of `materiality'. An entity should consider these requirements
as mutually exclusive.
9.1. Revenue from operations
The aggregate of revenue from operations needs to be disclosed on the face
of the Statement of Profit and Loss as per Schedule III.
9.1.1. Note 3 of General Instructions for the Preparation of Statement of
Profit and Loss requires that revenue from operations is to be separately
disclosed on the face of the Statement of Profit and Loss, showing:
(a) Interest Income;
(b) Dividend Income;
(c) Rental Income;
(d) Fees and commission Income;
(e) Net gain on fair value changes;
(f) Net gain on derecognition of financial instruments under amortised
cost category;
(g) Sale of products (including Excise duty);
(h) Sale of services; and
(i) Others (to be specified)
9.1.2. For the purpose of presentation Ind AS 113 and 115 will have to be
referred to. As per the definition of Revenue in Ind AS 115, "revenue is
income arising in the course of an entity's ordinary activities" and income is
defined in Ind AS 115, "increases in economic benefits during the accounting
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period in the form of income or enhancements of assets or decreases of
liabilities that result in an increase in equity, other than those relating to
contributions from equity participants". Further, as per Ind AS 115, revenue
includes only the gross increase in economic benefits occurring to the entity
on its own account. Amounts collected, in capacity of an agent, on behalf of
third parties such as sales taxes, goods and services taxes and value added
taxes are not economic benefits which flow to the entity and do not result in
increases in equity. Therefore, they are excluded from revenue. Similarly, in
an agency relationship, the gross increase in economic benefits include
amounts collected on behalf of the principal and which do not result in
increases in equity for the entity. The amounts collected on behalf of the
principal are not revenue.
9.1.3. Under the GST regime, the collection of GST by an entity would not be
an inflow on the entity's own account but it shall be made on behalf of the
government authorities. Accordingly, the revenue from operations should be
presented net of GST.
9.1.4. The revenue from operation shall include:
9.1.4.1. Interest Income:
As per Note 3 of General Instructions for Preparation of Profit and Loss,
Interest Income shall be classified as:
(a) Interest on loans;
(b) Interest income from investments;
(c) Interest on deposits with banks;
(d) Other interest income
Interest income should be classified based on the financial assets measured
at fair value through OCI, at amortised cost, or classified as fair value
through profit or loss.
As per Paragraph 82 (a) of Ind AS 1, in addition to items required by other
Ind ASs, the profit or loss section of the statement of profit and loss shall
include line items that presenting separately interest revenue calculated
using the effective interest method.
Ind AS 107, Paragraph 20(b) requires total interest revenue calculated using
the effective interest method for financial assets that are measured at
amortized cost and that are measured at FVOCI, to be shown separately.
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The effective interest rate is the rate that exactly discounts estimated future
cash receipts through the expected life of the financial instrument or, when
appropriate, a shorter period, to the net carrying amount of the financial
asset.
`Other Interest' Income includes any other interest/ discount income not
included in sub-heads (a), (b) and (c) as mentioned above. Dividend in the
nature of interest should be classified here as per the requirements of Indian
Accounting Standards. Also, interest income on unwinding of security
deposits and interest received on delayed payments by customers should be
classified under other interest income. Interest income on income tax refund
which is in the nature of income tax should be treated as per Ind AS 12.
Ind AS 107 Paragraph B5(e) requires a company to disclose whether interest
income from financial assets measured at FVTPL is included as a part of fair
value changes. Accordingly, a company shall disclose as its accounting
policy, whether it presents interest income on financial assets at FVTPL as a
part of fair value changes or presents separately.
9.1.4.2. Dividend Income:
As per Paragraph 5.7.1A of Ind AS 109 dividends are recognised in profit or
loss only when:
(a) the entity's right to receive payment of the dividend is established;
(b) it is probable that the economic benefits associated with the dividend
will flow to the entity; and
(c) the amount of the dividend can be measured reliably.
As per Paragraph 5.7.6 of Ind AS 109 if the entity makes an irrevocable
election to present the fair value changes in other comprehensive income, it
shall recognize in profit or loss dividends from that investment in accordance
with Paragraph 5.7.1A of Ind AS 109.
Further, Ind AS 107 Paragraph B5(e) requires a company to disclose
whether dividend income on financial assets measured at FVTPL is included
as a part of fair value changes. Accordingly, a company shall disclose as its
accounting policy, whether it presents dividend income on financial assets at
FVTPL as a part of fair value changes or presents separately.
9.1.4.3. Rental Income
Rental income shall include rent on investment property and operating lease
payments received if the entity is in the nature of renting business.
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9.1.4.4. Fees and commission income:
Fees that are not an integral part of effective interest rate in accordance with
Ind AS 109 should be considered under this head. `Fees and Commission
Income' shall include all remuneration on services such as commission on
collections, commission/ exchange on remittances and transfers, commission
on letters of credit and guarantees, commission on Government business,
commission on other permitted agency business including consultancy,
distribution of third party products and other services, brokerage, fees
charged for servicing a loan, loan syndication fees etc.
9.1.4.5. Net gain/(loss) on fair value changes:
As per Note 4 of General Instructions for preparation of Statement of Profit
and Loss, the fair value gains or losses (net) on financial assets which are
measured at FVTPL should be presented under `Revenue from Operations'
with the following line items:
(A) Net Gain/ (Loss) on financial instruments at fair value through profit or
loss
(i) On trading portfolio
-- Investments
-- Derivatives
-- Others
(ii) On financial instruments designated at fair value through profit
or loss
(B) Others (to be specified)
Total Net gain/ (loss) on fair value changes (C)
Fair value changes:
-- Realised
-- Unrealised
Total Net gain/ (loss) on fair value changes (D) to tally with (C)
The fair value changes in this schedule are other than those arising on
account of accrued interest income/ expense.
The amount of net loss under this section should be disclosed in Expenses
Net loss on fair value changes.
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`Others' may include instruments other than those held for trading or
designated at fair value through profit or loss such as debt instruments which
are classified as fair value through profit or loss and on derecognition of debt
instruments classified as fair value through other comprehensive income.
Further, Paragraph B5(e ) of Ind AS 107 as mentioned above is also required
to be referred.
9.1.4.6. Others (to be specified):
The term "others" is not defined. This would include revenue arising from a
company's operating activities, i.e., either its principal or ancillary revenue-
generating activities, but which is not revenue arising from the sub-items
mentioned above. Whether a particular income constitutes "other operating
revenue" or "other income" is to be decided based on the facts of each case
and detailed understanding of the company's activities.
9.2. Other income
The aggregate of `Other income' is to be disclosed on the face of the
Statement of Profit and Loss. As per Note 5 of General Instructions for the
Preparation of Statement of Profit and Loss, `Other Income' shall be
classified as:
(a) Net gain/ (loss) on ineffective portion of hedges;
(b) Net gain/ (loss) on derecognition of property, plant and equipment;
(c) Net gain or loss on foreign currency transaction and translation (other
than those considered as finance cost) (to be specified) and
(d) Others (to be specified)
As per Paragraph 6.5.11 (b) and (c) of Ind AS 109, for designated and
qualifying cash flow hedges, the effective portion of the cumulative gain or
loss on the hedging instruments is initially recognised directly in OCI within
equity (cash flow hedge reserve). The ineffective portion of the gain or loss
on the hedging instrument is recognised immediately in net gain/loss on fair
value changes in the statement of profit and loss.
Net gain/ (loss) on derecognition of property, plant and equipment includes
profit/loss on sale of furniture, land and building, motor vehicles, etc. Only
the net position should be shown. If the net position is a loss, the amount
should be shown as an expense.
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Any gains on account of foreign exchange fluctuations are to be disclosed
separately as per Ind AS 21. Thus, net exchange gain should be classified
under other income and the amount so included should be separately
disclosed.
Interest on income tax refund shall form part of `others' under `Other Income'.
Rental income other than that presented under `Revenue from operations'
shall be disclosed under `others'.
Income under `others' should be disclosed net off expenses directly
attributable to such income. However, the expenses so netted off should be
separately disclosed.
Any item under the head `Other Income' which exceeds one per cent of the
total income should be presented separately.
9.3. Expenses
The aggregate of the following expenses is to be disclosed on the face
of the Statement of Profit and Loss:
· Finance Costs
· Fees and commission expense
· Net loss on fair value changes
· Net loss on derecognition of financial instruments under amortised
cost category
· Impairment of financial instruments
· Cost of materials consumed
· Purchases of Stock-in-Trade
· Changes in inventories of finished goods, stock-in-trade and work-in-
progress
· Employee benefits expense
· Depreciation, amortization and impairment
· Other expenses (to be specified)
9.3.1 Finance Costs
As per Note 6 of the General Instructions for the Preparation of the
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Statement of Profit and Loss, disclosure of finance costs is to be bifurcated
under the following:
(a) Interest on deposits
(b) Interest on borrowings
(c) Interest on debt securities
(d) Interest on subordinated liabilities
(e) Other interest expense
The finance costs should be classified based on financial liabilities measured
at fair value through profit or loss and on financial liabilities measured at
amortised cost. The latter should be calculated as per the effective interest
method as per Ind AS 107.
Interest on deposits: Interest on deposits includes interest paid on all types
of deposits including deposits from banks and other institutions.
Interest on deposits also includes unwinding of the discount that results in an
increase in financial liabilities such as security deposits for assets taken on
lease.
Interest on borrowings: Interest on borrowings includes discount/interest on
all borrowings and refinance from banks and other institutions and agencies.
Interest in respect of lease liabilities recognised in accordance with Ind AS
116, Leases
Interest on debt securities: Interest on debt securities includes interest on
bonds/ debentures and liability component of financial instruments.
Dividend on preference shares, whether redeemable or convertible, is of the
nature of `Interest expense', only where there is no discretion of the issuer
over the payment of such dividends. In such case, the portion of dividend as
determined by applying the effective interest method should be presented as
`Other Interest expense' under `Finance cost'. Accordingly, the corresponding
Dividend Distribution Tax on such portion of non-discretionary dividends
should also be presented in the Statement of Profit and Loss under `Interest
expense'. On the other hand, where there is a discretion of issuer over the
payments of dividend on preference shares, whether redeemable or
convertible, the entire dividend is in the nature of distribution of profit and
therefore shall be presented in Statement of Changes in Equity. Accordingly,
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the corresponding Dividend Distribution Tax should also be presented in
Statement of Changes in Equity.
Interest on subordinated liabilities: This includes interest expense on all
subordinated liabilities.
Other interest expense: Other interest expense includes the following:
1. Increases in the carrying amount of provisions / decommissioning
liabilities where such increase reflects the passage of time;
2. Net interest on net defined benefit liability which reflects the change in
net defined benefit liability that arises from the passage of time.
9.3.2 Ind AS 21 and Ind AS 23 deal with foreign exchange differences
arising on foreign currency transactions included in the financial statements
of an entity. The same shall be disclosed under `Other interest expense'
finance cost. All exchange differences within the purview of Ind AS 21 are
recognized as exchange differences and presented accordingly. However, all
exchange differences arising from foreign currency borrowings are within the
purview of Ind AS 23 and are regarded as a cost of borrowing irrespective of
whether they are capitalized or not as a part of the cost of the asset. In
accordance with Ind AS 23 `Borrowing Costs', borrowing costs that are
directly attributable to the acquisition, construction or production of a
qualifying asset form part of the cost of that asset. For the purpose of
capitalization, borrowing costs also include exchange difference regarded as
an adjustment to borrowing costs. Exchange differences eligible for
capitalization are determined in accordance with Paragraph 6(e) and 6A of
Ind AS 23. Accordingly, in case a company has utilized its foreign currency
borrowings for the purpose of acquisition or construction of a qualifying
asset, it would capitalize certain portion of foreign exchange differences in
accordance with the Paragraph 6(e) and 6A of Ind AS 23. All other borrowing
costs are recognized as an expense. For presenting foreign exchange
differences arising on foreign currency borrowings in the statement of profit
and loss, there is no specific requirement to apply the limit prescribed in
paragraphs 6(e) and 6A of Ind AS 23 since the nature of the exchange
difference on foreign currency borrowings is effectively a cost of borrowing.
Accordingly, the entire foreign exchange differences relating to foreign
currency borrowings to the extent not capitalized in accordance with Ind AS
23 should be presented under the head `finance costs'.
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9.3.3 Fees and commission expense
Fees and commission expenses include all expenses on services such as
commission on documents sent on collection, commission/ exchange on
remittances and transfers, commission on letters of credit, and guarantees,
commission on other permitted agency business including consultancy and
other services, brokerage, etc. If any of these elements are required to be
included for the purpose of computing effective interest rate under Indian
Accounting Standards, it should not be included under this head.
9.3.4 Net loss on fair value changes
(Refer Paragraph 9.1.4.5. for the line items to be presented as a part of Net
gains (losses) on fair value changes)
9.3.5 Impairment of financial instruments
As per Note 8 of the General Instructions for the Preparation of the
Statement of Profit and Loss, disclosure of impairment of financial
instruments is to be bifurcated under the following:
(e) Loans
(f) Investments
(g) Others (to be specified)
The same is to be further classified based on financial instruments measured
at fair value through OCI, and on financial instruments measured at
amortised cost.
Ind AS 109 requires that its impairment provisions are also applied to loan
commitments and trade receivables. Thus, such impairments would be
included under the sub-head `Others' as mentioned above.
Excess of amount of loss written-off over the accumulated loss allowance is
of the nature of impairment loss and should thus be presented under this line
item. In case of subsequent recoveries which are higher than previously
written off asset, the nature of recoveries is similar to reversals of impairment
and should thus be presented in the impairment line in profit or loss as it
would provide useful and relevant information to the users of the financial
statements.
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9.3.6 Employee benefits expense
As per Paragraph 7 of Ind AS 19 an employee may provide services to an
entity on a full-time, part-time, permanent, casual or temporary basis. For the
purpose of this Standard, employees include directors and other
management personnel.
This line item under the schedule requires disclosure of the following details:
9.3.6.1 Salaries and wages
The aggregate amounts paid/payable by the company for payment of
salaries and wages are to be disclosed here. Expenses on account of bonus,
leave encashment, compensation and other similar payments also need to
be disclosed here. Where a separate fund is maintained for gratuity payouts,
contribution to Gratuity Fund should be disclosed under the sub-head
Contribution to provident and other funds.
9.3.6.2 Contribution to provident and other funds
The aggregate amounts paid / payable by a company on account of
contributions to provident fund and other funds like Superannuation fund,
ESI, Labour Welfare Fund, etc., are to be disclosed here. This is true for
defined contribution plans since the expense recognized for a defined benefit
plan is not necessarily the amount of the contribution due for the period.
Contributions for such funds for contract labour may also be separately
disclosed here. However, penalties and other similar amounts paid to the
statutory authorities are not strictly in the nature of `contribution' and should
not be disclosed here.
9.3.6.3 Share based payment to employees
The amount of expense under this head should be determined in accordance
with Ind AS 102 Share-based Payments and/or the SEBI (Employee Stock
Option Scheme and Employee Stock Purchase Scheme) Guidelines, 1999,
as applicable. Companies should also consider all disclosures required by
Ind AS 102.
9.3.6.4 Staff welfare expense
The total expenditure on staff welfare is to be disclosed herein.
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9.3.7 Depreciation, amortization and impairment
A company should disclose depreciation provided on Property, Plant and
Equipment, Investment Property and amortization of intangible assets and
any impairment under this head.
9.3.8 Other Expenses
All other expenses not classified under other heads will be classified here. As
per Note 9 of General Instructions for Preparation of Profit and Loss, Other
expenses shall be bifurcated into:
(c) Rent, taxes and energy costs;
(d) Repairs and maintenance;
(e) Communication costs;
(f) Printing and stationery;
(g) Advertisement and publicity;
(h) Director's fees, allowances, and expenses;
(i) Auditor's fees and expenses;
(j) Legal and Professional charges;
(k) Insurance;
(l) Other expenditure.
Rent, taxes and energy costs: Rent will include expenses such as rent on low
value or short term leases i.e. in respect of leases which are not accounted
for under Ind AS 116. Taxes shall include municipal and other taxes
(excluding income tax) and energy cost shall include electricity and other
similar charges and levies.
Repairs and maintenance: This includes repairs to company's property, plant
and equipment and their maintenance charges, etc.
Communication costs: This includes postal charges (like stamps),
telephones, courier costs, facsimile, e-mail, internet, SWIFT charges etc.
Printing and stationery: This includes cost of books, forms and stationery
used by the company and other printing charges which are not incurred by
way of publicity expenditure.
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Advertisement and publicity: This includes expenditure incurred by the
company for advertisement and publicity purposes including printing charges
on publicity material.
Director's fees, allowances and expenses: This includes sitting fees and all
other items of expenditure incurred on behalf of directors including all
allowances and expenses on behalf of directors. The daily allowance, hotel
charges, conveyance charges, etc. which though in the nature of
reimbursement of expenses incurred may be included under this head.
Auditor's fees and expenses: This includes the fees paid to the statutory
auditors and branch auditors for professional services rendered and all
expenses for performing their duties, even though they may be in the nature
of reimbursement of expenses.
Legal and Professional charges: All legal expenses and reimbursement of
expenses incurred in connection with legal services are to be included here.
Professional charges could include fee paid for consultancy, valuations, etc.
Insurance: This includes insurance charges on company's property, plant
and equipment, etc.
Other expenditure: All expenses other than those not included in any of the
other heads like license fees, donations, subscriptions to papers, periodicals,
entertainment expenses, travel expenses, etc. may be included under this
head.
Any item under the head `Other expenditure' which exceeds one per cent of
the total income shall be presented separately.
9.4. Exceptional items
The term `Exceptional items' is neither defined in Division III to Schedule III
nor in Ind AS. However, Ind AS 1 requires separate disclosures of certain
items of similar nature in Paragraphs 85, 86, 97 and 98.
Paragraph 85 states that additional line items, headings and subtotals in the
statement of profit and loss shall be presented, when such presentation is
relevant to an understanding of the entity's financial performance.
Further, Paragraph 86 states that disclosing the components of financial
performance assists users in understanding the financial performance
achieved and in making projections of future financial performance. An entity
considers factors including materiality and the nature and function of the
items of income and expense.
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Paragraph 97 states that when items of income or expense are material, an
entity shall disclose their nature and amount separately. Paragraph 98 gives
circumstances that would give rise to the separate disclosure of items of
income and expense and includes:
(a) Write-downs of inventories to net realisable value or of property, plant
and equipment to recoverable amount, as well as reversals of such
write-downs;
(b) restructurings of the activities of an entity and reversals of any
provisions for the costs of restructuring;
(c) disposals of items of property, plant and equipment;
(d) disposals of investments;
(e) discontinued operations;
(f) litigation settlements; and
(g) other reversals of provisions.
In case the company has more than one such item of income / expense of
the above nature which is exceptional, then such items should be disclosed
on the face of the Statement of Profit and Loss. Details of all the individual
items should be disclosed in the Notes.
9.5. Tax expense
This is to be disclosed on the face of the Statement of Profit and Loss and
bifurcated into:
(1) Current tax, and
(2) Deferred tax
9.5.1 Current tax
The term `Current tax' has been defined under Ind AS-12 Income Taxes as
the amount of income taxes payable (recoverable) in respect of the taxable
profit (tax loss) for a period. Hence, details of all taxes on income payable
under the applicable taxation laws should be disclosed here.
Any interest on shortfall in payment of advance income-tax is in the nature of
finance cost and hence should not be clubbed with the `Current tax'. The
same should be classified as interest expense under finance costs. However,
such amount should be separately disclosed.
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Any penalties levied under Income tax laws should not be classified as
`Current tax'. Penalties which are compensatory in nature should be treated
as interest and disclosed in the manner explained above. Other tax penalties
should be classified under `Other Expenses'.
Excess/Short provision of tax relating to earlier years should be separately
disclosed.
9.5.2 Deferred tax
Any charge/credit for deferred taxes needs to be disclosed separately on the
face of the Statement of Profit and Loss.
Ind AS 12 defines `deferred tax liabilities', `deferred tax assets', `temporary
differences' as:
`Deferred tax liabilities' are the amounts of income taxes payable in future
periods in respect of taxable temporary differences;
`Deferred tax assets' are the amounts of income taxes recoverable in future
periods in respect of:
(a) deductible temporary differences;
(b) the carry forward of unused tax losses; and
(c) the carry forward of unused tax credits.
`Temporary differences' are differences between the carrying amount of an
asset or liability in the balance sheet and its tax base
Ind AS 12 has the concept of temporary differences as against AS 22 which
has a concept of timing differences. Moreover, deferred tax asset is defined
in Ind AS 12 to include the carry forward of unused tax credits. MAT Credits
are in the form of unused tax credits that are carried forward by the company
for a specified period of time. Accordingly, MAT Credit Entitlement should be
grouped with Deferred Tax Asset (net) in the Balance Sheet of an entity and
a separate note should be provided specifying the nature and amount of MAT
Credit included as a part of deferred tax. However, the company should
review at each balance sheet date the reasonable certainty to recover
deferred tax asset including MAT Credit Entitlement.
Correspondingly, MAT Credit Entitlement should be grouped with deferred
tax in the Statement of Profit and Loss and a separate note should be
provided specifying the amount of MAT Credit.
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9.6. Profit / (loss) from discontinued operations
The term 'discontinued operations' is defined in Ind AS 105, "Non-current
Assets Held for Sale and Discontinued Operations" as a component of an
entity that either has been disposed of or is classified as held for sale and:
(a) represents a separate major line of business or geographical area of
operations,
(b) is part of a single co-ordinated plan to dispose of a separate major line
of business or geographical area of operations; or
(c) is a subsidiary acquired exclusively with a view to resale.
Profit or loss from Discontinued Operations needs to be separately disclosed
on the face of Statement of Profit and Loss. This disclosure is in line with the
disclosure requirement of Ind AS 105 Paragraph 33(a) which requires a
single amount in the statement of profit and loss comprising the total of: (i)
post-tax profit or loss of discontinued operations; and (ii) post-tax gain or loss
recognized on the measurement to fair value less costs to sell or on the
disposal of the assets or disposal group(s) constituting the discontinued
operation.
Further, Ind AS-105 Paragraph 33(b) requires an entity to present an
analysis of a single amount either in Notes or on the face of the Statement of
Profit and Loss:
(i) the revenue, expenses and pre-tax profit or loss of discontinued
operations;
(ii) the gain or loss recognised on the measurement to fair value less
costs to sell or on the disposal of the assets or disposal group(s)
constituting the discontinued operation; and
(iii) the related income tax expense as required by paragraph 81(h) of Ind
AS 12.
If the above analysis is presented in the Statement of Profit and Loss, then it
shall be presented in a section identified as relating to discontinued
operations, i.e. separately from continuing operations.
9.7. Tax expense of discontinued operations
In case there are any taxes payable / tax credits available on profits / losses
of discontinued operations, the same need to be disclosed as a separate line
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item on the Statement of Profit and Loss, when presenting a separate
analysis as per Paragraph 33(b) of Ind AS 105, as stated above in Paragraph
9.5.
9.8. Earnings per equity share
Computation of Basic and Diluted Earnings per Share should be made in
accordance with Ind AS 33, Earnings per Share. It is pertinent to note that
the nominal value of equity shares should be disclosed along with the
Earnings per Share figures as required by Ind AS 33.
10. Other Comprehensive Income
10.1 `Other comprehensive income' (OCI) is defined in Ind AS 1 as
`comprising items of income and expense (including reclassification
adjustments) that are not recognised in profit or loss as required or permitted
by other Ind ASs.
10.2 Note 10 of General Instructions for Preparation of Statement of Profit
and Loss state that `Other Comprehensive Income' shall be classified into:
(a) Items that will not be reclassified to profit or loss and its related
income tax effects:
(1) Changes in revaluation surplus;
(2) Re-measurements of the defined benefit plans;
(3) Equity Instruments through other comprehensive income;
(4) Fair value changes relating to own credit risk of financial
liabilities designated at fair value through profit or loss;
(5) Share of Other Comprehensive Income in Associates and Joint
Ventures, to the extent not to be classified into profit or loss;
and
(6) Others (specify nature);
(b) Items that will be reclassified to profit or loss and its related income
tax effects:
(1) Exchange differences in translating the financial statements of a
foreign operation;
(2) Debt Instruments through other comprehensive income;
(3) The effective portion of gain and loss on hedging instruments in
a cash flow hedge;
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(4) Share of Other Comprehensive Income in Associates and Joint
Ventures, to the extent to be classified into profit or loss; and
(5) Others (specify nature).
10.3 As a part of the definition of OCI given in Ind AS 1, the components of
OCI, which are in addition to above, are stated to include:
Items that will not be reclassified to profit or loss and its related income tax
effects:
(a) Gains and losses on hedging instruments that hedge investments in
equity instruments measured through Other Comprehensive Income;
(b) Changes in time value of options when separating the intrinsic value
and time value of an option contract and designating only intrinsic
value changes as the hedging instrument;
(c) Changes in the value of the forward elements of forward contracts
when separating the forward element and spot element of a forward
contract and designating only spot element changes as hedging
instrument;
(d) Changes in the value of the foreign currency basis spread of a
financial instrument when excluding it from the designation of that
financial instrument as the hedging instrument.
10.4 Ind AS 1, Paragraph 91 gives a choice of presentation for tax effects
of items presented in other comprehensive income. An entity may present
items of OCI either:
(a) Net of related tax effects, or
(b) Before related tax effects with one amount shown for the aggregate
amount of income tax relating to those items.
However, Schedule III requires an entity to present items of OCI in aggregate
and the related tax effects to be shown separately.
10.5 Further, an entity shall present for each component of equity, an
analysis of other comprehensive income by item as required by Ind AS 1,
Paragraph 106A (including, reclassification adjustments as required by Ind
AS 1, Paragraph 92). Such presentation may be made either in the
Statement of Changes in Equity or in the Notes to Accounts.
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10.6 Division III to Schedule III does not highlight the presentation of
bargain purchase gains arising in a business combination. Paragraph 34 of
Ind AS 103, requires an acquirer to recognize a bargain purchase gain in
other comprehensive income on the acquisition date, after meeting the
requirements of Paragraph 36 of Ind AS 103. Such gain shall be attributed to
the acquirer (i.e. parent and not non-controlling interest) and may be
presented under `Other Items of other comprehensive income' in statement
of changes in equity. The above would also hold true in case of an
acquisition of a business which is accounted for in Separate Financial
Statements. However, if Paragraph 36 requirements are not met, then, the
acquirer shall recognize and disclose such gain directly in capital reserve as
per Paragraph 36A of Ind AS 103.
11. Additional information to be disclosed by way of
Notes to Statement of Profit and Loss
Besides the above disclosures, Note 11 of the General instructions for
Preparation of Statement of Profit and Loss also require disclosure by way of
notes, additional information regarding aggregate expenditure and income on
the following items:
11.1 Depreciation, amortization and impairment [Clause (i) of Note 11]
A company should disclose depreciation provided on Property, Plant and
Equipment, Investment Property and amortization of intangible assets and
any impairment under this head.
11.2 Payments to the auditor [Clause (ii) of Note 11]
Payments covered here should be for payments made to the firm of
auditor(s). Expenses incurred towards auditor's remuneration should be
disclosed under each of the following sub-heads as follows:
(a) As Auditor,
(b) For taxation matters,
(c) For company law matters,
(d) For other services,
(e) For reimbursement of expenses;
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11.3 In case of NBFCs covered under section 135, amount of
expenditure incurred on corporate social responsibility activities
[Clause (iii) of Note 11]
This new requirement introduced by the Act is that the companies which are
covered under Section 135 are required to disclose the amount of
expenditure incurred on corporate social responsibility activities. The
Guidance Note on Accounting for Expenditure on Corporate Social
Responsibility Activities issued by the ICAI may be referred to for disclosure
requirements, which are essentially as under:
(a) From the perspective of better financial reporting and in line with the
requirements of Schedule III in this regard, it is recommended that all
expenditure on CSR activities, that qualify to be recognised as
expense should be recognised as a separate line item as `CSR
expenditure' in the statement of profit and loss. Further, the relevant
note should disclose the break-up of various heads of expenses
included in the line item `CSR expenditure'.
(b) The notes to accounts relating to CSR expenditure should also contain
the following:
(1) Gross amount required to be spent by the company during the
year.
(2) Amount spent during the year on:
(i) Construction/acquisition of any asset
(ii) On purposes other than (i) above
The above disclosure, to the extent relevant, may also be made in the
notes to the cash flow statement, where applicable.
(c) Details of related party transactions, e.g., contribution to a trust
controlled by the company in relation to CSR expenditure as per Ind
AS 24, Related Party Disclosures.
(d) Where a provision is made in accordance with the above paragraph,
above the same should be presented as per the requirements of
Schedule III to the Act. Further, movements in the provision during
the year should be shown separately.
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12. Part III General Instructions for Preparation of
Consolidated Financial Statements
The Act defines a `subsidiary company' and an `associate company' which is
different from the definition of a `subsidiary', an `associate' and a `joint
venture' under Ind AS. An amendment to the Companies (Accounts) Rules,
2014 on 4 September 2015, newly inserted Rule 4A which state that
"financial statements shall be in the form specified in Schedule III to the Act
and comply with Accounting Standards or Indian Accounting Standards as
applicable, provided that the items contained in financial statements shall be
prepared in accordance with the definitions and other requirements specified
in the Accounting Standards or the Indian Accounting Standards, as the case
may be."
The Act mandates that the companies which have one or more subsidiaries
or associates (which as per the Act includes joint ventures) are required to
prepare Consolidated Financial Statements (CFS), except under certain
circumstances exempted under the Act and Rules.
Accordingly, Ind AS definitions of subsidiary, associate and joint venture
shall be considered for assessment of control, joint control and significant
influence even though the requirement of preparation of CFS will be
governed by the Act.
The companies are expected to prepare the Separate Financial Statements
in addition to Consolidated Financial Statements.
Part III of Division III to Schedule III provides for General Instructions for
Preparation of Consolidated Financial Statements. This is a new addition
brought in under the Act.
12.1 General requirements
Where a company is required to prepare Consolidated Financial Statements,
i.e. consolidated balance sheet, consolidated statement of changes in equity
and consolidated statement of profit and loss, the company shall mutatis
mutandis follow the requirements of this Schedule as applicable to a
company in preparation of the Separate Financial Statements. This means
that all the reporting requirements of the Schedule III need to be aggregated
and reported for the group as a whole in the Consolidated Financial
Statements. However, where the consolidated financial statements contains
elements pertaining to NBFCs and other than NBFCs, mixed basis of
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presentation may be followed for consolidated financial statements where
both kinds of operations are significant.
In addition, the Consolidated Financial Statements shall disclose the
information as per the requirements specified in the applicable Ind AS
notified under the Companies Ind AS Rules, including the following, namely:
(1) Profit or loss attributable to `non-controlling interest' and to `owners of
the parent' in the statement of profit and loss shall be presented as
allocation for the period. Further, `total comprehensive income' for the
period attributable to `non-controlling interest' and to `owners of the
parent' shall be presented in the statement of profit and loss as
allocation for the period. The aforesaid disclosures for `total
comprehensive income' shall also be made in the statement of
changes in equity. In addition to the disclosure requirements in the
Indian Accounting Standards, the aforesaid disclosures shall also be
made in respect of `other comprehensive income'. This requirement is
in line with Paragraph 81B of Ind AS 1.
(2) `Non-controlling interests' in the Balance Sheet and in the Statement
of Changes in Equity, within equity, shall be presented separately from
the equity of the `owners of the parent'.
(3) Investments accounted for using the equity method.
(4) Ind AS 110 Paragraph B96 deals with changes in proportion held by
non-controlling interest. When the proportion of the equity held by non-
controlling interests changes, an entity shall adjust the carrying
amounts of the controlling and non-controlling interests to reflect the
changes in their relative interests in the subsidiary. The entity shall
recognise directly in equity any difference between the amount by
which the non-controlling interests are adjusted and the fair value of
the consideration paid or received, and attribute it to the owners of the
parent. An entity may present such gain / loss separately as `Non-
controlling Interest Reserve' shown under `Other Reserves' by
specifying the nature.
All of these would also indicate the need to obtain such information for all the
subsidiaries / associates for preparing the Consolidated Financial
Statements, including where such subsidiaries / associates are not audited
under the Act.
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However, due note has to be taken of the fact that the Schedule III itself
states that the provisions of the schedule are to be followed mutatis mutandis
for a Consolidated Financial Statements. MCA has also clarified vide General
Circular No. 39 / 2014 dated 14th October 2014 that Schedule III to the Act
[Refer Annexure E (Pg 176)] read with the applicable Accounting Standards
does not envisage that a company while preparing its CFS merely repeats
the disclosures made by it under stand-alone accounts being consolidated.
Accordingly, the company would need to give all disclosures relevant for CFS
only.
In this context, the requirements of Division III to Schedule III shall apply to a
CFS, subject to the following exemptions / modifications based on the
relevance to the CFS:
Division III to Schedule III Applicability to CFS (if left blank,
Requirements is applicable, as it is)
Share capital authorized, issued, It is adequate to present paid up
subscribed and paid up capital and any calls in arrears
Note: It has no relevance in the CFS
context.
Sources from which bonus shares Not relevant at CFS level and
are issued, e.g., capitalisation of hence, may be dispensed with.
profits or Reserves or from
Securities Premium Account.
Disclosure of all unutilized monies Not relevant at CFS level and
out of the issue indicating the form hence, may be dispensed with.
in which such unutilized funds have
been invested.
(a) Period and amount of On all these items, disclosure can
continuing default as on the be limited to those which are
Balance Sheet date in material to the CFS; materiality
repayment of borrowings and could be considered at 10% of the
interest, shall be specified respective balance sheet item
separately in each case.
(b) Loans and advances due by
directors or other officers of the
company or any of them either
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severally or jointly with any
other persons or amounts due
by firms or private companies
respectively in which any
director is a partner or a
director or a member should be
separately stated
(c) Debts due by directors or other
officers of the company or any
of them either severally or
jointly with any other person or
debts due by firms or private
companies respectively in which
any director is a partner or a
director or a member should be
separately stated
(d) Where in respect of an issue of
securities made for a specific
purpose, the whole or part of
the amount has not been used
for the specific purpose at the
Balance Sheet date, there shall
be indicated by way of note how
such unutilized amounts have
been used or invested.
Share application money pending Separate disclosure should be given
allotment shall be classified into for such monies due outside the
equity or liability in accordance with group in respect of entities which are
relevant Ind AS. Share application consolidated.
money to the extent not refundable
shall be shown under the head
`Equity' and share application
money to the extent refundable shall
be separately shown under `Other
financial liabilities'.
Additional information for disclosure: Not relevant at CFS level and
(a) Payments to the auditor as (a) hence, may be dispensed with.
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auditor,(b) for taxation matters,
(c) for company law matters, (d)
for other services, (e) for
reimbursement of expenses;
(b) In case of Companies covered
under section 135, amount of
expenditure incurred on
corporate social responsibility
activities
(c) Disclosures required as per the
MSMED Act, 2006
12.2 Indian Accounting Standards
The Consolidated Financial Statements shall also disclose the information as
required under the various Indian Accounting Standards applicable.
12.3 Additional information on the entities included in the
Consolidated Financial Statements
Division III to Schedule III also requires specific disclosure of additional
information on the entities which are included in the Consolidated Financial
Statements in the following format:
Name Net Assets i.e., Share in profit Share in other Share in total
of the total assets or loss comprehensive comprehensive
entity minus total income income
in the liabilities
Group
As % of Amount As % of Amount As % of Amou As % of Amount
Consolid Consolid consolidated nt total
ated ated other comprehen
net profit or comprehensi sive
assets loss ve income income
Parent
Subsidiari
es
Indian
1
2
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3
...
.....
Foreign
1
2
3
...
.....
Non-
controlling
interest in
all
subsidiari
es
Associate
s
(Investme
nt as per
equity
method)
Indian
1
2
3
...
...
Foreign
1
2
3
...
.....
Joint
Ventures
(Investme
nt as per
98
GN on Division III Schedule III to the Companies Act 2013 for NBFC ...
equity
method)
Indian
1
2
3
...
.....
Foreign
1
2
3
...
.....
TOTAL
Certain joint arrangements which are of the nature of joint operations will be
consolidated to the extent of the share of joint operator based on the
principles laid down in Ind AS 111. Even though the above table does not
specify a disclosure about joint operations' net assets, profit or loss, other
comprehensive income and total comprehensive income, it should be
disclosed in similar manner as disclosed for joint ventures. This requirement
would apply only if a joint operation is conducted through a separate legal
entity.
Moreover, as regards consolidation adjustments (including elimination of
intra-group transactions), it should be ensured that these are either disclosed
as a single line item separately or adjusted in the information (e.g., net
assets) disclosed for the parent and its each component.
These are necessary in order to match the respective amounts reported in
Consolidated Financial Statements with the respective total amounts in the
above table.
12.4 Entities not consolidated
Entities which are not covered in the Consolidated Financial Statements,
whether subsidiaries, associates or joint ventures are to be listed in the
Consolidated Financial Statements along with the reasons for not
99
GN on Division III Schedule III to the Companies Act 2013 for NBFC ...
consolidating such entities. Additional disclosure requirements as set out in
Ind AS 112 should also be complied with in this regard.
12.5 Definition of terms relevant for consolidation
The terms "Control", "Subsidiary" and "Associate" are defined very differently
in the Act as compared to definition in Ind AS. Rule 6 of the Companies
(Accounts) Rules, 2015 however states that Consolidated Financial
Statements shall be prepared in accordance with the provisions of Division III
to Schedule III of the Act and the applicable Ind AS. Further, Rule 4A of the
Companies (Accounts) Rules, 2015 provides that the items contained in the
financial statements shall be prepared in accordance with the definitions and
other requirements specified in Ind AS.
100
Annexure A
"Division III
Financial Statements for a Non-Banking Financial Company (NBFC) whose
financial statements are drawn up in compliance of the Companies (Indian
Accounting Standards) Rules, 2015.
GENERAL INSTURCTIONS FOR PREPARATION OF FINANCIAL
STATEMENTS OF A NON- BANKING FINANCIAL COMPANY (NBFC)
THAT IS REQUIRED TO COMPLY WITH INDIAN ACCOUNTING
STANDARDS (Ind AS)
1. Every Non-Banking Financial company as defined in the Companies
(Indian Accounting Standards) (Amendment) Rules, 2016 to which
Indian Accounting Standards apply, shall prepare its financial
statements in accordance with this Schedule or with such modification
as may be required under certain circumstances.
2. Where compliance with the requirements of relevant Act, Regulations,
Guidelines or Circulars issued by the relevant regulator from time to
time including Indian Accounting Standards (Ind AS) (except the
option of presenting assets and liabilities in accordance with current,
non-current classification as provided by relevant Ind AS) as
applicable to the NBFCs require any change in treatment or disclosure
including addition, amendment, substitution or deletion in the head or
sub-head or any changes inter se, in the financial statements or
statements forming part thereof , the same shall be made and the
requirements under this Schedule shall stand modified accordingly.
3. The disclosure requirements specified in this Schedule are in addition
to and not in substitution of the disclosure requirements specified in
the Indian Accounting Standards. Additional disclosures specified in
the Indian Accounting Standards shall be made in the Notes or by way
of additional statement or statements unless required to be disclosed
on the face of the Financial Statements. Similarly, all other disclosures
as required by the Companies Act, 2013 shall be made in the Notes in
addition to the requirements set out in this Schedule.
101
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4. (i) Notes shall contain information in addition to that presented in
the Financial Statements and shall provide where required-
(a) narrative descriptions or disaggregations of items
recognised in those statements; and
(b) information about items that do not qualify for recognition
in those statements.
(ii) Each item on the face of the Balance Sheet, Statement of
Changes in Equity and Statement of Profit and Loss shall be
cross-referenced to any related information in the Notes. In
preparing the Financial Statements including the Notes, a
balance shall be maintained between providing excessive
details that may not assist users of Financial Statements and
not providing important information as a result of too much
aggregation.
5. Depending upon the total income of the NBFC, the figures appearing
in the Financial Statements shall be rounded off as below:
Total Income Rounding off
(i) less than one hundred crore To the nearest hundreds,
rupees thousands, lakhs or
millions, or decimals thereof.
(ii) one hundred crore rupees or To the nearest, lakhs, millions or
more crores, or
decimals thereof.
Once a unit of measurement is used, it should be used uniformly in the
Financial Statements.
6. Financial Statements shall contain the corresponding amounts
(comparatives) for the immediately preceding reporting period for all
items shown in the Financial Statements including Notes except in the
case of first Financial Statements after incorporation.
7. Financial Statements shall disclose all `material' items, i.e., the items if
they could, individually or collectively, influence the economic
decisions that users make on the basis of the financial statements.
Materiality depends on the size or nature of the item or a combination
of both, to be judged in the particular circumstances.
102
GN on Division III - Schedule III to the Companies Act 2013
8. For the purpose of this Schedule, the terms used herein shall have the
same meanings assigned to them in Indian Accounting Standards.
9. Where any Act, Regulation, Guidelines or Circulars issued by the
relevant regulators from time to time requires specific disclosures to
be made in the standalone financial statements of an NBFC, the said
disclosures shall be made in addition to those required under this
Schedule.
10. The NBFCs preparing financial statements as per this Schedule may
change the order of presentation of line items on the face of financial
statements or order of line items within the schedules in order of
liquidity, if appropriate, considering the operations performed by the
NBFC.
Note: This Schedule sets out the minimum requirements for disclosure on
the face of the Financial Statements, i.e., Balance Sheet, Statement of
Changes in Equity for the period, the Statement of Profit and Loss for the
period (The term `Statement of Profit and Loss' has the same meaning as `
Profit and Loss Account') and Notes. Cash flow statement shall be prepared,
where applicable, in accordance with the requirements of the relevant Indian
Accounting Standard.
Line items, sub-line items and sub-totals shall be presented as an addition or
substitution on the face of the Financial Statements when such presentation
is relevant to an understanding of the NBFC's financial position or
performance or to cater to categories of NBFCs as prescribed by the relevant
regulator or sector-specific disclosure requirements or when required for
compliance with the amendments to the relevant statutes or under the Indian
Accounting Standards.
103
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PART I BALANCE SHEET
Name of the Non-Banking Financial Company.........................
Balance Sheet as at ...........................
(Rupees in............)
Particulars Note Figures as Figures as
No. at the end at the end
of current of the
reporting previous
period reporting
period
1 2 3
ASSETS
(1) Financial Assets
(a) Cash and cash equivalents
(b) Bank Balance other than (a)
above
(c) Derivative financial instruments
(d) Receivables
(I) Trade Receivables
(II) Other Receivables
(e) Loans
(f) Investments
(g) Other Financial assets (to be
specified)
(2) Non-financial Assets
(a) Inventories
(b) Current tax assets (Net)
(c) Deferred tax Assets (Net)
(d) Investment Property
104
GN on Division III - Schedule III to the Companies Act 2013
(e) Biological assets other than
bearer plants
(f) Property, Plant and Equipment
(g) Capital work-in-progress
(h) Intangible assets under
development
(i) Goodwill
(j) Other Intangible assets
(k) Other non-financial assets (to be
specified)
Total Assets
LIABILITIES AND EQUITY
LIABILITIES
(1) Financial Liabilities
(a) Derivative financial instruments
(b) Payables
(I) Trade Payables
(i) total outstanding dues of
micro enterprises and
small enterprises
(ii) total outstanding dues of
creditors other than
micro enterprises and
small enterprises
(II) Other Payables
(i) total outstanding dues of
micro enterprises and
small enterprises
(ii) total outstanding dues of
creditors other than
micro enterprises and
small enterprises
105
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(c) Debt Securities
(d) Borrowings (Other than Debt
Securities)
(e) Deposits
(f) Subordinated Liabilities
(g) Other financial liabilities(to be
specified)
(2) Non-Financial Liabilities
(a) Current tax liabilities (Net)
(b) Provisions
(c) Deferred tax liabilities (Net)
(d) Other non-financial liabilities(to be
specified)
(3) EQUITY
(a) Equity Share capital
(b) Other Equity
Total Liabilities and Equity
See accompanying notes to the financial statements
STATEMENT OF CHANGES IN EQUITY
Name of the Non-Banking Financial Company.........................
Statement of Changes in Equity for the period ended ........................
(Rupees in.................)
A. Equity Share Capital
Balance at the beginning Changes in equity Balance at the end of
of the reporting period share capital during the reporting period
the year
Xxx xxx Xxx
106
GN on Division III Schedule III to the Companies Act 2013 for NBFC ...
B. Other Equity
Share Equity Reserves and Surplus Debt Equity Effecti Revalu Exchang Other Money Total
applicati compon Statut Capita Securiti Other Retain instruments Instruments ve ation e items of receiv
on ent of ory l es Reserv ed through through portio Surplus differenc Other ed
money compou Reser Reser Premiu es Earnin Other Other n of es on Compre agains
pending nd ve s ve m (specif gs Comprehen Comprehen Cash translati hensive t
allotme financial y sive sive Flow ng the Income share
nt instrume nature) Income Income Hedge financial (specify warra
nts s stateme nature) nt s
nts of a
foreign
operatio
n
Balance at
the
beginning
of the
reporting
period
Changes in
accounting
policy/prior
period
errors
107
GN on Division III Schedule III to the Companies Act 2013 for NBFC ...
Restated
balance at
the
beginning
of the
reporting
period
Total
Comprehen
sive Income
for the year
Dividends
Transfer to
retained
earnings
Any other
change (to
be
specified)
Balance at
the end of
the
reporting
period
108
GN on Division III Schedule III to the Companies Act 2013 for NBFC ...
Note:
(i) Remeasurement of defined benefit plans and fair value changes
relating to own credit risk of financial liabilities designated at fair value
through profit or loss shall be recognised as a part of retained earnings
with separate disclosure of such items alongwith the relevant amounts
in the Notes.
(ii) A description of the purpose of each reserve within equity shall be
disclosed in the Notes.
Notes
GENERAL INSTRUCTIONS FOR PREPARATION OF BALANCE SHEET
A Non-Banking Financial company shall disclose the following in the notes to
accounts:
(A) Cash and cash equivalents: Cash and cash equivalents shall be
classified as:
(i) Cash on hand
(ii) Balances with Banks (of the nature of cash and cash
equivalents);
(iii) Cheques, drafts on hand; and
(iv) Others (specify nature).
Cash and Bank balances: The following disclosures with regard to
cash and bank balances shall be made:
(i) Earmarked balances with banks (for example, for unpaid
dividend) shall be separately stated.
(ii) Balances with banks to the extent held as margin money or
security against the borrowings, guarantees, other commitments
shall be disclosed separately.
(iii) Repatriation restrictions, if any, in respect of cash and bank
balances shall be separately stated.
(B) Derivative financial Instruments
1 Explain use of derivatives
2 Cross-reference to Financial Risks section for management of
risks arising from derivatives
109
GN on Division III Schedule III to the Companies Act 2013 for NBFC ...
Part I (Current Year) (Previous Year)
Notional Fair Fair Notional Fair Fair
amounts Value Value - amounts Value - Value -
Assets Liabilities Assets Liabilities
(i) Currency
derivatives:
-Spot and
forwards
-Currency
Futures
-Currency
swaps
-Options
purchased
-Options sold
(written)
-Others
Subtotal (i)
(ii) Interest
rate
Derivatives
-Forward Rate
Agreements
and Interest
Rate Swaps
-Options
Purchased
-Options sold
(written)
-Futures
-Others
Subtotal (ii)
(iii) Credit
derivatives
(iv) Equity
linked
Derivatives
(v) Other
110
GN on Division III - Schedule III to the Companies Act 2013
derivatives
(Please
specify)
Total
Derivative
Financial
Instruments
(i) + (ii) + (iii)
+ (iv) + (v)
Part II
Included in
above
(Part I) are
derivatives
held for
hedging and
risk
management
purposes as
follows:
(i) Fair value
hedging:
- Currency
Derivatives
- Interest rate
derivatives
- Credit
derivatives
- Equity linked
Derivatives
- Others
Subtotal (i)
(ii) Cash flow
hedging:
- Currency
derivatives
- Interest rate
derivatives
- Credit
111
GN on Division III Schedule III to the Companies Act 2013 for NBFC ...
derivatives
- Equity linked
derivatives
- Others
Subtotal (ii)
(iii)Net
investment
hedging:
(iv)
Undesignated
Derivatives
Total
Derivative
Financial
Instruments
(i) + (ii) + (iii)
+ (iv)
With respect to hedges and hedge accounting, NBFCs may provide a
description in accordance with the requirements of Indian Accounting
Standards, of how derivatives are used for hedging, explain types of hedges
recognized for accounting purposes and their usage/application by the entity.
(C) Receivables:
(i) Receivables shall be sub-classified as:
(a) Receivables considered good - Secured;
(b) Receivables considered good - Unsecured;
(c) Receivables which have significant increase in Credit Risk; and
(d) Receivables - credit impaired
(ii) Allowance for impairment loss allowance shall be disclosed under the
relevant heads separately.
(iii) Debts due by directors or other officers of the NBFC or any of them
either severally or jointly with any other person or debts due by firms
including limited liability partnerships (LLPs), private companies
respectively in which any director is a partner or a director or a
member should be separately stated.
112
GN on Division III Schedule III to the Companies Act 2013 for NBFC ...
(D) Loans
(Current Year) (Previous Year)
Amortised At Fair Value Sub- Total Amortise At Fair Value Sub- Total
cost Through Through Designat total d cost Through Through Designat total
Other profit or ed at fair Other profit or ed at fair
Compreh loss value Compreh loss value
ensive through ensive through
Income profit or Income profit or
loss loss
(1) (2) (3) (4) (5 = 2 + (6 = 1 + (7) (8) (9) (10) (11 = 8 (12 =
3 + 4) 5) +9+ (7) +
10) (11)
Loans
(A)
(i) Bills
Purchased and
Bills Discounted
(ii) Loans
repayable on
Demand
(iii) Term
Loans
(iv) Leasing
(v) Factoring
113
GN on Division III Schedule III to the Companies Act 2013 for NBFC ...
(vi) Others (to
be specified)
Total (A)
Gross
Less:
Impairment loss
allowance
Total (A)
Net
(B) (i) Secured
by tangible
assets
(ii) Secured by
intangible
assets
(iii) Covered by
Bank/Governme
nt Guarantees
(iv) Unsecured
Total (B)-
Gross
Less:
Impairment loss
114
GN on Division III - Schedule III to the Companies Act 2013
Allowance
Total (B)-
Net
(C) (I)
Loans in India
(i) Public
Sector
(ii) Others (to be
specified)
Total (C)-
Gross
Less:
Impairment loss
Allowance
Total(C) (I)-Net
(C) (II) Loans
outside India
Less:
Impairment loss
Allowance
Total (C) (II)-
Net
Total C(I) and C
(II)
115
GN on Division III Schedule III to the Companies Act 2013 for NBFC ...
(E) Investments
Investments
Investme (Current Year) (Previous Year)
nts Amortis At Fair Value Sub- Others Total Amortis At Fair Value Sub- Other Total
ed cost Through Through Design Total * ed cost Through Throug Designa Total s*
Other profit ated at Other h profit ted at
Compre or loss fair Compre or loss fair
hensive value hensive value
Income through Income through
profit profit
or loss or loss
(1) (2) (3) (4) (5) = (6) (7) = (8) (9) (10) (11) (12) = (13) (14) =
(2) + (1) + (9) + (8) +
(3) + (5) + (10) + (12) +
(4) (6) (11) (13)
Mutual
funds
Governme
nt
securities
116
GN on Division III - Schedule III to the Companies Act 2013
Other
approved
securities
Debt
securities
Equity
instrumen
ts
Subsidiari
es
Associate
s
Joint
Ventures
Others
(specify)
Total
Gross (A)
(i)
Investmen
117
GN on Division III Schedule III to the Companies Act 2013 for NBFC ...
ts outside
India
(ii)
Investmen
ts in India
Total (B)
Total (A)
to tally
with (B)
Less:
Allowance
for
Impairme
nt
loss (C)
Total
Net
D= (A)-
(C)
* Other basis of measurement such as cost may be explained as a footnote
118
GN on Division III Schedule III to the Companies Act 2013 for NBFC ...
(F) Investment Property
A reconciliation of the gross and net carrying amounts of each class of
property at the beginning and end of the reporting period showing additions,
disposals, acquisitions through business combinations and other adjustments
and the related depreciation and impairment losses or reversals shall be
disclosed separately.
(G) Biological Assets other than bearer plants:
A reconciliation of the carrying amounts of each class of assets at the
beginning and end of the reporting period showing additions, disposals,
acquisitions through business combinations and other adjustments shall be
disclosed separately.
(H) Property, Plant and Equipment
(i) Classification shall be given as:
(a) Land
(b) Buildings
(c) Plant and Equipment
(d) Furniture and Fixtures
(e) Vehicles
(f) Office equipment
(g) Bearer Plants
(h) Others (specify nature)
(ii) Assets under lease shall be separately specified under each class of
asset.
(iii) A reconciliation of the gross and net carrying amounts of each class of
assets at the beginning and end of the reporting period showing
additions, disposals, acquisitions through business combinations and
other adjustments and the related depreciation and impairment losses
or reversals shall be disclosed separatel y.
(I) Goodwill
A reconciliation of the gross and net carrying amount of goodwill at the
beginning and end of the reporting period showing additions, impairments,
disposals and other adjustments.
119
GN on Division III Schedule III to the Companies Act 2013 for NBFC ...
(J) Other Intangible assets
(i) Classification shall be given as:
(a) Brands or trademarks
(b) Computer software
(c) Mastheads and publishing titles
(d) Mining rights
(e) Copyrights, patents, other intellectual property rights, services
and operating rights
(f) Recipes, formulae, models, designs and prototypes
(g) Licenses and franchises
(h) Others (specify nature)
(ii) A reconciliation of the gross and net carrying amounts of each class of
assets at the beginning and end of the reporting period showing
additions, disposals, acquisitions through business combinations and
other adjustments and the related amortization and impairment losses
or reversals shall be disclosed separately.
(K) Payables
The following details relating to Micro, Small and Medium Enterprises shall
be disclosed:
(a) the principal amount and the interest due thereon (to be shown
separately) remaining unpaid to any supplier at the end of each
accounting year;
(b) the amount of interest paid by the buyer in terms of section 16 of the
Micro, Small and Medium Enterprises Development Act, 2006, along
with the amount of the payment made to the supplier beyond the
appointed day during each accounting year;
(c) the amount of interest due and payable for the period of delay in
making payment (which have been paid but beyond the appointed day
during the year) but without adding the interest specified under the
Micro, Small and Medium Enterprises Development Act, 2006;
(d) the amount of interest accrued and remaining unpaid at the end of
each accounting year; and
120
GN on Division III Schedule III to the Companies Act 2013 for NBFC ...
(e) the amount of further interest remaining due and payable even in the
succeeding years, until such date when the interest dues above are
actually paid to the small enterprise, for the purpose of disallowance of
a deductible expenditure under section 23 of the Micro, Small and
Medium Enterprises Development Act, 2006.
Explanation.- The terms `appointed day', `buyer', `enterprise', `micro
enterprise', `small enterprise' and `supplier', shall have the same
meaning assigned to those under clauses (b), (d), (e), (h), (m) and (n)
respectively of section 2 of the Micro, Small and Medium Enterprises
Development Act, 2006."
(L) Debt Securities
(Current Year) (Previous Year)
At At Fair Designate Total At At Fair DesignatedTotal
Amortised Value d at fair Amortise Value at fair
Cost Through value d Cost Through value
profit or through profit or through
loss profit or loss profit or
loss loss
(1) (2) (3) (4) = (5) (6) (7) (8) =
(1) + (5) +
(2) + (6) +
(3) (7)
Liability
component
of
compound
financial
instruments
Others
(Bonds/
Debenture
etc.)
Total (A)
Debt
securities
in India
121
GN on Division III Schedule III to the Companies Act 2013 for NBFC ...
Debt
securities
outside
India
Total (B)
to tally
with (A)
(i) bonds or debentures (along with the rate of interest, and particulars of
redemption or conversion, as the case maybe) shall be stated in
descending order of maturity or conversion, starting from earliest
redemption or conversion date, as the case may be. Where
bonds/debentures are redeemable by installments, the date of maturity
for this purpose must be reckoned as the date on which the first
installment becomes due;
(ii) particulars of any redeemed bonds or debentures which the NBFC has
power to reissue shall be disclosed
(M) Borrowings (Other than Debt Securities)
(Current Year) (Previous Year)
At At fair Designa Total At At fair Designa Total
Amorti value ted Amorti value ted
sed Throu at fair sed Throu at fair
Cost gh value Cost gh value
profit through profit through
or profit or or profit or
loss loss loss loss
(1) (2) (3) (4)=(1)+(2) (1) (2) (3) (4)=(1)+(2)
+(3) +(3)
(a)Term
loans
(i)from
banks
(ii)from
other
parties
(b)Deferre
d
payment
liabilities
122
GN on Division III Schedule III to the Companies Act 2013 for NBFC ...
(c)Loans
from
related
parties
(d)
Finance
lease
obligations
(e)Liability
component
of
compound
financial
instrument
s
(f)Loans
repayable
on demand
(i)from
banks
(ii)from
(g)
Oth
er loans
(specify
nature)
Total (A)
Borrowings
India
Borrowings
outside
India
Total (B)
to tally
with (A)
(i) Borrowings shall further be sub-classified as secured and unsecured.
Nature of security shall be specified separately in each case.
123
GN on Division III Schedule III to the Companies Act 2013 for NBFC ...
(ii) Where borrowings have been guaranteed by directors or others, the
aggregate amount of such borrowings under each head shall be
disclosed;
(iii) terms of repayment of term loans and other loans shall be stated; and
(iv) period and amount of default as on the balance sheet date in
repayment of borrowings and interest shall be specified separately in
each case.
(N) Deposits
(Current Year) (Previous Year)
At At fair Desig Total At At fair Desig Total
Amort value nated Amorti value nated
ised throug at fair sed throug at fair
Cost h value Cost h value
profit throug profit throug
or loss h or h
profit loss profit
or loss or
loss
(1) (2) (3) (4)=(1) (5) (6) (7) (8)=(5)
+ (2) + + (6) +
(3) (7)
Deposits
(i) Public
Deposits
(ii) From
Banks
(iii)From
Others
Total
124
GN on Division III Schedule III to the Companies Act 2013 for NBFC ...
(O) Subordinated Liabilities
(Current Year) (Previous Year)
At At fair Design Total At At fair Design Total
Amorti value ated at Amorti value ated at
sed throug fair sed throug fair
Cost h profit value Cost h profit value
or loss throug or loss throug
h profit h profit
or loss or loss
(1) (2) (3) (4)=(1)+ (5) (6) (7) (8)=(5)+
(2)+(3) (6)+(7)
Perpetual
Debt
Instruments
to the
extent that
do not
qualify as
equity
Preference
Shares
other than
those that
qualify as
Equity
Others
(specifying
the nature
and type of
instrument
issued)
Total (A)
Subordinate
d Liabilities
in India
Subordinated
Liabilities
outside
India
Total (B) to
tally with
(A)
125
GN on Division III Schedule III to the Companies Act 2013 for NBFC ...
(P) Other Financial Liabilities (to be specified):
Other Financial liabilities shall be classified as-
(a) Interest accrued;
(b) Unpaid dividends;
(c) Application money received for allotment of securities to the extent
refundable and interest accrued thereon;
(d) Unpaid matured deposits and interest accrued thereon;
(e) Unpaid matured debentures and interest accrued thereon;
(f) Margin money (to be specified);and
(g) Others (specify nature)
(Q) Provisions:
The amounts shall be classified as-
(a) Provision for employee benefits; and
(b) Others (specify nature)
(R) Other Non-financial liabilities (to be specified):
(a) Revenue received in advance;
(b) Other advances (Specify nature); and
(c) Others (specify nature).
(S) Equity Share Capital : For each class of equity share capital:
(a) the number and amount of shares authorized;
(b) the number of shares issued, subscribed and fully paid, and
subscribed but not fully paid;
(c) par value per share;
(d) a reconciliation of the number of shares outstanding at the beginning
and at the end of the period;
(e) the rights, preferences and restrictions attaching to each class of
shares including restrictions on the distribution of dividends and the
repayment of capital;
126
GN on Division III Schedule III to the Companies Act 2013 for NBFC ...
(f) 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;
(g) shares in the company held by each shareholder holding more than
five percent shares specifying the number of shares held;
(h) shares reserved for issue under options and contracts/commitments
for the sale of shares or disinvestment, including the terms and
amounts;
(i) For the period of five years immediately preceding the date at which
the Balance Sheet is prepared:
· Aggregate number and class of shares allotted as fully paid up
pursuant to contract without payment being received in cash;
· Aggregate number and class of shares allotted as fully paid up
by way of bonus shares; and
· Aggregate number and class of shares bought back;
(j) terms of any securities convertible into equity shares issued along with
the earliest date of conversion in descending order starting from the
farthest such date;
(k) calls unpaid (showing aggregate value of calls unpaid by directors and
officers);
(l) forfeited shares (amount originally paid up)
(m) An NBFC shall disclose information that enables users of its financial
statements to evaluate the NBFC's objectives, policies and processes
for managing capital.
(T) Other Equity
(i) Other Reserves' shall be classified in the notes as:
(a) Capital Redemption Reserve;
(b) Debenture Redemption Reserve;
(c) Share Options Outstanding Account;
(d) Statutory Reserves; and
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(e) Others (specify the nature and purpose of each reserve and
the amount in respect thereof); (Additions and deductions since
last balance sheet to be shown under each of the specified
heads)
(ii) Retained Earnings represents surplus i.e. balance of the relevant
column in the Statement of Changes in Equity;
(iii) A reserve specifically represented by earmarked investments shall
disclose the fact that it is so represented;
(iv) Debit balance of Statement of Profit and Loss shall be shown as a
negative figure under the head `retained earnings'. Similarly, the
balance of `Other Equity', after adjusting negative balance of retained
earnings, if any, shall be shown under the head `Other Equity' even if
the resulting figure is in the negative;
(v) Under the sub-head `Other Equity', disclosure shall be made for the
nature and amount of each item; and
(vi) Under the sub-head `Other Equity', disclosure shall be made for
conditions or restrictions for distribution attached to statutory reserves.
(U) Contingent Liabilities and commitments (to the extent not
provided for)
(i) Contingent Liabilities shall be classified as:
(a) Claims against the company not acknowledged as debt;
(b) Guarantees excluding financial guarantees; and
(c) Other money for which the company is contingently liable
(ii) Commitments shall be classified as:
(a) Estimated amount of contracts remaining to be executed on
capital account and not provided for;
(b) Uncalled liability on shares and other investments partly paid;
(c) Other commitments (specify nature).
(V) The amount of dividends proposed to be distributed to equity and
preference shareholders for the period and the related amount per
share shall be disclosed separately. Arrears of fixed cumulative
dividends on irredeemable preference shares shall also be disclosed
separately.
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(W) Where in respect of an issue of securities made for a specific purpose
the whole or part of amount has not been used for the specific purpose
at the Balance Sheet date, there shall be indicated by way of note how
such unutilized amounts have been used or invested.
(X) Other Classification related General Instructions
1. When an NBFC applies an accounting policy retrospectively or makes
a restatement of items in the financial statements or when it
reclassifies items in its financial statements, the NBFC shall attach to
the Balance Sheet, a "Balance Sheet" as at the beginning of the
earliest comparative period presented.
2. Share application money pending allotment shall be classified into
equity or liability in accordance with relevant Indian Accounting
Standards. Share application money to the extent not refundable shall
be shown under the head Equity and share application money to the
extent refundable shall be separately shown under `Other financial
liabilities'.
3. Preference shares including premium received on issue, shall be
classified and presented as `Equity' or `Liability' in accordance with the
requirements of the relevant Indian Accounting Standards.
Accordingly, the disclosure and presentation requirements in this
regard applicable to the relevant class of equity or liability shall be
applicable mutatis mutandis to the preference shares. For instance,
plain vanila redeemable preference shares shall be classified and
presented under `liabilities' as `borrowings' or `subordinated liability'
and the disclosure requirements in this regard applicable to such
borrowings shall be applicable mutatis mutandis to redeemable
preference shares.
4. Compound financial instruments such as convertible debentures,
where split into equity and liability components, as per the
requirements of the relevant Indian Accounting Standards, shall be
classified and presented under the relevant heads in ``Liabilities and
Equity'.
5. Regulatory Deferral Account Balances shall be presented in the
Balance Sheet in accordance with the relevant Indian Accounting
Standards.
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PART II STATEMENT OF PROFIT AND LOSS
Name of the Non-Banking Financial Company.........................
Statement of Profit and Loss for the period ended ...........................
(Rupees in .................)
Particulars Note Figures for Figures for
No. the current the previous
reporting reporting
period period
Revenue from operations
(i) Interest Income
(ii) Dividend Income
(iii) Rental Income
(iv) Fees and commission
Income
(v) Net gain on fair value
changes
(vi) Net gain on derecognition of
financial instruments
under amortised cost
category
(vii) Sale of products(including
Excise Duty)
(viii) Sale of services
(ix) Others (to be specified)
(I) Total Revenue from
operations
(II) Other Income (to be
specified)
(III) Total Income (I+II)
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Expenses
(i) Finance Costs
(ii) Fees and commission
expense
(iii) Net loss on fair value
changes
(iv) Net loss on derecognition of
financial instruments under
amortised cost category
(v) Impairment on financial
instruments
(vi) Cost of materials consumed
(vii) Purchases of Stock-in-trade
(viii) Changes in Inventories of
finished goods, stock-in-
trade and work-in- progress
(ix) Employee Benefits Expenses
(x) Depreciation, amortization
and impairment
(xi) Others expenses (to be
specified)
(IV ) Total Expenses (IV)
(V ) Profit / (loss) before
exceptional items and tax
(III-
IV)
(VI ) Exceptional items
(VII ) Profit/(loss) before tax (V -VI
)
(VIII) Tax Expense:
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(1) Current Tax
(2) Deferred Tax
(IX) Profit / (loss) for the
period from continuing
operations(VII-VIII)
(X) Profit/(loss) from
discontinued operations
(XI) Tax Expense of discontinued
operations
(XII) Profit/(loss) from
discontinued operations(After
tax) (X-XI)
(XIII) Profit/(loss) for the period
(IX+XII)
(XIV) Other Comprehensive
Income
(A) (i) Items that will not be
reclassified to profit or loss
(specify items and amounts)
(ii) Income tax relating to
items that will not be
reclassified to profit or loss
Subtotal (A)
(B) (i) Items that will be
reclassified to profit or
loss
(specify items and amounts)
(ii) Income tax relating to
items that will be
reclassified to profit or loss
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Subtotal (B)
Other Comprehensive
Income (A + B)
(XV) Total Comprehensive
Income for the period
(XIII+XIV) (Comprising
Profit (Loss) and other
Comprehensive Income for
the period)
(XVI) Earnings per equity share
(for continuing operations)
Basic (Rs.)
Diluted (Rs.)
(XVII) Earnings per equity share
(for discontinued
operations)
Basic (Rs.)
Diluted (Rs.)
(XVIII) Earnings per equity share
(for continuing and
discontinued operations)
Basic (Rs.)
Diluted (Rs.)
See accompanying notes to the financial statements
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Notes
GENERAL INSTRUCTIONS FOR PREPARATION OF STATEMENT OF
PROFIT AND LOSS
1. The provisions of this Part shall apply to the income and expenditure
account, in like manner as they apply to a Statement of Profit and
Loss.
2. The Statement of Profit and Loss shall include:
(A) Profit or loss for the period;
(B) Other Comprehensive Income for the period.
The sum of (A) and (B) above is `Total Comprehensive Income'.
3. Interest Income
Particulars (Current Year) (Previous Year)
On On Interest On On Interest
Financial Financial Income Financial Financial Income
Assets Assets on Assets Assets on
measured measured Financial measured measured Financial
at fair at Assets at fair at Assets
value Amortised Classified value Amortised classified
through Cost at fair through Cost at fair
OCI Value OCI value
through through
profit or profit or
Loss loss
Interest on
Loans
Interest income
from
investments
Interest on
deposits
with Banks
Other interest
Income
Total
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4. Net gain/ (loss) on fair value changes*
Particulars (Current Year) (Previous Year)
(A) Net gain/ (loss) on
financial instruments at fair
value through profit or loss
(i) On trading portfolio
- Investments
- Derivatives
- Others
(ii) On financial
instruments designated at
fair value through profit or
loss
(B) Others (to be specified)
Total Net gain/(loss) on fair
value changes (C)
Fair Value changes:
-Realised
-Unrealised
Total Net gain/(loss) on fair
value changes(D) to tally
with (C)
*Fair value changes in this schedule are other than those arising on account
of accrued interest income/expense.
5. Other Income (to be specified)
Particulars (Current Year) (Previous Year)
Net gain/(loss) on ineffective portion of
hedges
Net gain/(loss) on derecognition of
property, plant and equipment
Net gain or loss on foreign currency
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transaction and translation (other than
considered as finance cost) (to be
specified)
Others ( to be specified)*
Total
* Any item under the subhead `Others' which exceeds one per cent of the
total income to be presented separately.
6. Finance Costs
Particulars (Current Year) (Previous Year)
On On On On
Financial Financial Financial Financial
liabilities Liabilities liabilities liabilities
measured measured measured measured
at fair at at fair at
value Amortised value Amortised
through Cost through Cost
profit or profit or
Loss loss
Interest on deposits
Interest on borrowings
Interest on debt
securities
Interest on subordinated
liabilities
Other interest expense
Total
7. Employee Benefits Expenses
Particulars (Current Year) (Previous Year)
Salaries and wages
Contribution to provident and other
funds
Share Based Payments to employees
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Staff welfare expenses
Others (to be specified)
Total
8. Impairment on financial instruments
Particulars (Current Year) (Previous Year)
On On On On
Financial Financial Financial Financial
instruments instruments instruments instruments
measured at measured measured measured
fair value at at fair at
through OCI Amortised value Amortised
Cost through Cost
OCI
Loans
Investments
Others (to be
specified)
Total
9. Other expenses (to be specified)
Particulars (Current Year) (Previous Year)
Rent, taxes and energy costs
Repairs and maintenance
Communication Costs
Printing and stationery
Advertisement and publicity
Director's fees, allowances and
expenses
Auditor's fees and expenses
Legal and Professional charges
Insurance
Other expenditure
Total
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* Any item under the subhead `Others expenditure' which exceeds one per
cent of the total income to be presented separately.
10. Other Comprehensive Income shall be classified into-
(A) Items that will not be reclassified to profit or loss
(i) Changes in revaluation surplus;
(ii) Remeasurements of the defined benefit plans;
(iii) Equity Instruments through Other Comprehensive
Income;
(iv) Fair value changes relating to own credit risk of financial
liabilities designated at fair value through profit or loss;
(v) Share of Other Comprehensive Income in Associates
and Joint Ventures, to the extent not to be classified into
profit or loss; and
(vi) Others (specify nature).
(B) Items that will be reclassified to profit or loss;
(i) Exchange differences in translating the financial
statements of a foreign operation;
(ii) Debt Instruments through Other Comprehensive Income;
(iii) The effective portion of gains and loss on hedging
instruments in a cash flow hedge;
(iv) Share of Other Comprehensive Income in Associates
and Joint Ventures, to the extent to be classified into
profit or loss; and
(v) Others (specify nature).
11. Additional Information: An NBFC shall disclose by way of notes,
additional information regarding aggregate expenditure and income on
the following items:
(i) Depreciation, amortisation and impairment
(ii) payments to the auditor as (a) auditor, (b) for taxation matters, (c)
for company law matters, (d) for other services, (e) for
reimbursement of expenses;
138
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(iii) in case of NBFCs covered under section 135, amount of
expenditure incurred on corporate social responsibility activities;
and
(iv) details of items of exceptional nature
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PART III-GENERAL INSTRUCTIONS FOR THE PREPARATION OF
CONSOLIDATED FINANCIAL STATEMENTS
(1) Where a Non-Banking Financial Company (NBFC) is required to
prepare Consolidated Financial Statements, i.e., consolidated balance
sheet, consolidated statement of changes in equity and consolidated
statement of profit and loss, the NBFC shall mutatis mutandis follow
the requirements of this Schedule as applicable to an NBFC in the
preparation of balance sheet, statement of changes in equity and
statement of profit and loss. However, where the consolidated financial
statements contains elements pertaining to NBFCs and other than
NBFCs, mixed basis of presentation may be followed for consolidated
financial statements where both kinds of operations are significant. In
addition, the consolidated financial statements shall disclose the
information as per the requirements specified in the applicable Indian
Accounting Standards notified under the Companies (Indian
Accounting Standards) Rules 2015, including the following, namely:-
(i) Profit or loss attributable to `non-controlling interest' and to
`owners of the parent' in the statement of profit and loss shall be
presented as allocation for the period. Further, `total
comprehensive income' for the period attributable to `non-
controlling interest' and to `owners of the parent' shall be
presented in the statement of profit and loss as allocation for the
period. The aforesaid disclosures for `total comprehensive
income' shall also be made in the statement of changes in equity.
In addition to the disclosure requirements in the Indian
Accounting Standards, the aforesaid disclosures shall also be
made in respect of `other comprehensive income'.
(ii) `Non-controlling interests' in the Balance Sheet and in the
Statement of Changes in Equity, within equity, shall be presented
separately from the equity of the `owners of the parent'.
(iii) Investments accounted for using the equity method.
(2) In Consolidated Financial Statements, the following shall be disclosed
by way of additional information:
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Name of Net Assets, Share in Share in other Share in total
the i.e., total profit or loss comprehensiv comprehensive
entity in assets minus e income income
the total
Group Liabilities
As % of Amou As % of Amou As % of Amou As % of Amou
consolid nt consolida nt consolidat nt total nt
ated net ted profit ed other comprehen
assets or loss comprehe sive
nsive income
income
Parent
Subsidia
ries
Indian
1.
2.
3.
Foreign
1.
2.
3.
Non-
controllin
g
Interests
in all
Subsidia
ries
Associat
es
(Investm
ent as
per the
equity
method)
141
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Indian
1.
2.
3.
Foreign
1.
2.
3.
Joint
Ventures
(as per
the
equity
method)
Indian
1.
2.
3.
Foreign
1.
2.
3.
Total
(3) All subsidiaries, associates and joint ventures (whether Indian or
foreign) will be covered under consolidated financial statements.
(4) An entity shall disclose the list of subsidiaries or associates or joint
ventures which have not been consolidated in the consolidated
financial statements along with the reasons of not consolidating.
142
Annexure B
Key Differences in Division I and Division III to Schedule III to the
Companies Act, 2013
Division I Division III
1. Applicability
Division I is applicable to a Division III is applicable to every
Company whose Financial NBFC to which Ind AS apply in
Statements are not required to preparation of its financial
comply Ind AS. statements.
2. What it includes?
Division I includes Division III includes
1. Balance Sheet 1. Balance Sheet
2. Statement of Profit and Loss 2. Statement of Changes in Equity
3. Statement of Cash Flow 3. Statement of Profit and Loss.
4. Notes, comprising a summary of 4. Statement of Cash Flow
significant accounting policies and 5. Notes, comprising a summary of
other explanatory information significant accounting policies and
other explanatory information
6. A balance as at the beginning of
the earliest comparative period
when an entity applies an
accounting policy retrospectively or
makes a retrospective restatement
of items in its Financial Statements,
or when it reclassifies items in its
Financial Statements.
Statement of Profit and Loss shall
include profit or loss for the period
and Other Comprehensive Income
for the period.
3. Materiality
A Company shall disclose by way of A NBFC shall disclose by way of
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Division I Division III
notes additional information any notes additional information for any
item of expenditure and income item of `other income' or `other
which exceeds one per cent of the expenditure' which exceeds 1
revenue from operations or Rs. percent of the total income.
1,00,000 whichever is higher. Also disclosure is to be made of all
material items i.e. the items if they
could, individually or collectively,
influence the economic decisions
that users make on the Financial
Statements.
4. Earnings per Share
No separate disclosure is required Division III requires separate
for earning per share for continuing disclosure of the earning per share
and discontinuing operations. for continuing and discontinuing
operations.
5. Extraordinary items
Separate disclosure is required. There is no separate disclosure of
extraordinary items which is in line
with IND AS 1.
6. Investments
Under each classification of The head `investments' includes the
investments details shall be given total investments including
of names of bodies corporate investments at amortised cost, at
indicating separately whether such fair value through Other
bodies are Comprehensive Income, at fair
1. Subsidiaries value through Profit or Loss, and
2. Associates designated at fair value through
Profit or Loss both within and
3. Joint ventures
outside India. Where the NBFC has
4. Controlled special purpose
used a basis other than amortised
entities
cost or fair value, the same may be
The following shall also be included in column `Others', with
disclosed. the basis of measurement disclosed
(a) The basis of valuation of as a footnote. The impairment loss
individual investment allowance as per Ind AS 109 should
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Division I Division III
(b) Aggregate amount of quoted be disclosed as a separate line item
investments and market under the sub-heads mentioned
value thereof above.
(c) Aggregate amount of Investments shall be classified as:
unquoted investments (i) Investments in Mutual funds
(d) Aggregate provision made for (ii) Investments in Government
diminution in value of securities
investments (iii) Investments in Other
approved securities
(iv) Investments in Debt
Securities
(v) Investments in Equity
Instruments
(vi) Investments in Subsidiaries
(vii) Investments in Associates
(viii) Investments in Joint Ventures
(ix) Others (Specify)
7. Trade Receivables
Aggregate amount of Trade As per the amendments to
receivable outstanding for a period Schedule III, `trade receivables'
exceeding six months from the date should be classified as follows:
they are due for payment should be a) Trade receivables considered
separately disclosed good (Secured)
b) Trade receivables considered
good (Unsecured)
c) Trade receivables which have
significant increase in credit risk
and
d) Trade receivables credit
impaired.
A separate disclosure under
`receivables' is required for any
debts due from any Limited
Liability Partnership (LLP) in
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Division I Division III
which its director is a partner or
member.
8. Contingent liabilities
Contingent liabilities includes all Contingent liabilities pertaining to
guarantees guarantees excluding financial
guarantees.
Further, the following has been
removed for Division III:
W. If, in the opinion of the Board,
any of the assets other than fixed
assets and non-current
investments do not have a value
on realization in the ordinary
course of business at least equal
to the amount at which they are
stated, the fact that the Board is
of that opinion, shall be stated.
9. Finance Cost
Finance cost shall be classified as Finance Cost shall be classified as
(a) Interest Expense (a) Interest on deposits
(b) Other borrowing cost (b) Interest on borrowings
(c) Applicable net gain/loss on (c) Interest on debt securities
foreign currency transactions (d) Interest on subordinated
and translations liabilities
(e) Other interest expense
10. Revenue
Revenue is disclosed as Sales net Revenue includes excise duty.
of Excise duty Also, NBFCs are required to
disclose items comprising
`revenue from operations' and
`other comprehensive income' on
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Division I Division III
the face of the statement of profit
and loss.
11. Bank Deposits
Cash and cash equivalents Cash and cash equivalent
Cash and Cash equivalents shall be
classified as: Cash and Cash equivalents shall be
(a) Balance with banks classified as:
Bank deposits with more than 12
months maturity should be (a) Balance with banks (of the
classified under Other bank nature of cash and cash
balances equivalents)
12. Defined benefit plan
Gains/losses arising on defined Division III to Schedule III states
benefit plan is recognized in that Re-measurement gains/ losses
statement of profit and loss on defined benefit plans should
form part of retained earnings.
Ind AS requires that Re-
measurement gains/ (losses)
arising on defined benefit plans
should be recognized in the other
comprehensive income (OCI) and
these gains/ losses cannot
subsequently be reclassified to
profit or loss.
However, Ind AS does not contain
any specific guidance/ requirement
whether such gains/ losses should
be recognized in the retained
earnings or should appear as a
separate reserve within the
statement of changes in equity.
13. Liquidity
Where compliance with the Where any Act, Regulation,
requirements of the Act including Guidelines or Circulars issued by
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Division I Division III
Accounting Standards as applicable the relevant regulators from
to the companies require any time to time requires disclosures to
change in treatment or disclosure be made in the standalone financial
including addition, amendment, statements of an NBFC, the said
substitution or deletion in the head disclosures shall be made in
or sub-head or any changes, inter addition to those required under
se, in the financial statements or this Schedule. The NBFCs
statements forming part thereof, the preparing financial statements as
same shall be made and the per this Schedule may change the
requirements of this Schedule shall order of presentation of line
stand modified accordingly. items on the face of financial
statements or order of line items
within the schedules in order of
liquidity, if appropriate,
considering the operations
performed by the NBFC.
14. Other disclosures of
Statement of Profit and Loss
The following disclosures are These disclosures are no longer
required required under Division III to
A. (a) In the case of manufacturing Schedule III.
companies,
(1) Raw materials under broad
heads.
(2) goods purchased under
broad heads.
(b) In the case of trading
companies, purchases in respect of
goods traded in by the company
under broad heads.
(c) In the case of companies
rendering or supplying services,
gross income derived from services
rendered or supplied under broad
heads.
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Division I Division III
(d) In the case of a company, which
falls under more than one of the
categories mentioned in (a), (b) and
(c) above, it shall be sufficient
compliance with the requirements
herein if purchases, sales and
consumption of raw material and
the gross income from services
rendered is shown under broad
heads.
(e) In the case of other companies,
gross income derived under broad
heads.
B. In the case of all concerns
having works in progress under
broad heads.
C. (a) The aggregate, if material, of
any amounts set aside or proposed
to be set aside, to reserve, but not
including provisions made to meet
any specific liability,
Contingency or commitments
known to exist at the date as to
which the balance sheet is made
up.
(b) The aggregate, if material, of
any amounts withdrawn from such
reserves.
D. (a) The aggregate, if material, of
the amounts set aside to provisions
made for meeting specific liabilities,
contingencies or commitments.
(b) The aggregate, if material, of
the amounts withdrawn from such
provisions, as no longer required.
E. Expenditure incurred on each of
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Division I Division III
the following items, separately for
each item:
(a) Consumption of stores and
spare parts;
(b) Power and fuel;
(c) Rent;
(d) Repairs to buildings;
(e) Repairs to machinery;
(f) Insurance;
(g) Rates and taxes, excluding
taxes on income;
(h) Miscellaneous expenses,
F. (a) Dividends from subsidiary
companies.
(b) Provisions for losses of
subsidiary companies.
G. The profit and loss account shall
also contain by way of a note the
following information, namely:
(a) Value of imports calculated on
C.I.F basis by the company during
the financial year in respect of
I. Raw materials;
II. Components and spare
parts;
III. Capital goods;
(b) Expenditure in foreign currency
during the financial year on account
of royalty, know-how, professional
and consultation fees, interest, and
other matters;
(c) Total value if all imported raw
materials, spare parts and
components consumed during the
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Division I Division III
financial year and the total value of
all indigenous raw materials, spare
parts and components similarly
consumed and the percentage of
each to the total consumption;
(d) The amount remitted during the
year in foreign currencies on
account of dividends with a specific
mention of the total number of non-
resident shareholders, the total
number of shares held by them on
which the dividends were due and
the year to which the dividends
related;
(e) Earnings in foreign exchange
classified under the following
heads, namely:
I. Export of goods calculated
on F.O.B. basis;
II. Royalty, know-how,
professional and consultation
fees;
III. Interest and dividend;
IV. Other income, indicating the
nature thereof.
15. Dividend on Preference
Shares
Dividend on redeemable preference Dividend on redeemable preference
shares was regarded as an shares is now presented as a part
adjustment to reserves. of Finance cost.
16. Prior Period Items
A separate disclosure was required There is no concept of Prior period
for Prior Period Items. items and any retrospective
application of accounting policy or
retrospective restatement of items
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Division I Division III
in Financial Statements, or
reclassification of items in Financial
Statements requires restatement of
comparative period.
17. Rounding off Disclosure
Depending upon the turnover of the Depending upon the turnover of the
company, the figures appearing in company, the figures appearing in
the Financial Statements may be the Financial Statements shall be
rounded off as given in Non-Ind AS rounded off as given in Division III
Schedule III. to Schedule III.
18. Investments Names of
Bodies Corporate
Under each classification of The head `investments' includes the
investments details shall be given total investments including
of names of bodies corporate investments at amortised cost, at
indicating separately whether such fair value through Other
bodies are Comprehensive Income, at fair
1. Subsidiaries value through Profit or Loss, and
2. Associates designated at fair value through
Profit or Loss both within and
3. Joint ventures
outside India. Where the NBFC has
4. Control special purpose entities
used a basis other than amortised
cost or fair value, the same may be
included in column `Others', with
the basis of measurement disclosed
as a footnote. The impairment loss
allowance as per Ind AS 109 should
be disclosed as a separate line item
under the sub-heads mentioned
above.
Investments shall be classified as:
(i) Investments in Mutual funds
(ii) Investments in Government
securities
(iii) Investments in Other
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approved securities
(iv) Investments in Debt
Securities
(v) Investments in Equity
Instruments
(vi) Investments in Subsidiaries
(vii) Investments in Associates
(viii) Investments in Joint
Ventures
Others (Specify)
19. Investment Property
Investment property was disclosed Investment Property is disclosed as
as a part of Investments. a separate line item on the face
of balance sheet.
Also the following disclosure needs
to be given
A reconciliation of the gross and
net carrying amounts of each
class of property at the
beginning and end of the
reporting period showing
additions, disposals, acquisitions
through business combinations
and other adjustments and the
related depreciation and
impairment losses or reversals
shall be disclosed separately.
20. Disclosure in standalone
financial statements
No such explicit Requirement Disclosures required by Act,
Regulation, Guidelines or
Circulars issued by the relevant
regulators from time to time shall
be made in the standalone financial
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statements which shall be made in
addition to those required under
this Schedule.
21. Property, Plant and
Equipment and Intangible Assets
Tangible assets Property, Plant and Equipment
Classification shall be given as: Classification shall be given as:
(i) Land; (i) Land
(ii) Buildings; (ii) Buildings
(iii) Plant and Equipment; (iii) Plant and Equipment
(iv) Furniture and Fixtures; (iv) Furniture and Fixtures
(v) Vehicles; (v) Vehicles
(vi) Office equipment; (vi) Office equipment
(vii) Others (specify nature) (vii) Bearer Plants
Clause common to Tangible assets (viii) Others (specify nature)
and Intangible assets: Clause common to Property, Plant
& Equipment and Other Intangible
Assets:
22. Capital Reduction
Where sums have been written-off No such requirement
on a reduction of capital or
revaluation of assets or where
sums have been added on
revaluation of assets, every balance
sheet subsequent to date of such
write-off, or addition shall show the
reduced or increased figures as
applicable and shall by way of a
note also show the amount of the
reduction or increase as applicable
together with the date thereof for
the first five years subsequent to
the date of such reduction or
increase.
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23. Biological Assets other than
bearer plants
Biological assets other than bearer Biological assets other than bearer
plants plants
No such requirement Biological assets other than bearer
plants need to be disclosed
separately on the face of balance
sheet.
Further, A reconciliation of the
carrying amounts of each class of
assets at the beginning and end of
the reporting period showing
additions, disposals, acquisitions
through business combinations and
other adjustments shall be
disclosed separately.
24. Loans: Non-current
Long-term loans and advances As per the amendment to Schedule
shall be classified as: III, `loans receivables' should be
(a) Capital Advances; classified as follows:
(b) Security Deposits; (a) Loans receivables considered
(c) Loans and advances to good - Secured;
related parties (giving details (b) Loans receivables considered
thereof); good Unsecured;
(d) Other loans and advances (c) Loans receivables which have
(specify nature). significant increase in credit
risk; and
(d) Loans receivables credit
impaired.
25. Other non-current assets
Other non-current assets shall be There is no line item as Other
classified as: non-current assets in Division III
(i) Long-term Trade to Schedule III.
Receivables (including trade
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receivables on deferred
credit terms);
(ii) Others (specify nature);
(iii) Long-term Trade
Receivables, shall be sub-
classified as:
(a) Secured, considered
good;
(b) Unsecured, considered
good;
(c) Doubtful.
Allowance for bad and doubtful
debts shall be disclosed under the
relevant heads separately.
Debts due by directors or other
officers of the company or any of
them either severally or jointly with
any other persons or advances to
firms or private companies
respectively in which any director is
a partner or a director or a member
should be separately stated.
26. Loans: Current
Short-term loans and advances There is no line item as Loans:
shall be classified as: Current in Division III to
(a) Loans and advances to Schedule III.
related parties (giving details
thereof);
(b) Others (specify nature).
27. Other current assets
This is an all-inclusive heading, There is no line item as Other
which incorporates current assets current assets in Division III to
that do not fit into any other asset Schedule III.
categories.
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28. Share capital
For each class of share capital For each class of equity share
(different classes of preference capital (different classes of
shares to be treated separately): preference shares to be treated
(j) terms of any securities separately):
convertible into equity/preference
shares issued along with the (j) terms of any securities
earliest date of conversion in convertible into equity/ preference
descending order starting from the shares issued along with the
farthest such date; earliest date of conversion in
descending order starting from the
farthest such date;
29. Reserves and Surplus/Other
Equity
(i) Reserves and Surplus shall (i) `Other Reserves' shall be
be classified as: classified in the notes as-
(a) Capital Reserves; (a) Capital Reserve;
(b) Capital Redemption Reserve; (a) Capital Redemption Reserve;
(c) Securities Premium Reserve; (c) Securities Premium Reserve;
(d) Debenture Redemption (b) Debenture Redemption
Reserve; Reserve;
(e) Revaluation Reserve; (c) Share Options Outstanding
(f) Share Options Outstanding Account
Account; (d) Statutory Reserves; and
(g) Other Reserves-(specify the
nature and purpose of each (e) Others - (specify the nature and
reserve and the amount in purpose of each reserve and
respect thereof); the amount in respect thereof);
(h) Surplus i.e., balance in (Additions and deductions since last
Statement of Profit and Loss balance sheet to be shown under
disclosing allocations and each of the specified heads)
appropriations such as (ii) Retained Earnings represents
dividend, bonus shares and surplus i.e. balance of the relevant
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transfer to/ from reserves, column in the Statement of
etc.; Changes in Equity;
(Additions and deductions since last (iii) A reserve specifically
balance sheet to be shown under represented by earmarked
each of the specified heads); investments shall disclose the fact
(ii) A reserve specifically that it is so represented;
represented by earmarked (iv) Debit balance of Statement of
investments shall be termed as a Profit and Loss shall be shown as a
"fund". negative figure under the head
(iii) Debit balance of statement of `retained earnings'. Similarly, the
profit and loss shall be shown as a balance of `Other Equity', after
negative figure under the head adjusting negative balance of
"Surplus". Similarly, the balance of retained earnings, if any, shall be
"Reserves and Surplus", after shown under the head `Other
adjusting negative balance of Equity' even if the resulting figure is
surplus, if any, shall be shown in the negative; and
under the head "Reserves and (v) Under the sub-head `Other
Surplus" even if the resulting figure Equity', disclosure shall be made
is in the negative. for the nature and amount of each
item.
(vi) Under the sub-head `Other
Equity', disclosure shall be made
for conditions or restrictions for
distribution attached to statutory
reserves.
30. Borrowings: Non-current
Long-term borrowings shall be There are no current and non-
classified as: current classifications in Division III.
(a) Bonds/debentures; Borrowings and Debt Securities fall
(b) Term loans: under the head `Financial
Liabilities'.
(A) from banks.
Borrowings (Other than Debt
(B) from other parties.
Securities) shall be classified as:
(c) Deferred payment liabilities;
(a) Term Loans
(d) Deposits;
(i) From banks
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Division I Division III
(e) Loans and advances from (ii) From other parties
related parties; (b) Deferred payment liabilities
(f) Long term maturities of finance (c) Loans from related parties
lease obligations; (d) Finance lease obligations
(g) Other loans and advances (e) Liability component of
(specify nature). compound financial instruments
Period and amount of continuing (f) Loans repayable on demand
default as on the balance sheet
(i) From banks
date in repayment of loans and
(ii) From other parties
interest, shall be specified
separately in each case. (g) Other loans (specify nature)
The borrowings shall be disclosed
at amortised cost and at fair value
through profit or loss, and
designated at fair value through
profit and loss, both within and
outside India.
The head `Debt Securities' under
`Financial Liabilities' includes
Liability component of compound
financial instruments as per
applicable accounting standards
and Others (Bonds/ Debentures
etc.) i.e. debt securities other than
subordinated liabilities; including
debt securities at amortised cost
and at fair value, both within and
outside India.
31. Other non-current liabilities
Other Long-term Liabilities shall be There is no line item as `Other
classified as: non-current liabilities' in Division
(a) Trade payables III to Schedule III. Other financial
(b) Others liabilities and other non-financial
liabilities are disclosed as line
items in the balance sheet.
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32. Borrowings: Current
Short-term borrowings shall be There are no current and non-
classified as: current classifications in Division III.
(a) Loans repayable on demand; Borrowings and Debt Securities fall
(A) from banks. under the head `Financial
Liabilities'.
(B) from other parties.
Borrowings (Other than Debt
(b) Loans and advances from
Securities) shall be classified as:
related parties;
(h) Term Loans
(c) Deposits;
(i) From banks
(d) Other loans and advances
(specify nature). (ii) From other parties
Period and amount of default as on (i) Deferred payment liabilities
the balance sheet date in (j) Loans from related parties
repayment of loans and interest, (k) Finance lease obligations
shall be specified separately in (l) Liability component of
each case. compound financial
instruments
(m) Loans repayable on demand
(i) From banks
(ii) From other parties
(n) Other loans (specify nature)
The borrowings shall be disclosed
at amortised cost and at fair value
through profit or loss, and
designated at fair value through
profit and loss, both within and
outside India.
The head `Debt Securities' under
`Financial Liabilities' includes
Liability component of compound
financial instruments as per
applicable accounting standards
and Others (Bonds/ Debentures
etc.) i.e. debt securities other than
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Division I Division III
subordinated liabilities; including
debt securities at amortised cost
and at fair value, both within and
outside India.
33. Other current liabilities
Other current liabilities There is no line item as `Other
The amounts shall be classified as: current liabilities' in Division III
to Schedule III. Other financial
(a) Current maturities of long-
liabilities and other non-financial
term debt;
liabilities are disclosed as line
(b) Current maturities of finance items in the balance sheet.
lease obligations;
(c) Interest accrued but not due
on borrowings;
(d) Interest accrued and due on
borrowings;
(e) Income received in advance;
(f) Unpaid dividends;
(g) Application money received
for allotment of securities and
due for refund and interest
accrued thereon;
(h) Unpaid matured deposits and
interest accrued thereon;
(i) Unpaid matured debentures
and interest accrued thereon;
(j) Other payables (specify
nature).
34. Non-current assets held for
sale
No such requirement The presentation of liabilities
associated with group of assets
classified as held for sale and non-
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current assets classified as held for
sale shall be in accordance with the
relevant Indian Accounting
Standards (Ind ASs).
35. Proposed dividend
The amount of dividends proposed The amount of dividends proposed
to be distributed to equity and to be distributed to equity and
preference shareholders for the preference shareholders for the
period and the related amount per period and the related amount per
share shall be disclosed separately. share shall be disclosed separately.
Arrears of fixed cumulative Arrears of fixed cumulative
dividends on preference shares dividends on irredeemable
shall also be disclosed separately. preference shares shall also be
As per AS 4 Contingencies and disclosed separately.
Events Occurring After the Balance As per Ind AS 10 Events after the
Sheet Date (Revised 2016), Reporting Period, proposed
proposed dividends should not be dividends should not be recognized
recognized as a liability but rather as a liability but rather should be
should be disclosed as a separate disclosed as a separate note.
note. Hence, there is no difference
between Indian GAAP and Ind AS.
36. Share application money
Share application money includes Share application money pending
advances towards allotment of allotment shall be classified into
share capital. The terms and equity or liability in accordance with
conditions including the number of relevant Indian Accounting
shares proposed to be issued, the Standards. Share application
amount of premium, if any, and the money to the extent not refundable
period before which shares shall be shall be shown under the head
allotted shall be disclosed. It shall Equity and share application money
also be disclosed whether the to the extent refundable shall be
company has sufficient authorised separately shown under `Other
capital to cover the share capital financial liabilities'.
amount resulting from allotment of
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shares out of such share
application money. Further, the
period for which the share
application money has been
pending beyond the period for
allotment as mentioned in the
document inviting application for
shares along with the reason for
such share application money being
pending shall be disclosed. Share
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 "Other
current liabilities"
37. Classification of preference
shares
No such requirement Preference shares including
premium received on issue, shall be
classified and presented as `Equity'
or `Liability' in accordance with the
requirements of the relevant Indian
Accounting Standards. Accordingly,
the disclosure and presentation
requirements in this regard
applicable to the relevant class of
equity or liability shall be applicable
mutatis mutandis to the preference
shares. For instance, plain vanila
redeemable preference shares shall
be classified and presented under
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`liabilities' as `borrowings' or
`subordinated liability' and the
disclosure requirements in this
regard applicable to such
borrowings shall be applicable
mutatis mutandis to redeemable
preference shares.
38.Compound financial
instruments
No such requirement Compound financial instruments
such as convertible debentures,
where split into equity and liability
components, as per the
requirements of the relevant Indian
Accounting Standards, shall be
classified and presented under the
relevant heads in `Liabilities and
Equity'.
39. Regulatory Deferral Account
No such requirement Regulatory Deferral Account
Balances and changes in such
Balances shall be presented in the
Balance Sheet and Statement of
Profit and Loss in accordance with
the relevant Indian Accounting
Standards.
40. Boards opinion on realizable
value
If, in the opinion of the Board, any No such requirement in
of the assets other than fixed accordance with Ind AS.
assets and non-current investments
do not have a value on realisation
in the ordinary course of business
at least equal to the amount at
which they are stated, the fact that
the Board is of that opinion, shall be
stated.
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41. Revenue from operations
In respect of a company other than Revenue from operations shall be
a finance company revenue from separately disclosed on the face of
operations shall disclose separately the Statement of Profit and Loss,
in the notes revenue from- showing:
(a) Sale of products; (a) Interest Income;
(b) Sale of services; (b) Dividend Income;
(c) Other operating revenues; (c) Rental Income;
Less: (d) Fees and commission
(d) Excise duty Income;
In respect of a finance company, (e) Net gain on fair value
revenue from operations shall changes;
include revenue from- (f) Net gain on derecognition of
(a) Interest financial instruments under
(b) Other financial services amortised cost category;
Revenue under each of the above (g) Sale of products (including
heads shall be disclosed separately Excise duty);
by way of notes to accounts to the (h) Sale of services; and
extent applicable. (i) Others (to be specified)
42. Other income
Other income shall be classified as: `Other Income' shall be classified
(a) interest income (in case of a as:
company other than a (a) Net gain/ (loss) on ineffective
finance company) portion of hedges;
(b) dividend income (b) Net gain/ (loss) on
(c) Net gain/loss on sale of derecognition of property,
investments plant and equipment;
(d) other non-operating income (c) Net gain or loss on foreign
(net of expenses directly currency transaction and
attributable to such income) translation (other than
considered as finance
cost)(to be specified)
(d) Others (to be specified)
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43. Employee benefit expense
Employee benefits expense shall Employee benefits expense shall
classified as: classified as:
(i) salaries and wages, (a) salaries and wages
(ii) contribution to provident and (b) contribution to provident and
other funds other funds
(iii) expense on Employee Stock (c) share based payments to
Option Scheme (ESOP) and employees
Employee Stock Purchase (d) staff welfare expenses
Plan (ESPP)
(iv) staff welfare expenses
44.Adjustments to carrying
amount of investments
A Company shall disclose by way of No such requirement
notes additional information
regarding aggregate expenditure
and income on adjustments to the
carrying amount of investments.
45. Payment to auditors
Payments to auditor shall be Payments to auditor shall be
classified as: classified as:
(a) auditor (a) auditor
(b) for taxation matters (b) for taxation matters
(c) for company law matters (c) for company law matters
(d) for management services (d) for management services
(e) for other services (d) for other services
(f) for reimbursement of (e) for reimbursement of
expenses expenses
46.Consolidated financial
statements
"Minority interests" in the balance `Non-controlling interests' in the
sheet within equity shall be Balance Sheet and in the
presented separately from the Statement of Changes in Equity,
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equity of the owners of the parent. within equity, shall be presented
separately from the equity of the
`owners of the parent'.
Consolidated financial statements
shall also disclose investments
accounted for using the equity
method.
47. Retrospective restatement or
reclassification
No such requirement When a company applies an
accounting policy retrospectively or
makes a restatement of items in the
financial statements or when it
reclassifies items in its financial
statements, the company shall
attach to the Balance Sheet, a
"Balance Sheet" as at the beginning
of the earliest comparative period
presented.
48. Other Comprehensive Income
No such requirement Other Comprehensive Income shall
be classified into:
(A) Items that will not be
reclassified to profit or loss:
(i) Changes in revaluation
surplus;
(ii) Remeasuremnts of the
defined benefit plans;
(iii) Equity Instruments
through Other
Comprehensive Income;
(iv) Fair value changes
relating to own credit
risk of financial liabilities
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designated at FVTPL; or
(v) Share of Other
Comprehensive Income
in Associates and Joint
Ventures, to the extent
not to be classified into
profit or loss; and
(vi) Others (specify nature).
Income tax relating to items
that will not be reclassified to
profit or loss
(B) Items that will be reclassified
to profit or loss:
(i) Exchange differences in
translating the financial
statements of a foreign
operation;
(ii) Debt Instruments
through Other
Comprehensive Income;
(iii) The effective portion of
gains and loss on
hedging instruments in a
cash flow hedge;
(iv) Share of Other
Comprehensive Income
in Associates and Joint
Ventures, to the extent
to be classified into
profit or loss; and
(v) Others (specify nature).
Income tax relating to items that will
be reclassified to profit or loss
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Key Differences in Division II and Division III Schedule III to the
Companies Act, 2013
Division II Division III
1. Applicability
Division II is applicable to a Division III is applicable to every
company whose financial NBFC to which Ind AS apply in
statements are prepared in preparation of its financial
accordance with Ind AS (other than statements.
Non-Banking Financial Companies
(NBFCs)).
2. Presentation of balance sheet items
Division II does not allow NBFCs have been allowed to
presentation of items of the balance present the items of the balance
sheet in order of their liquidity. sheet in order of their liquidity.
3. Classification of balance sheet items
The items of the balance sheet The items of the balance sheet
shall be broadly classified into shall be broadly classified into
current and non-current assets/ financial and non-financial assets/
liabilities. liabilities.
4. Separate Disclosure based on materiality
A separate disclosure is required A separate disclosure by way of a
for any item of income or note is required for any item of
expenditure which exceeds 1 `other income' or `other expenditure'
percent of the revenue from which exceeds 1 percent of the
operations or INR 10,00,000, total income.
whichever is higher.
5. Separate disclosure under `receivables'
No such requirement. A separate disclosure under
`receivables' is required for any
debts due from any Limited Liability
Partnership (LLP) in which its
director is a partner or member.
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6. Disclosure of items comprising `revenue from operations' and
`other comprehensive income'
Companies are required to disclose NBFCs are required to disclose
items comprising `revenue from items comprising `revenue from
operations' and `other operations' and `other
comprehensive income' as part of comprehensive income' on the face
the notes. of the statement of profit and loss.
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Annexure C
Illustrative list of disclosures required under the Companies Act 2013
1. Section 69 - Transfer of certain sums to capital redemption reserve
account.
Where a company purchases its own shares out of free reserves or securities
premium account, a sum equal to the nominal value of the shares so
purchased shall be transferred to the capital redemption reserve account and
details of such transfer shall be disclosed in the balance sheet.
2. Section 129 - Financial Statements
(5) Without prejudice to sub-section (1), where the Financial Statements
of a company do not comply with the accounting standards referred to in sub-
section (1), the company shall disclose in its Financial Statements, the
deviation from the accounting standards, the reasons for such deviation and
the financial effects, if any, arising out of such deviation.
3. Section 131 - Voluntary revision of Financial Statements or Board's
report
(1) If it appears to the directors of a company that--
(a) the Financial Statements of the company; or
(b) the report of the Board, do not comply with the provisions of section 129
or section 134 they may prepare revised Financial Statements or a revised
report in respect of any of the three preceding financial years after obtaining
approval of the Tribunal on an application made by the company in such form
and manner as may be prescribed and a copy of the order passed by the
Tribunal shall be filed with the Registrar:
Provided that the Tribunal shall give notice to the Central Government and
the Income tax authorities and shall take into consideration the
representations, if any, made by that Government or the authorities before
passing any order under this section:
Provided further that such revised Financial Statements or report shall not be
prepared or filed more than once in a financial year:
Provided also that the detailed reasons for revision of such Financial
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Statements or report shall also be disclosed in the Board's report in the
relevant financial year in which such revision is being made.
4. Section 135 - Corporate Social Responsibility
(2) The Board's report under sub-section (3) of section 134 shall disclose
the composition of the Corporate Social Responsibility Committee.
5. Section 182 - Prohibitions and restrictions regarding political
contributions
(3) Every company shall disclose in its profit and loss account the total
amount contributed by it under this section during the financial year to which
the account relates.
6. Section 183 - Power of Board and other persons to make
contributions to national defence fund, etc.
(2) Every company shall disclose in its profits and loss account the total
amount or amounts contributed by it to the Fund referred to in sub-section (1)
during the financial year to which the amount relates.
7. Section 186 - Loan and investment by company
(4) The company shall disclose to the members in the Financial
Statements the full particulars of the loans given, investment made or
guarantee given or security provided and the purpose for which the loan or
guarantee or security is proposed to be utilised by the recipient of the loan or
guarantee or security.
8. Section 272 - Petition for winding up
(4) The Registrar shall be entitled to present a petition for winding up
under subsection (1) on any of the grounds specified in sub-section (1) of
section 271, except on the grounds specified in clause (b), clause (d) or
clause (g) of that sub-section:
Provided that the Registrar shall not present a petition on the ground that the
company is unable to pay its debts unless it appears to him either from the
financial condition of the company as disclosed in its balance sheet or from
the report of an inspector appointed under section 210 that the company is
unable to pay its debts:
Provided further that the Registrar shall obtain the previous sanction of the
Central Government to the presentation of a petition:
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Provided also that the Central Government shall not accord its sanction
unless the company has been given a reasonable opportunity of making
representations.
173
Annexure D
List of Indian Accounting Standards notified as on date:
Ind AS Description
Ind AS 101 First-time Adoption of Indian Accounting Standards
Ind AS 102 Share-based Payment
Ind AS 103 Business Combinations
Ind AS 104 Insurance Contracts
Ind AS 105 Non-current Assets Held for Sale and Discontinued
Operations
Ind AS 106 Exploration for and Evaluation of Mineral Resources
Ind AS 107 Financial Instruments: Disclosures
Ind AS 108 Operating Segments
Ind AS 109 Financial Instruments
Ind AS 110 Consolidated Financial Statements
Ind AS 111 Joint Arrangements
Ind AS 112 Disclosure of Interests in Other Entities
Ind AS 113 Fair Value Measurement
Ind AS 114 Regulatory Deferral Accounts
Ind AS 115 Revenue from Contracts with Customers
Ind AS 1 Presentation of Financial Statements
Ind AS 2 Inventories
Ind AS 7 Statement of Cash Flows
Ind AS 8 Accounting Policies, Changes in Accounting Estimates and
Errors
Ind AS 10 Events after the Reporting Period
Ind AS 11 Construction Contracts
Ind AS 12 Income Taxes
Ind AS 16 Property, Plant and Equipment
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Ind AS 17 Leases
Ind AS 19 Employee Benefits
Ind AS 20 Accounting for Government Grants and Disclosure of
Government Assistance
Ind AS 21 The Effects of Changes in Foreign Exchange Rates
Ind AS 23 Borrowing Costs
Ind AS 24 Related Party Disclosures
Ind AS 27 Separate Financial Statements
Ind AS 28 Investments in Associates and Joint Ventures
Ind AS 29 Financial Reporting in Hyperinflationary Economies
Ind AS 32 Financial Instruments: Presentation
Ind AS 33 Earnings per Share
Ind AS 34 Interim Financial Reporting
Ind AS 36 Impairment of Assets
Ind AS 37 Provisions, Contingent Liabilities and Contingent Assets
Ind AS 38 Intangible Assets
Ind AS 40 Investment Property
Ind AS 41 Agriculture
175
Annexure E
General Circular No. 39/2014 dated: 14th October, 2014
To
All Regional Directors,
All registrars of Companies,
All Stakeholders
Subject: Clarification on matters relating to Consolidated Financial
Statements.
Sir,
Government has received representations from stakeholders seeking
clarifications on the manner of presentation of notes in Consolidated
Financial Statements (CFS) to be prepared under Schedule III to the Act.
These representations have been examined in consultation with the Institute
of Chartered Accountants of India (ICAI) and it is clarified that Schedule III to
the Act read with the applicable Accounting Standards does not envisage
that a company while preparing its CFS merely repeats the disclosures made
by it under stand-alone accounts being consolidated. In the CFS, the
company would need to give all disclosures relevant for CFS only.
2. This issues with the approval of the competent authority
176
Glossary
Act The Companies Act, 2013
Ind AS Schedule III Division II to Ind AS Schedule III
Ind AS Indian Accounting Standards
Companies Ind AS Companies Ind AS Rules, 2015 as amended from
Rules time to time
Ind AS Framework Framework for the preparation and presentation
of Financial Statements in accordance with Indian
Accounting Standards
Non Ind AS Accounting Standards
Companies AS Rules Companies Accounting Standards Rules, 2006 as
amended from time to time
FVTPL Fair Value through Profit or Loss
FVOCI Fair Value through other Comprehensive Income
SEBI Securities and Exchange Board of India
SEBI (LODR) SEBI (Listing Obligations and Disclosure
Requirements) Regulations, 2015
GAAP Generally Accepted Accounting Principles
MSMED The Micro, Small and Medium Enterprises
Development Act, 2006
CENVAT Central Value Added Tax
GST Goods and Services Tax
MAT Minimum Alternate Tax
CFS / SFS Consolidated Financial Statements / Standalone
Financial Statements
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