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Guidance Note on Division I- Non Ind AS Schedule III to the Companies Act, 2013- July 2019 Revised Edition
July, 05th 2019
           GUIDANCE NOTE
                 ON
DIVISION I ­ NON IND AS SCHEDULE III
    TO THE COMPANIES ACT, 2013
      (Revised July 2019 Edition)




     Corporate Laws & Corporate Governance Committee
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               :   May 2017
Second Edition              :   July 2019


Committee/Department        :   Corporate Laws & Corporate Governance
                                Committee


E-mail                      :   clcgc@icai.in


Website                     :   www.icai.org


Price                       :   Rs. 200/-


ISBN No.                    :   978-81-8441-826-2


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, Agra 282 003
                                July/2019/1,000
            Foreword to the Second Edition
The Division I to the Schedule III of the Companies Act, 2013 lays down the
format for preparation of the financial statements by the Companies that are
required to comply with Companies (Accounting Standards), Rules, 2006,
and has been amended by the Ministry of Corporate Affairs vide notification
dated 11th October, 2018. The changes are in reference to fixed assets and
securities premium reserve.
The first edition of the Guidance Note on Division I ­ Non Ind AS Schedule III
to the Companies Act 2013 was brought out by the Institute of Chartered
Accountants of India (ICAI) in the year 2016 immediately after the
introduction of format of Schedule III to the Companies Act 2013 to guide the
members in discharging their responsibility more efficiently and effectively.
However, recent amendments have necessitated the revisions in the
Guidance Note.
I congratulate the Corporate Laws & Corporate Governance Committee of
ICAI in taking this initiative of revising the guidance note and updating it as
per the amendments incorporated in Division I- to the Schedule III to the
Companies Act, 2013.
I extend my sincere appreciation to the entire Committee and specially
appreciate the efforts put in by CA. (Dr.) Debashis Mitra, Chairman,
Corporate Laws & Corporate Governance Committee and CA.
Chandrashekhar V. Chitale, Vice-Chairman, Corporate Laws & Corporate
Governance Committee for initiating and updating this publication.
I am of the firm belief that this revised Guidance Note would be of great help
to the members as well as for the entities in preparing and presenting
Financial Statements in accordance with the Accounting Standards.


New Delhi                                             CA Prafulla P. Chhajed
                                                              President ICAI
              Preface to the Second Edition
The Corporate Laws & Corporate Governance Committee issued the
Guidance Note on Schedule III to the Companies Act, 2013 (the Act) in
February, 2016 after considering the newly introduced Schedule III to the
Act.
The Ministry of Corporate Affairs vide Notification dated 11.10.2018 made
amendments to Schedule III to the Act. Therefore, there was a need to revise
the aforesaid Guidance Note.
In the amended Division I ­ of Schedule III, the major revisions that have
been made are that the Words Fixed Assets", have been replaced with the
words, "Property, Plant, and Equipment" for trade payables w.r.t. MSME,
disclosure of specific details required as per the MSMED Act, 2006 have
been added.
We would like to convey our sincere gratitude to the President ICAI CA.
Prafulla P. Chhajed, and the Vice President ICAI CA. Atul Kumar Gupta for
supporting us in bringing out the publication.
We also wish to place on record our sincere thanks to all the Committee
members & Special Invitees for their suggestions, support and guidance in
finalizing this Guidance Note.
Our thanks to the Study Group members CA Dhinal Shah (Convenor), CA.
Himanshu Kishnadwala, CA. Vijay Maniar, CA. Suresh Yadav, CA. Sandeep
Shah, Sh Vignesh Poojari, Sh Shriraj Bhandari, CA. Keyur Dave and CA.
Pratik Haria for their contribution in Revising the Guidance Note
We would also like to thank Secretary to the Committee CA. Sarika Singhal
and Ms Seema Jangid for their technical and administrative support.
We sincerely believe that the members of the profession, industry & other
stakeholders would find the publication immensely useful.

CA. (Dr.) Debashis Mitra                   CA. Chandrashekhar V. Chitale
Chairman,                                                 Vice Chairman
Corporate Laws &                                       Corporate Laws &
Corporate Governance                               Corporate Governance
Committee                                                     Committee
Dated: 18.06.2019
                 Foreword to the First Edition
The Companies Act 2013 was enacted to improve corporate governance and
better transparency in the corporate sector which is imperative to imbue
confidence amongst investors in Indian market and to further strengthen
regulations for the companies, keeping in view the changing economic
environment as well as the growth of our economy. The Ministry of Corporate
Affairs in 2011 revised the formats for preparation and presentation of
financial statements and released the Revised Schedule VI to the Companies
Act 1956.
The formats for financial statements were revised taking cognizance of
imperative situation and need that the financial statements of Indian
corporates should be comparable with international format as most of the
Indian accounting standards have been made at par with the international
accounting standards due to applicability of Ind AS.
The Institute through its Corporate Laws & Corporate Governance Committee
issued the Guidance Note on Revised Schedule VI to the Companies Act,
1956 in January, 2012. Further, the Schedule III to the Companies Act 2013
was notified on 26th March, 2014 with some amendments related to
disclosure on expenditure of Corporate Social Responsibility and
Consolidated Financial Statements. Therefore, there was a need to revise
the Guidance Note on Revised Schedule VI to the Companies Act, 1956 to
the extent of amendments in the Schedule III to the Companies Act, 2013.
So, the Corporate Laws & Corporate Governance Committee took this
initiative to bring this Guidance Note on Schedule III to the Companies Act
2013.
I wish to thank Vice President of ICAI CA. Devaraja Reddy M for his
encouragement and support in publishing this Guidance Note.
I commend the Corporate Laws & Corporate Governance Committee in
bringing out this useful publication. I place on record my appreciation for CA
S. Santhanakrishnan, Chairman, CA. Tarun Jamnadas Ghia, Vice Chairman
and the entire team of CL&CGC.
I sincerely hope that this publication would be of immense use to the
members in carrying out their professional assignment.
9th February 2016                                          CA. Manoj Fadnis
                                                              President, ICAI
                    Preface to the First Edition
The corporate laws of an economy are a sine qua non for economic growth.
In today's global economic scenario, entrepreneurs are looking forward to
economies that have the best, compact and easy laws and procedures that
facilitate quick establishment of companies. The Indian Company Law, which
had its legislative origin after independence, had gone through a complete
overhaul in 2013. The Ministry of Corporate Affairs has been taking timely
and pro-active initiatives by making the existing law simple, compact with
less cumbersome procedures. With its total makeover at this juncture, it is
almost at par with the laws elsewhere in the globe and making the country as
a platform for inviting off-shore investments.
As `Accounting Standards' including "Ind AS" as applicable have become
mandatory, Schedule III to the Companies Act, 2013 became an important
piece of document with a format aligned with that of Accounting Standards.
The Schedule III to the Companies Act, 2013 became applicable to all
companies for the preparation of Financial Statements beginning on or from
1.4.2014. It is a major step and members of the profession have a greater
role and responsibility in its preparation. To facilitate the preparation of
Financial Statements in compliance with the Schedule III, the ICAI has
brought out this Guidance Note for the benefit of its members.
In this connection, I take this opportunity in thanking the honourable
President of ICAI, CA. Manoj Fadnis and the Vice President of ICAI CA.
Devaraja Reddy M for their moral support and encouragement in bringing out
the publication. I place on record my appreciation to CA Taru Jamnadas
Ghia, the Vice-Chairman of the Corporate Laws & Corporate Governance
Committee and the other committee members for their help and guidance in
shaping this Guidance Note. I also thank CA. Nilesh Vikamsey, CA. Dhinal
Shah and my esteemed colleagues in the Accounting Standards Board and
the Auditing and Assurance Standards Board for their invaluable comments
and suggestions in the process of discussion. My thanks to also CA. T. V.
Balasubramanian for undertaking the preparation of this Guidance Note.
The Secretariat to the Committee (comprising CA. Sarika Singhal and Ms. S.
Rita) also deserves appreciation for having participated and contributed to
the technical deliberations at various committee meetings.
I sincerely believe that the members of the profession, industries, companies,
Chambers of Commerce and other bodies will find the publication immensely
useful.


9th February 2016                                CA S. Santhanakrishnan
                                                               Chairman
                    Corporate Laws & Corporate Governance Committee, ICAI
                                                                 Index
S.No.   Contents                                                 Page No.
 1.     Introduction                                                        1
 2.     Objective and Scope                                                 1
 3.     Applicability                                                       2
 4.     Summary of Division I to the Schedule III                           3
 5.     Structure of Division I to the Schedule III                         4
 6.     General Instructions to Division I to Schedule III                  4
 7.     General Instructions For Preparation of Balance                     9
        Sheet: Notes 1 to 5
 8.     Part I- Form of Balance Sheet and Note 6 to General             15
        Instructions For Preparation of Balance Sheet
 9.     Part II- Statement of Profit and Loss                           52
 10.    Other additional information to be disclosed by way of          69
        Notes to Statement of Profit and Loss
 11.    Other Disclosures                                               76
 12.    Multiple Activity Companies                                     91
 13.    Consolidated Financial Statements                               91
        Annexures
        Annexure A ­ Division I to the Schedule III to the             102
                     Companies Act 2013
        Annexure B ­ Illustrative List of Disclosures                  130
                     required under the Companies Act,
                     2013
        Annexure C ­ List of Accounting Standards notified             133
                     as on date
        Annexure D ­ General Circular No. 39 / 2014 dated              135
                     14th October 2014
1. Introduction
1.1 Schedule III to the Companies Act, 2013 (`the Act') provides the
manner in which every company registered under the Act shall prepare its
Balance Sheet, Statement of Profit and Loss and notes thereto. In the light of
various economic and regulatory reforms that have taken place for
companies over the last several years, there was a need for harmonizing and
synchronizing the notified Accounting Standards as applicable
(`AS'/`Accounting Standard(s)').
1.2 The relevant format of Schedule III to the Act is given in Annexure A
(Pg 102). As per the Act and rules / notifications thereunder, the Schedule
applies to all companies, except for those companies where Division II and
Division III of the Schedule III is applicable, for the Financial Statements to
be prepared for the financial year commencing on or after April 1, 2014. This
Guidance Note also incorporates the changes made by MCA Notification
dated 11 October 2018 to Division I to the Schedule III (hereinafter, referred
to as `Schedule III').
1.3 The requirements of the Schedule III however, do not apply to
companies as referred to in the proviso to Section 129(1) of the Act, i.e., any
insurance or banking company, or any company engaged in the generation
or supply of electricity or to any other class of company for which a form of
Balance Sheet and Statement of Profit and Loss has been specified in or
under any other Act governing such class of company.
1.4     It may be clarified that for companies engaged in the generation and
supply of electricity, however, 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 Companies Act,
2013 states that the Companies Act will apply to electricity companies, to the
extent it is not inconsistent with the provisions of the Electricity Act. Keeping
this in view, Schedule III 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 of companies in
accordance with various aspects of the Schedule III. However, it does not
provide guidance on disclosure requirements under Accounting Standards,
 Guidance Note on Division I ­ Non Ind AS Schedule III to the Companies Act, 2013

other pronouncements of the Institute of Chartered Accountants of India
(ICAI), other statutes, etc.
2.2. In preparing this Guidance Note, reference has been made to the
Accounting standards notified under Section 133 of the Companies Act, 2013
read together with Paragraph 7 of the Companies (Accounts) Rules, 2014
given in Annexure C (Pg 133) and various other pronouncements of the
ICAI. The primary focus of the Guidance Note has been to lay down broad
guidelines to deal with practical issues that may arise in the implementation
of the Schedule III.
2.3. 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
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,
2015, the Schedule III is applicable for the Balance Sheet and Statement of
Profit and Loss to be prepared for the financial year commencing on or after
April 1, 2014.
3.2. The Schedule III requires that except in the case of the first Financial
Statements laid before the company after incorporation, the corresponding
amounts for the immediately preceding period are to be disclosed in the
Financial Statements including the Notes to Accounts. Accordingly,
corresponding information will have to be presented starting from the first
year of application of the Schedule III. Thus for the Financial Statements
prepared for the year 2014-15(1st April 2014to 31st March 2015),
corresponding amounts need to be given for the financial year 2013-14.


                                     2
Guidance Note on Division I ­ Non Ind AS Schedule III to the Companies Act, 2013

3.3. Applicability of the Schedule III format to interim Financial Statements
prepared by companies in the first year of application of the Schedule:
Relevant paragraphs of AS-25 Interim Financial Reporting are quoted below:
"10. If an enterprise prepares and presents a complete set of Financial
Statements in its interim financial report, the form and content of those
statements should conform to the requirements as applicable to annual
complete set of Financial Statements.
11. If an enterprise prepares and presents a set of condensed Financial
Statements in its interim financial report, those condensed statements should
include, at a minimum, each of the headings and sub-headings that were
included in its most recent annual Financial Statements and the selected
explanatory notes as required by this Statement. Additional line items or
notes should be included if their omission would make the condensed interim
Financial Statements misleading."
3.4. Accordingly, if a company is presenting condensed interim Financial
Statements, its format should also going forward conform to that used in the
company's most recent annual Financial Statements, i.e., the Schedule III of
Companies Act, 2013.
4.    Summary of Division I to the Schedule III
4.1. Main principles
4.1.1. The Schedule III requires that if compliance with the requirements of
the Act and/ or the notified Accounting Standards requires a change in the
treatment or disclosure in the Financial Statements as compared to that
provided in the Schedule III, the requirements of the Act and/ or the notified
Accounting Standards will prevail over the Schedule.
4.1.2. The Schedule III clarifies that the requirements mentioned therein for
disclosure on the face of the Financial Statements or in the notes are
minimum requirements. Line items, sub-line items and sub-totals can be
presented as an addition or substitution on the face of the Financial
Statements when such presentation is relevant for understanding of the
company's financial position and/or performance.
4.1.3. The terms used in the Schedule III will carry the meaning as defined
by the applicable Accounting Standards. For example, the terms such as
`associate', `related parties', etc. will have the same meaning as defined in
Accounting Standards notified under Companies (Accounting Standards)
Rules, 2006 (as amended from time to time).

                                     3
 Guidance Note on Division I ­ Non Ind AS Schedule III to the Companies Act, 2013

4.1.4. In preparing the Financial Statements including the Notes to Accounts,
a balance will have to 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.
4.1.5. All items of assets and liabilities are to be bifurcated between current
and non-current portions and presented separately on the face of the
Balance Sheet.
4.1.6. There is an explicit requirement to use the same unit of measurement
uniformly throughout the Financial Statements and notes thereon.

5.     Structure of Division I to the Schedule III
The Structure of Schedule III is as under:
I.     General Instructions for preparation of Balance Sheet and Statement
       of Profit and Loss of a company
II.    Part I ­ Form of Balance Sheet
III.   General Instructions for Preparation of Balance Sheet
IV.    Part II ­ Form of Statement of Profit and Loss
V.     General Instructions for Preparation of Statement of Profit and Loss
VI.    General Instructions for the Preparation of Consolidated Financial
       Statements

6.     General Instructions to Division I to The Schedule III
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 the Preface to the Statements of Accounting
Standards issued by ICAI, if a particular Accounting Standard 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. The
Schedule III gives overriding status to the requirements of the Accounting
Standards and other requirements of the Act, such principle of law overriding
the Accounting Standards is inapplicable in the context of the Schedule III.
6.3. The Schedule III requires that if compliance with the requirements of
the Act including applicable Accounting Standards require any change in the
treatment or disclosure including addition, amendment, substitution or
deletion in the head/sub-head or any changes inter se, in the Financial


                                     4
Guidance Note on Division I ­ Non Ind AS Schedule III to the Companies Act, 2013

Statements or statements forming part thereof, the same shall be made and
the requirements of Schedule III shall stand modified accordingly.
6.4. Implications of all instructions mentioned above can be illustrated by
means of the following example. One of the line items to be presented on the
face of the Balance Sheet under Current assets is "Cash and cash
equivalents". The break-up of these items required to be presented by the
Schedule III comprises of items such as Balances with banks held as margin
money or security against borrowings, guarantees, etc. and bank deposits
with more than 12 months maturity. According to AS-3 Cash Flow
Statements, 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 readily convertible into known amounts of cash and
which are subject to an insignificant risk of changes in value. The Standard
further explains that an investment normally qualifies as a cash equivalent
only when it has a short maturity of three months or less from the date of
acquisition. Hence, normally, deposits with original maturity of three months
or less only should be classified as cash equivalents. Further, bank balances
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. Thus,
this is an apparent conflict between the requirements of the Schedule III and
the Accounting Standards with respect to which items should form part of
Cash and cash equivalents. As laid down in the General Instructions, Para 1
of Schedule III, requirements of the Accounting Standards would prevail over
the Schedule III and the company should make necessary modifications in
the Financial Statements, which may include addition, amendment,
substitution or deletion in the head/sub-head or any other changes inter se.
Accordingly, the conflict should be resolved by changing the caption "Cash
and cash equivalents" to "Cash and bank balances," which may have two
sub-headings, viz., "Cash and cash equivalents" and "Other bank balances."
The former should include only the items that constitute Cash and cash
equivalents defined in accordance with AS 3 (and not the Schedule III), while
the remaining line-items may be included under the latter heading.
6.5. Para 2 of the General Instructions to the Schedule III states that the
disclosure requirements of the Schedule are in addition to and not in
substitution of the disclosure requirements specified in the notified
Accounting Standards. They further clarify that the additional disclosures
specified in the Accounting Standards shall be made in the Notes to
Accounts or by way of an additional statement unless required to be

                                     5
 Guidance Note on Division I ­ Non Ind AS Schedule III to the Companies Act, 2013

disclosed on the face of the Financial Statements. All other disclosures
required by the Act are also required to be made in the Notes to Accounts in
addition to the requirements set out in the Schedule III.
6.6. An example to illustrate the above point is the specific disclosure
required by AS-24 Discontinuing Operations on the face of the Statement of
Profit and Loss which has not been incorporated in the Schedule III. The
disclosure pertains to the amount of pre-tax gain or loss recognised on the
disposal of assets or settlement of liabilities attributable to the discontinuing
operation. Accordingly, such disclosures specifically required by the
Accounting Standard on the face of either the Statement of Profit and Loss or
Balance Sheet will have to be so made even if not forming part of the formats
prescribed under the Schedule III.
6.7. All the other disclosures required by the Accounting Standards will
continue to be made in the Financial Statements. Further, the disclosures
required by the Act will continue to be made 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 B (Pg 130).
6.8. Though not specifically required by the Schedule III, disclosures may
be mandated by other Acts or legal requirements will have to be made in the
Financial Statements. For example, until amendment to Division I to
schedule II by MCA notification dated 4th September 2015, the disclosure as
required by The Micro, Small and Medium Enterprises Development
(MSMED) Act, 2006 was required to be made in the annual Financial
Statements of the buyer wherever such Financial Statements are required to
be audited under any law.
6.9. The above principle would apply to disclosures required by other legal
requirements. A further extension of the above principle also means that
specific disclosures required by various pronouncements of regulatory bodies
such as the ICAI announcement for disclosures on derivatives and unhedged
foreign currency exposures, and other disclosure requirements prescribed by
various ICAI Guidance Notes, such as Guidance Note on Employee Share-
based Payments, Guidance Note on Accounting for Derivative Contracts, etc.
should continue to be made in the Financial Statements in addition to the
disclosures specified by the Schedule III.


                                     6
Guidance Note on Division I ­ Non Ind AS Schedule III to the Companies Act, 2013

6.10. Para 3 of the General Instructions of the Schedule III also states that
the Notes to Accounts 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 later in this Guidance Note. Some of the other disclosures relating
to items that are not recognized in the Financial Statements also emanate
from the Accounting Standards, such as, disclosures required under AS9
Revenue Recognition on circumstances in which revenue recognition is to be
postponed pending the resolution of significant uncertainties. Contingent
Assets, however, are not to be disclosed in the Financial Statements as per
AS29 Provisions, Contingent Liabilities and Contingent Assets.
6.11. The General Instructions also lay down the principle that in preparing
Financial Statements including Notes to Accounts, 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.
6.12. The 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 to Accounts should be of the same denomination.
6.13. Depending upon the turnover of the company, the figures appearing
in the Financial Statements may be rounded off as given below in the table.
However, it is not compulsory to apply rounding off and a company can
continue to disclose full figures. But, if the same is applied, the rounding off
requirement should be complied with:


                                     7
 Guidance Note on Division I ­ Non Ind AS Schedule III to the Companies Act, 2013


                                 Schedule III
 ·   Turnover Rs. 100 Crores - Round off to the nearest lakhs, millions or
     crores, or decimal thereof

6.14. The instructions also clarify that the terms used in the Schedule III
shall be as per the applicable Accounting Standards. For example, the term
`related parties' used at several places in the Schedule III should be
interpreted based on the definition given in AS-18 Related Party Disclosures.
6.15. The Notes to the General Instructions re-clarify that the 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 Balance Sheet
and Statement of Profit and Loss when such presentation is relevant to an
understanding of the company's financial position or performance or to cater
to industry/sector-specific disclosure requirements, apart from, when required
for compliance with amendments to the Act or the Accounting Standards.
The application of the above requirement is a matter of professional
judgement. The following examples illustrate this requirement. Earnings
before Interest, Tax, Depreciation and Amortization is often an important
measure of financial performance of the company relevant to the various
users of Financial Statements and stakeholders of the company. Hence, a
company may choose to present the same as an additional line item on the
face of the Statement of Profit and Loss. The method of computation adopted
by companies for presenting such measures should be followed consistently
over the years. Further, companies should also disclose the policy followed
in the measurement of such line items.

6.16. Similarly, users and stakeholders often want to know the liquidity
position of the company. To highlight the same, a company may choose to
present additional sub-totals of Current assets and Current liabilities on the
face of the Balance Sheet.
6.17. One example of addition or substitution of line items, sub-line items
and sub-totals to cater to industry-specific disclosure requirements can be
noted from Non-Banking Financial (Non-Deposit Accepting or Holding)
Companies Prudential Norms (Reserve Bank) Directions, 2007. The
Directions prescribe that every non-banking finance company is required to

                                     8
Guidance Note on Division I ­ Non Ind AS Schedule III to the Companies Act, 2013

separately disclose in its Balance Sheet the provisions made under the
Directions without netting them from the income or against the value of
assets. Though not specifically required by the Schedule, such addition or
substitution of line items can be made in the notes forming part of the
Financial Statements as well.

7.    General Instructions For Preparation of Balance
      Sheet : Notes 1 To 5
7.1. Current/Non-current assets and liabilities:
The Schedule III requires all items in the Balance Sheet to be classified as
either Current or Non-current and be reflected as such. Notes 1 to 3 of the
Schedule III define Current Asset, Operating Cycle and Current Liability as
below:
7.1.1. "An asset shall be classified as current when it satisfies any of the
following criteria:
(a)   it is expected to be realized in, or is intended for sale or consumption
      in, the company's normal operating cycle;
(b)   it is held primarily for the purpose of being traded;
(c)   it is expected to be realized within twelve months after the reporting
      date; or
(d)   it is Cash or cash equivalent unless it is restricted from being
      exchanged or used to settle a liability for at least twelve months after
      the reporting date.
All other assets shall be classified as non-current."
7.1.2. "An operating cycle is the time between the acquisition of assets for
processing and their realization in Cash or cash equivalents. Where the
normal operating cycle cannot be identified, it is assumed to have a duration
of twelve months."
7.1.3. "A liability shall be classified as current when it satisfies any of the
following criteria:
(a)   it is expected to be settled in the company's normal operating cycle;
(b)   it is held primarily for the purpose of being traded;
(c)   it is due to be settled within twelve months after the reporting date; or
(d)   the company does not have an unconditional right to defer settlement


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 Guidance Note on Division I ­ Non Ind AS Schedule III to the Companies Act, 2013

       of the liability for at least twelve months after the reporting date. Terms
       of a liability that could, at the option of the counterparty, result in its
       settlement by the issue of equity instruments do not affect its
       classification.
All other liabilities shall be classified as non-current."
7.1.4. It is recommended that the disclosure about the company's operating
cycle be given as a part of `Notes to the Financial Statements'.
7.1.5. The Schedule III defines "current assets" and "current liabilities", with
the non-current category being the residual. It is therefore necessary that the
balance pertaining to each item of assets and liabilities contained in the
Balance Sheet be split into its current and non-current portions and be
classified accordingly as on the reporting date.
7.1.6. Based on the definition, current assets include assets such as raw
material and stores which are intended for consumption or sale in the course
of the company's normal operating cycle. Items of inventory which may be
consumed or realized within the company's normal operating cycle should be
classified as current even if the same are not expected to be so consumed or
realized within twelve months after the reporting date. Current assets would
also include assets held primarily for the purpose of being traded such as
inventory of finished goods. They would also include trade receivables which
are expected to be realized within twelve months from the reporting date and
Cash and cash equivalents which are not under any restriction of use.
7.1.7. Similarly, current liabilities would include items such as trade
payables, employee salaries and other operating costs that are expected to
be settled in the company's normal operating cycle or due to be settled within
twelve months from the reporting date. It is pertinent to note that such
operating liabilities are normally part of the working capital of the company
used in the company's normal operating cycle and hence, should be
classified as current even if they are due to be settled more than twelve
months after the end of the reporting date.
7.1.8. Further, any liability, pertaining to which the company does not have
an unconditional right to defer its settlement for at least twelve months after
the Balance Sheet/reporting date, will have to be classified as current.
7.1.9. The application of this criterion could be critical to the Financial
Statements of a company and requires careful evaluation of the various
terms and conditions of a loan liability. To illustrate, let us understand how
this requirement will apply to the following example:

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Guidance Note on Division I ­ Non Ind AS Schedule III to the Companies Act, 2013

Company X has taken a five year loan. The loan contains certain debt
covenants, e.g., filing of quarterly information, failing which the bank can
recall the loan and demand repayment thereof. The company has not filed
such information in the last quarter; as a result of which the bank has the
right to recall the loan. However, based on the past experience and/or based
on the discussions with the bank the management believes that default is
minor and the bank will not demand the repayment of loan. According to the
definition of Current Liability, what is important is, whether a borrower has an
unconditional right at the Balance Sheet date to defer the settlement
irrespective of the nature of default and whether or not a bank can exercise
its right to recall the loan. If the borrower does not have such right, the
classification would be "current". It is pertinent to note that as per the terms
and conditions of the aforesaid loan, the loan was not repayable on demand
from day one. The loan became repayable on demand only on default in the
debt covenant and bank has not demanded the repayment of loan upto the
date of approval of the accounts. In the Indian context, the criteria of a loan
becoming repayable on demand on breach of a covenant, is generally added
in the terms and conditions as a matter of abundant caution. Also, banks
generally do not demand repayment of loans on such minor defaults of debt
covenants. Therefore, in such situations, the companies generally continue
to repay the loan as per its original terms and conditions. Hence, considering
that the practical implications of such minor breach are negligible in the
Indian scenario, an entity could continue to classify the loan as "non-current"
as on the Balance Sheet date since the loan is not actually demanded by the
bank at any time prior to the date on which the Financial Statements are
approved. However, in case a bank has recalled the loan before the date of
approval of the accounts on breach of a loan covenant that occurred before
the year-end, the loan will have to be classified as current. Further, the
above situation should not be confused with a loan which is repayable on
demand from day one. For such loans, even if the lender does not demand
repayment of the loan at any time, the same would have to be continued to
be classified as "current".
Further, where there is a breach of a material provision of a long-term loan
arrangement on or before the end of the reporting period with the effect that
the liability becomes payable on demand on the reporting date, the entity
does not classify the liability as current, if the lender has agreed, after the
reporting period and before the approval of the financial statements for issue,
not to demand payment as a consequence of the breach.

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 Guidance Note on Division I ­ Non Ind AS Schedule III to the Companies Act, 2013

Breach of a material provision to include only substantive breaches (e.g.,
amongst other covenants, those that are financial covenants). Accordingly,
the entity has to carefully evaluate what would be construed as a "breach of
a material provision" on case-to-case basis considering the facts and the
terms and conditions of each borrowing arrangement.
7.2. The term "Operating Cycle" is defined as the time between the
acquisition of assets for processing and their realization in Cash or cash
equivalents. A company's normal operating cycle may be longer than twelve
months e.g. companies manufacturing wines, etc. However, where the
normal operating cycle cannot be identified, it is assumed to have a duration
of twelve months.
7.2.1. Where a company is engaged in running multiple businesses, the
operating cycle could be different for each line of business. Such a company
will have to classify all the assets and liabilities of the respective businesses
into current and non-current, depending upon the operating cycles for the
respective businesses.
Let us consider the following other examples:
1.    A company has excess finished goods inventory that it does not
      expect to realize within the company's operating cycle of fifteen
      months. Since such finished goods inventory is held primarily for the
      purpose of being traded, the same should be classified as "current".
2.    A company has sold 10,000 tonnes of steel to its customer. The sale
      contract provides for a normal credit period of three months. The
      company's operating cycle is six months. However, the company does
      not expect to receive the payment within twelve months from the
      reporting date. Therefore, the same should be classified as "Non-
      Current" in the Balance Sheet. In case, the company expects to realize
      the amount upto 12 months from the Balance Sheet date (though
      beyond operating cycle), the same should be classified as "current".
7.3. For the purpose of Schedule III, a company also needs to classify its
employee benefit obligations as current and non-current categories. While
AS-15 Employee Benefits governs the measurement of various employee
benefit obligations, their classification as current and non-current liabilities
will also be governed by the criteria laid down in Notes 1 to 3 to the General
Instructions for Preparation of Balance Sheet in the Schedule III. In
accordance with these criteria, a liability is classified as "current" if a
company does not have an unconditional right as on the Balance Sheet date
to defer its settlement for twelve months after the reporting date. Each

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Guidance Note on Division I ­ Non Ind AS Schedule III to the Companies Act, 2013

company will need to apply these criteria to its specific facts and
circumstances and decide an appropriate classification of its employee
benefit obligations. Given below is an illustrative example on application of
these criteria in a simple situation:
(a)   Liability toward bonus, etc., payable within one year from the Balance
      Sheet date is classified as "current".
(b)   In case of accumulated leave outstanding as on the reporting date, the
      employees have already earned the right to avail the leave and they
      are normally entitled to avail the leave at any time during the year. To
      the extent, the employee has unconditional right to avail the leave, the
      same needs to be classified as "current" even though the same is
      measured as `other long-term employee benefit' as per AS-15.
      However, whether the right to defer the employee's leave is available
      unconditionally with the company needs to be evaluated on a case to
      case basis ­ based on the terms of Employee Contract and Leave
      Policy, Employer's right to postpone/deny the leave, restriction to avail
      leave in the next year for a maximum number of days, etc. In case of
      such complexities the amount of Non-current and Current portions of
      leave obligation should normally be determined by a qualified Actuary.
(c)   Regarding funded post-employment benefit obligations, amount due
      for payment to the fund created for this purpose within twelve months
      is treated as "current" liability. Regarding the unfunded post-
      employment benefit obligations, a company will have settlement
      obligation at the Balance Sheet date or within twelve months for
      employees such as those who have already resigned or are expected
      to resign (which is factored for actuarial valuation) or are due for
      retirement within the next twelve months from the Balance Sheet date.
      Thus, the amount of obligation attributable to these employees is a
      "current" liability. The remaining amount attributable to other
      employees, who are likely to continue in the services for more than a
      year, is classified as "non-current" liability. Normally the actuary should
      determine the amount of current &non-current liability for unfunded
      post-employment benefit obligation based on the definition of Current
      and Non-current assets and liabilities in the Schedule III.
7.4. The Schedule III requires Investments to be classified as Current and
Non-Current. However, AS13 `Accounting for Investments' requires to
classify Investments as Current and Long-Term. As per AS 13, current
investment is an investment that is by its nature readily realisable and is

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 Guidance Note on Division I ­ Non Ind AS Schedule III to the Companies Act, 2013

intended to be held for not more than one year from the date on which such
investment is made. A long-term investment is an investment other than a
current investment.
7.4.1. Accordingly, as per AS-13, the assessment of whether an Investment
is "Long-term" has to be made with respect to the date of Investment
whereas, as per the Schedule III, "Non-current" Investment has to be
determined with respect to the Balance Sheet date.
7.4.2. Though the Schedule III clarifies that the Accounting Standards would
prevail over itself in case of any inconsistency between the two, it is pertinent
to note that AS-13 does not lay down presentation norms, though it requires
disclosures to be made for Current and Long-term Investments. Accordingly,
presentation of all investments in the Balance Sheet should be made based
on Current/Non-current classification as defined in the Schedule III. The
portion of long-term investment as per AS13 which is expected to be realized
within twelve months from the Balance Sheet date needs to be shown as
Current investment under the Schedule III.
7.5. Settlement of a liability by issuing of equity
7.5.1. The Schedule III clarifies that, "the terms of a liability that could, at the
option of the counterparty, result in its settlement by the issue of equity
instruments do not affect its classification". A consequence of this is that if
the conversion option in convertible debt is exercisable by the holder at any
time, the liability cannot be classified as "current" if the maturity for cash
settlement is greater than one year. A question therefore arises for the
aforesaid requirement of classifying items as, a) convertible debt where the
conversion option lies with the issuer, or b) mandatorily convertible debt
instrument.
7.5.2. Based on the specific exemption granted only to those cases where
the conversion option is with the counterparty, the same should not be
extended to other cases where such option lies with the issuer or is a
mandatorily convertible instrument. For all such cases, conversion of a
liability into equity should be considered as a means of settlement of the
liability as defined in the Framework for the Preparation and Presentation of
Financial Statements issued by ICAI. Accordingly, the timing of such
settlement would also decide the classification of such liability in terms of
Current or Non-current as defined in the Schedule III.
7.6 As per the classification in the Schedule III and in line with the ICAI's
earlier announcement with regard to the presentation and classification of net

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Guidance Note on Division I ­ Non Ind AS Schedule III to the Companies Act, 2013

Deferred Tax asset or liability, the same should always be classified as "non-
current".

8.    Part I: Form of Balance Sheet and Note 6 to General
      Instructions for Preparation of Balance Sheet
As per the Framework for The Preparation and Presentation of Financial
Statements, asset, liability and equity are defined as follows:
An asset is a resource controlled by the enterprise as a result of past events
from which future economic benefits are expected to flow to the enterprise.
A liability is a present obligation of the enterprise arising from past events,
the settlement of which is expected to result in an outflow from the enterprise
of resources embodying economic benefits.
Equity is the residual interest in the assets of the enterprise after deducting
all its liabilities.

I.    Equity and Liabilities
8.1. Shareholders' Funds
Under this head, following line items are to be disclosed:
      Share Capital;
      Reserves and Surplus;
      Money received against share warrants.
8.1.1. Share capital
8.1.1.1. Notes to the General Instructions require a company to disclose in
the Notes to Accounts line items/sub-line items referred to in Notes 6A to 6Q.
Clauses (a) to (l) of Note 6 A deal with disclosures for Share Capital and
such disclosures are required for each class of share capital (different
classes of preference shares to be treated separately).
8.1.1.2. As per ICAI Guidance Note on Terms Used in Financial Statements,
`Capital' refers "to the amount invested in an enterprise by its 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."
8.1.1.3. `Share Capital' refers to "aggregate amount of money paid or
credited as paid on the shares and/or stocks of a corporate enterprise."


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 Guidance Note on Division I ­ Non Ind AS Schedule III to the Companies Act, 2013

8.1.1.4. Application of AS 30 Financial Instruments: Recognition and
Measurement, AS 31 and AS 32 Financial Instruments: Disclosures is no
longer appropriate as ICAI has withdrawn, by of an announcement, the
recommendatory as well as mandatory status in March 2011 and also
specified that the accounting treatments covered by any of the existing
notified Accounting Standards (e.g., AS 11, AS 13, etc.) and specific
regulatory requirements given by a regulatory authority (e.g., loan
impairment, investment classification or accounting for securitisations by the
RBI, etc.) would continue to apply.
8.1.1.5. Presently, in the Indian context, generally, there are two kinds of
share capital namely - Equity and Preference. Within Equity/Preference
Share Capital, there could be different classes of shares, say, Equity Shares
with or without voting rights, Compulsorily Convertible Preference Shares,
Optionally Convertible Preference Shares, etc. If the preference shares are
to be disclosed under the head `Share Capital', until the same are actually
redeemed / converted, they should continue to be shown under the head
`Share Capital'. Preference shares of which redemption is overdue should
continue to be disclosed under the head `Share Capital'.
8.1.1.6. Clause (a) of Note 6A - 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
of shares that an enterprise may issue in accordance with its instrument of
incorporation. This is sometimes referred to as nominal share capital."
8.1.1.7. Clause (b) of Note 6A - 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, to make the
disclosure relevant to understanding the company's share capital, even the
amount for each category 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


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Guidance Note on Division I ­ Non Ind AS Schedule III to the Companies Act, 2013

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 would 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." As required by Clause (k) of Note 6A of the Schedule
III, calls unpaid are to be disclosed separately as per the Schedule III.
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.
8.1.1.8. Clause (c) of Note 6A ­ 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 (a)
to the sub-section (4) of section 13 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.
8.1.1.9. Clause (d) of Note 6A- a reconciliation of the number of shares
outstanding at the beginning and at the end of the reporting period :
As per the Schedule III, opening number of shares outstanding, shares
issued, shares bought back, other movements, etc. during the year and


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 Guidance Note on Division I ­ Non Ind AS Schedule III to the Companies Act, 2013

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 6A]
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
both Equity and Preference Shares and for each class of share capital within
Equity and Preference Shares.
8.1.1.10. Clause (e) of Note 6A - 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 Statement, 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 (Issue of Share Capital with Differential Voting Rights) Rules,
2001. In respect of Preference shares, the rights include (a) as respects
dividend, a preferential right to be paid a fixed amount or at a fixed rate and,
(b) as respects capital, a preferential right of repayment of amount of capital
on winding up. Further, Preference shares can be cumulative, non-
cumulative, redeemable, convertible, non-convertible etc. All such rights,
preferences and restrictions attached to each class of preference shares,
terms of redemption, etc. have to be disclosed separately.
8.1.1.11. Clause (f) of Note 6A - 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;


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Guidance Note on Division I ­ Non Ind AS Schedule III to the Companies Act, 2013

·     Subsidiaries of its holding company;
·     Subsidiaries of its ultimate holding company;
·     Associates of its holding company; and
·     Associates of its ultimate holding company.
Aggregation should be done for each of the above categories.
The terms `subsidiary', `holding company' and `associate' should be
understood as defined under AS-21, Consolidated Financial Statements and
AS-18, Related Party Disclosures. Based on 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 ending
right upto the ultimate holding company would have to be disclosed. Further,
all the above disclosures need to be made separately for each class of
shares, both within Equity and Preference Shares.
8.1.1.12. Clause (g) of Note 6A - 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 class of shares, both within Equity and Preference
Shares. Accordingly, such percentage should be computed separately for
each class of shares outstanding within Equity and Preference Shares. This
information should also be given for the comparative previous period.
8.1.1.13. Clause (h) of Note 6A - shares reserved for issue under
options      and    contracts/commitments     for   the sale   of
shares/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,
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.

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 Guidance Note on Division I ­ Non Ind AS Schedule III to the Companies Act, 2013

8.1.1.14. Clause (i) of Note 6A­ 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 allotments 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.
(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.
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.
8.1.1.15. Clause (j) of Note 6A- 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:
This disclosure would cover securities, such as Convertible Preference


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Guidance Note on Division I ­ Non Ind AS Schedule III to the Companies Act, 2013

Shares, Convertible Debentures/bonds, etc. ­ optionally or otherwise into
equity.
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 Long-term borrowings where these are required to be classified in
the Balance Sheet, rather than disclosing the same again under this clause.
8.1.1.16. Clause (k) of Note 6(A) - 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. The total calls unpaid should be
disclosed. The terms `director' and `officer' should be interpreted based on
the definitions in the Act.
8.1.2. Reserves and Surplus
Note 6(B) of the General Instructions deals with the disclosures of "Reserves
and Surplus" in the Notes to Accounts and the classification thereof under
the various types of reserves.
8.1.2.1. Reserve:
The Guidance Note on Terms Used in Financial Statements defines the term
`Reserve' as "the portion of earnings, receipts or other surplus of an
enterprise (whether capital or revenue) appropriated by the management for
a general or a specific purpose other than a provision for depreciation or
diminution in the value of assets or for a known liability." `Reserves' should
be distinguished from `provisions'. For this purpose, reference may be made
to the definition of the expression `provision' in AS-29 Provisions, Contingent
Liabilities and Contingent Assets.
As per AS-29, a `provision' is "a liability which can be measured only by
using a substantial degree of estimation". A `liability' is "a present obligation
of the enterprise arising from past events, the settlement of which is

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 Guidance Note on Division I ­ Non Ind AS Schedule III to the Companies Act, 2013

expected to result in an outflow from the enterprise of resources embodying
economic benefits." Present obligation' ­ "an obligation is a present
obligation if, based on the evidence available, its existence at the Balance
Sheet date is considered probable, i.e., more likely than not."
8.1.2.2. 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 the
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 the 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 profit of a capital
nature and, hence, it should be credited to capital reserve.
8.1.2.3. 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.
8.1.2.4. 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."
The terminology used in the Schedule III is "Securities Premium" while the
nomenclature as per the Act is "Securities Premium Account". Accordingly,
the terminology of the Act should be used.
8.1.2.5. 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 adequate amounts, from

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Guidance Note on Division I ­ Non Ind AS Schedule III to the Companies Act, 2013

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 General Reserve.
8.1.2.6. Revaluation Reserve :
As per the Guidance Note of Terms Used in Financial Statements,
`Revaluation reserve' is `a reserve created on the revaluation of assets or net
assets of an enterprise represented by the surplus of the estimated
replacement cost or estimated market values over the book values thereof.'
Accordingly, if a company has carried out revaluation of its assets, the
corresponding amount would be disclosed as "Revaluation Reserve"
8.1.2.7. Share Options Outstanding Account :
Presently, as per the Guidance Note on Accounting for Employee Share-
based Payments, Stock Options Outstanding Account is shown as a separate
line-item. The Schedule III requires this item to be shown as a part of
`Reserve and Surplus'.
8.1.2.8. Other Reserves (specify the nature and purpose of reserve and
the amount in respect thereof) :
Every other reserve which is not covered in the paragraphs 8.1.2.2 to 8.1.2.7
is to be reflected as `Other Reserves'. However, since the nature, purpose
and the amount are to be shown, each reserve is to be shown separately.
This would include reserves to be created under other statutes like Tonnage
Tax Reserve to be created under the Income Tax Act, 1961, Special Reserve
to be created under Section 45(IC) of the Reserve Bank of India Act,
1934,'Special Economic Zone Reinvestment Reserve Account' created under
section 10AA of Income Tax Act 1961 etc.

8.1.2.9. Surplus i.e. balance in Statement of Profit and Loss disclosing
allocations and appropriations such as dividend, bonus shares and
transfer to/from reserves, etc.
Appropriations to the profit for the year (including carried forward balance)
are to be presented under the main head 'Reserves and Surplus'. Under the
Schedule III, the Statement of Profit and Loss will no longer reflect any
appropriations.
Please also refer to the discussion in Para 10.9 below.


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 Guidance Note on Division I ­ Non Ind AS Schedule III to the Companies Act, 2013

8.1.2.10. 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.
Please refer to Para 10.9 of this Guidance note.
8.1.2.11 As per Schedule III, a reserve specifically represented by earmarked
investments shall be termed as a `fund'.
8.1.2.12 Debit balance in the Statement of Profit and Loss and in
Reserves and Surplus:
Debit balance in the Statement of Profit and Loss which would arise in case
of accumulated losses, is to be shown as a negative figure under the head
`Surplus'. The aggregate amount of the balance of `Reserves and Surplus', is
to be shown after adjusting negative balance of surplus, if any. If the net
result is negative, the negative figure is to be shown under the head
`Reserves and Surplus'.
8.1.3. Money received against Share Warrants
Share warrants may be issued to promoters and others by a company. AS 20
Earning Per Share notified under the Companies (Accounting Standards)
Rules, 2006 defines `share warrants' as "financial instruments which give the
holder the right to acquire equity shares". Thus, effectively, share 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. Share Application Money pending allotment
8.2.1. Share Application money pending allotment is to be disclosed as a
separate line item on the face of Balance Sheet between "Shareholders'
Funds" and "Non-current Liabilities". Share application money not exceeding
the issued capital and to the extent not refundable is to be disclosed under
this line item. If the company's issued capital is more than the authorized
capital and approval of increase in authorized capital is pending, the amount
of share application money received over and above the authorized capital
should be shown under the head "Other Current Liabilities".
8.2.2. Clause (g) of Note 6G of General Instructions for preparation of
Balance sheet lists various circumstances and specifies the information to be
disclosed in respect of share application money. However, amount shown as

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Guidance Note on Division I ­ Non Ind AS Schedule III to the Companies Act, 2013

`share application money pending allotment' will not include share application
money to the extent refundable. For example, the amount in excess of issued
capital, or where minimum subscription requirement is not met. Such amount
will have to be shown separately under `Other Current Liabilities'.
8.2.3. Various disclosure requirements pertaining to Share Application
Money are as follows:
·     terms and conditions;
·     number of shares proposed to be issued;
·     the amount of premium, if any;
·     the period before which shares are to be allotted;
·     whether the company has sufficient authorized share capital to cover
      the share capital amount on allotment of shares out of share
      application money;
·     Interest accrued on amount due for refund;
·     The period for which the share application money has been pending
      beyond the period for allotment as mentioned in the share application
      form along with the reasons for such share application money being
      pending.
The above disclosures should be made in respect of amounts classified
under both Equity as well as Current Liabilities, wherever applicable.
8.2.4. As per power given under section 50 of the Act, a company, if so
authorized by its Articles, may accept from any member the whole or a part
of the amount remaining unpaid on any shares held by him, although no part
of that amount has been called up. The shareholder who has paid the money
in advance is not a creditor for the amount so paid as advance, as the same
cannot be demanded for repayment and the company cannot pay him back
unless Articles so provide. The amount of calls paid in advance does not
form part of the paid-up capital. The Department of Company Affairs has
clarified that it is better to show "Calls in Advance" under the head "Current
Liabilities and Provisions" (Letter No. 8/16(1)/61-PR, dated 9.5.1961). Thus,
under the Schedule III, calls paid in advance are to be reflected under "Other
Current Liabilities". The amount of interest which may accrue on such
advance should also is to be reflected as a liability.
8.2.5. "Share application money pending allotment" is required to be shown
as a separate line item on the face of the Balance Sheet after Shareholders'


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 Guidance Note on Division I ­ Non Ind AS Schedule III to the Companies Act, 2013

Funds. However, under "Other current liabilities" there is a statement that
Share application money not exceeding the issued capital and to the extent
not refundable shall be shown under the head Equity. The two requirements
appear to be conflicting. However, from the format as set out in the
Schedule, it appears that the Regulator's intention is to specifically highlight
the amount of Share application money pending allotment, though they may
be, in substance, in nature of Equity. Accordingly, the equity element should
continue to be disclosed on the face of the Balance Sheet as a separate line
item, rather than as a component of Shareholders' Funds.
8.3. Non-current liabilities
A liability shall be classified as current when it satisfies any of the following
criteria:
(a)    it is expected to be settled in the company's normal operating cycle;
(b)    it is held primarily for the purpose of being traded;
(c)    it is due to be settled within twelve months after the reporting date; or
(d)    the company does not have an unconditional right to defer settlement
       of the liability for at least twelve months after the reporting date. Terms
       of a liability that could, at the option of the counterparty, result in its
       settlement by the issue of equity instruments do not affect its
       classification.
All other liabilities shall be classified as non-current.
Based on the above definitions, on the face of the Balance Sheet, the
following items shall be disclosed under non-current liabilities.
·      Long-term borrowings;
·      Deferred tax liabilities (Net);
·      Other Long-term liabilities;
·      Long-term provisions.
8.3.1. Long-term borrowings:
8.3.1.1. Long-term borrowings shall be classified as:
(a)    Bonds/debentures;
(b)    Term loans;
       ·      from banks;
       ·      from other parties;

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Guidance Note on Division I ­ Non Ind AS Schedule III to the Companies Act, 2013

(c)   Deferred payment liabilities;
(d)   Deposits;
(e)   Loans and advances from related parties;
(f)   Long term maturities of finance lease obligations;
(g)   Other loans and advances (specify nature).
8.3.1.2. Borrowings shall further be sub-classified as secured and
unsecured. Nature of security shall be specified separately in each case.
8.3.1.3. Where loans have been guaranteed by directors or others, the
aggregate amount of such loans 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 related parties. However, in the normal course, a person or entity
guaranteeing a loan of a company will generally be associated with the
company in some manner.
8.3.1.4. Bonds/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 farthest 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.
8.3.1.5. Particulars of any redeemed bonds/ debentures which the company
has power to reissue shall be disclosed.
8.3.1.6. Terms of repayment of term loans and other loans shall be stated.
8.3.1.7. Period and amount of continuing default as on the Balance Sheet
date in repayment of loans and interest shall be specified separately in each
case.
8.3.1.8. The phrase "long-term" has not been defined. However, the
definition of `non-current liability' in the Schedule III may be used as long-
term liability for the above disclosure. Also, the phrase "term loan" has not
been defined in the Schedule III. Term loans normally have a fixed or pre-
determined maturity period or a repayment schedule.
8.3.1.9. As referred to in para 45(i) of the 2016 edition of the Guidance Note
on Companies (Auditor's Report) Order, 2016 (CARO) in the banking
industry, for example, loans with repayment period beyond thirty six months


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 Guidance Note on Division I ­ Non Ind AS Schedule III to the Companies Act, 2013

are usually known as "term loans". Cash credit, overdraft and call money
accounts / deposit are, therefore, not covered by the expression "term loans".
Term loans are generally provided by banks and financial institutions for
acquisition of capital assets which then become the security for the loan, i.e.,
end use of funds is normally fixed.
8.3.1.9 Deferred payment liabilities would include any liability for which
payment is to be made on deferred credit terms. E.g. deferred VAT / GST
liability, deferred payment for acquisition of Property, Plant and Equipment,
Intangible Assets, etc.
8.3.1.10 The current maturities of all long-term borrowings will be disclosed
under `other current liabilities' and not under long-term borrowings and short-
term borrowings. Hence, it is possible that the same bonds / debentures /
term loans may be bifurcated under both long-term borrowings as well as
under other current liabilities. Further, long-term borrowings are to be sub-
classified as secured and unsecured giving the nature of the security for the
secured position.
8.3.1.11 The 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.
8.3.1.12 The disclosure about the nature of security should also cover the
type of asset given as security e.g. inventories, property, plant and
equipment, intangible assets, etc. This is because the extent to which loan is
secured may vary with the nature of asset against which it is secured.
8.3.1.13 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.
8.3.1.14 The Schedule III requires that under the head "Borrowings," period
and amount of "continuing default (in case of long-term borrowing) and
default (in case of short-term borrowing) as on the Balance Sheet date in
repayment of loans and interest shall be specified separately in each case".
The word "loan" has been used in a more generic sense. Hence, the
disclosures relating to default should be made for all items listed under the
category of borrowings such as bonds/ debentures, deposits, deferred

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Guidance Note on Division I ­ Non Ind AS Schedule III to the Companies Act, 2013

payment liabilities, finance lease obligations, etc. and not only to items
classified as "loans" such as term loans, or loans and advances ,etc.
8.3.1.15 Also, a company need not disclose information for defaults other
than in respect of repayment of loan and interest, e.g., compliance with debt
covenants. The Schedule III requires specific disclosures only for default in
repayment of loans and interest and not for other defaults.
8.3.1.16 Though two different terms, viz., continuing default (in case of long-
term borrowing) and default (in case of short-term borrowing) have been
used, the requirement should be taken to disclose default "as on the Balance
Sheet date" in both the cases. Pursuant to this requirement, details of any
default in repayment of loan and interest existing as on the Balance Sheet
date needs to be separately disclosed. Any default that had occurred during
the year and was subsequently made good before the end of the year does
not need to be disclosed.
8.3.1.17 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 `Long-term
borrowings' as per Schedule III. Disclosure of terms of repayment should be
made preferably for each loan unless the repayment terms of individual loans
within a category are similar, in which case, they may be aggregated.
8.3.1.18 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 and other significant relevant terms if any.
8.3.1.19 Deposits classified under Borrowings would include deposits
accepted from public and inter corporate deposits which are in the nature of
borrowings.
8.3.1.20 Loans and advances from related parties are required to be
disclosed. Advances under this head should include those advances which
are in the nature of loans.
8.4. Other Long-term liabilities
This should be classified into:
a)    Trade payables; and
b)    Others.
8.4.1 A payable shall be classified as 'trade payable' if it is in respect of
amount due on account of goods purchased or services received in the


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 Guidance Note on Division I ­ Non Ind AS Schedule III to the Companies Act, 2013

normal course of business. The amounts due under contractual obligations
cannot be included within Trade payables. Such contractual obligations may
include dues payables in respect of statutory obligations like contribution to
provident fund, purchase of Property, Plant and Equipment, Intangible
Assets, etc., contractually reimbursable expenses, interest accrued on trade
payables, etc. Such payables should be classified as "others" and each such
item should be disclosed nature-wise. However, Acceptances should be
disclosed as part of trade payables in terms of the Schedule III.
8.4.2 By virtue of MCA notification dated 4th September 2015, disclosure
relating to dues to suppliers registered under The Micro, Small and Medium
Enterprises Development (MSMED) Act, 2006 was made. Though the
amendment was made under `Trade payables' under `Current Liabilities', the
principle would equally be applicable for disclosure of trade payables under
`other long term liabilities'.
8.4.3 The following disclosures are required by the said notification (similar
to Sec 22 of MSMED Act 2006 under the Chapter on Delayed Payments to
Micro and Small Enterprises):
(a)    the principal amount and the interest due thereon (to be shown
       separately) remaining unpaid to any supplier as at the end of
       accounting year;
(b)    the amount of interest paid by the buyer under MSMED Act, 2006
       along with the amounts 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 (where the
       principal has been paid but interest under the MSMED Act, 2006 not
       paid);
(d)    The amount of interest accrued and remaining unpaid at the end of
       accounting year; and
(e)    The amount of further interest due and payable even in the succeeding
       year, until such date when the interest dues as above are actually paid
       to the small enterprise, for the purpose of disallowance as a deductible
       expenditure under section 23.
The terms ''appointed day'', ''buyer'', ''enterprise'', ''micro 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.


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Guidance Note on Division I ­ Non Ind AS Schedule III to the Companies Act, 2013

8.5. Long-Term Provisions
8.5.1 This should be classified into provision for employee benefits and
others specifying the nature. Provision for employee benefits should be
bifurcated into long-term (non-current) and other current and the long-term
portion is disclosed under this para. All long-term provisions, other than
those related to employee benefits should be disclosed separately based on
their nature. Such items would include Provision for warranties etc. While
AS-15 Employee Benefits governs the measurement of various employee
benefit obligations, their classification as current and non-current liability will
also be governed by the criteria laid down in Notes 1 to 3 to the General
Instructions for Preparation of Balance Sheet in the Schedule III.
Accordingly, a liability is classified as current if a company does not have an
unconditional right as on the Balance Sheet date to defer its settlement for
12 months after the reporting date. Each company will need to apply these
criteria to its specific facts and circumstances and decide an appropriate
classification for its employee benefit obligations.
8.6. Current Liabilities
This should be classified on the face of the Balance Sheet as follows:
      Short-term borrowings;
      Trade payables;
      (A) total outstanding dues of micro enterprises and small enterprises;
          and
      (B) total outstanding dues of creditors other than micro enterprises
          and small enterprises.
      Other current liabilities;
      Short-term provisions.
8.6.1. Short-term borrowings
8.6.1.1. (i) Short-term borrowings shall be classified as:
      (a)    Loans repayable on demand
                    from banks;
                    from other parties.
      (b)    Loans and advances from related parties;
      (c)    Deposits;
      (d)    Other loans and advances (specify nature).







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 Guidance Note on Division I ­ Non Ind AS Schedule III to the Companies Act, 2013

(ii)    Borrowings shall further be sub-classified as secured and unsecured.
        Nature of security shall be specified separately in each case.
(iii)   Where loans have been guaranteed by directors or others, the
        aggregate amount of such loans under each head shall be disclosed.
(iv)    Period and amount of default as on the Balance Sheet date in
        repayment of loans and interest shall be specified separately in each
        case.
8.6.1.2 Loans payable on demand should be treated as part of short-term
borrowings. Short-term borrowings will include all loans within a period of 12
months from the date of the loan. In the case of short-term borrowings, all
defaults existing as at the date of the Balance Sheet should be disclosed
(item-wise). Current maturity of long-term borrowings should not be classified
as short-term borrowing. They have to be classified under other current
liabilities. Guidance on disclosure on various matters under this Para should
also be drawn, to the extent possible, from the guidance given under Long-
term borrowings.
8.6.2. Trade payables
Guidance on disclosure under this clause should be drawn from the guidance
given under Other Long-term borrowings to the extent applicable.
8.6.3. Other current liabilities
The amounts shall be classified as:
(a)     Current maturities of long-term debt;
(b)     Current maturities of finance 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).


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Guidance Note on Division I ­ Non Ind AS Schedule III to the Companies Act, 2013

The portion of long term debts / lease obligations, which is due for payments
within twelve months of the reporting date is required to be classified under
"Other current liabilities" while the balance amount should be classified under
Long-term borrowings.
Trade Deposits and Security Deposits which are not in the nature of
borrowings should be classified separately under `Other Non-current/Current
liabilities'. Other Payables may be in the nature of statutory dues such as
Withholding taxes, Excise Duty, GST, employer and employee contribution to
PF / ESI / LWF, etc.
8.6.4. Short-term provisions
The amounts 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 dividend, Provision for taxation, Provision for
warranties, etc. These amounts should be disclosed separately specifying
nature thereof.
II.    Assets
8.7. Non-current assets
Definition and Presentation
An asset shall be classified as `current' when it satisfies any of the following
criteria:
(a) it is expected to be realized in, or is intended for sale or consumption in
    the company's normal operating cycle;
(b) it is held primarily for the purpose of being traded;
(c)   it is expected to be realized within twelve months after the reporting
      date; or
(d) it is Cash or cash equivalent unless it is restricted from being
    exchanged or used to settle a liability for at least twelve months after
    the reporting date.
All other assets shall be classified as `non-current'.
Based on the above definition, on the face of the Balance Sheet, the
following items shall be disclosed under non-current assets: -


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 Guidance Note on Division I ­ Non Ind AS Schedule III to the Companies Act, 2013

(a) Property, Plant and Equipment (Tangible assets)
(b) Intangible assets;
(c)    Capital work-in-progress;
(d) Intangible assets under development
(e) Non-current investments
(f)    Deferred tax assets (net)
(g) Long-term loans and advances
(h) Other non-current assets

  Sr. Particulars                           Relevant Accounting Standards as
  No.                                       notified     under        Companies
                                            (Accounting Standards) Rules, 2006
                                            (as amended from time to time)
  1.      Property,     Plant    and AS 10 (Revised 2016)
          Equipment         (Tangible
          assets)
  2.      Intangible assets                 AS 26
  3.      Capital work-in-progress          AS 10 (Revised 2016)
  4.      Intangible assets     under AS 26
          development
8.7.1 Property, Plant and Equipment (Tangible assets)
The company shall disclose the following in the Notes to Accounts as per 6(I)
of Part I of the Schedule III.
(i)     Classification shall be given as:
        (a)    Land;
        (b)    Buildings;
        (c)    Plant and Equipment;
        (d)   Furniture and Fixtures;
        (e)   Vehicles;
        (f)   Office equipment;
        (g)   Others (specify nature).


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Guidance Note on Division I ­ Non Ind AS Schedule III to the Companies Act, 2013

(ii)   Assets under lease shall be separately specified under each class of
       asset.
The term "under lease" should be taken to mean assets given on operating
lease in the case of lessor and assets held under finance lease in the case of
lessee. Further, leasehold improvements should continue to be shown as a
separate asset class.
(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.
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 & Equipment 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.
The term "business combination" has not been defined in the Act or the
Accounting Standards as notified under the Companies (Accounting
Standards) Rules, 2006 as amended from time to time. However, related
concepts have been enumerated in AS14 (Revised 2016) Accounting for
Amalgamations and AS10 (Revised 2016) Property, Plant and Equipment.
Accordingly, such terminology should be interpreted to mean an
amalgamation or acquisition or any other mode of restructuring of a set of
assets and/or a group of assets and liabilities constituting a business.
Other adjustments should include items such as capitalization of exchange
differences where such option has been exercised by the Company as per
AS11 The Effects of Changes in Foreign Exchange Rates and/or adjustments
on account of exchange fluctuations for Property, Plant and Equipment in
case of non-integral operations as per AS11 and/or borrowing costs
capitalised in accordance with AS 16 Borrowing Costs. Such adjustments
should be disclosed separately for each class of assets. The disclosure as
required by the notification under para 46A of AS 11 should also be made.
Since reconciliation of gross and net carrying amounts of Property, Plant and
Equipment is required, the corresponding depreciation/amortization for each
class of asset should be disclosed in terms of Opening Accumulated

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 Guidance Note on Division I ­ Non Ind AS Schedule III to the Companies Act, 2013

Depreciation, Depreciation for the year, Deductions/Other adjustments and
Closing Accumulated Depreciation. Similar disclosures should also be made
for Impairment, if any, as applicable.
(iv) Where any amounts have been written-off 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. Disclosure by
way of a note would also be required to 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.
The Schedule III has introduced office equipment as a separate line item
while dropping items like, livestock, railway sidings, etc. However, if the said
items exist, the same should be disclosed separate asset class specifying
nature thereof.
The Schedule III does not prescribe any particular classification/presentation
for leasehold land. AS 19 Leases, excludes land leases from its scope. The
accounting treatment for leasehold land should be continued with as is being
currently followed under the prevailing Indian generally accepted accounting
principles and practices. Accordingly, Leasehold land should also continue to
be presented as a separate asset class under Tangible Assets. Also,
Freehold land should continue to be presented as a separate asset class.
With respect to revaluation of Property, Plant and Equipment, AS10 (Revised
2016) Property, Plant and Equipment requires a company to disclose details
such as effective date of the revaluation, whether an independent valuer was
involved, the methods and significant assumptions applied in estimating fair
value of the items, the extent to which fair values of items were determined
directly by reference to observable prices in an active market or recent
market transactions on arm's length terms or were estimated using other
valuation techniques, and the revaluation surplus, indicating the change for
the period and any restrictions on the distribution of the balance of
shareholders.
The Schedule III is clear that the disclosure requirements of the Accounting
Standards are in addition to disclosures required under the Schedule. Also,
in case of any conflict, the Accounting Standards will prevail over the
Schedule. Keeping this in view, companies should make disclosures required
by the Schedule III only for five years. However, details required by AS10
(Revised 2016) will have to be given as long as the asset is held by the
company.

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Guidance Note on Division I ­ Non Ind AS Schedule III to the Companies Act, 2013

However, it may be noted that, AS 26 Intangible Assets does not permit
revaluation of intangible assets.
8.7.2 Intangible assets
The company shall disclose the following in the Notes to Accounts as per
6(J) of Part I of the Schedule III.
(i)     Classification shall be given as:
        (a) Goodwill;
        (b) Brands /trademarks;
        (c)   Computer software;
        (d) Mastheads and publishing titles;
        (e) Mining rights;
        (f)   Copyrights, and patents and other intellectual property rights,
              services and operating rights;
        (g) Recipes, formulae, models, designs and prototypes;
        (h) Licenses and franchise;
        (i)   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/reversals shall be disclosed separately.
(iii)   Where sums have been written-off 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.
Classification of intangible assets (as listed above) has been introduced
under the Schedule III, which did not exist earlier.
The guidance given above on Tangible Assets, to the extent applicable, is
also to be used for Intangible Assets.


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 Guidance Note on Division I ­ Non Ind AS Schedule III to the Companies Act, 2013

8.7.3 Capital work-in-progress
As per the Schedule III, capital advances should be included under Long-
term loans and advances and hence, cannot be included under capital work-
in-progress.
8.7.4 Intangible assets under development
Intangible assets under development should be disclosed under this head
provided they can be recognised based on the criteria laid down in AS 26
Intangible Assets.
8.7.5 Non-current investments
(i)    Non-current investments shall be classified as trade investments and
       other investments and further classified as:
       (a) Investment property;
       (b) Investments in Equity Instruments;
       (c)   Investments in preference shares;
       (d) Investments in Government or trust securities;
       (e) Investments in debentures or bonds;
       (f)   Investments in Mutual Funds;
       (g) Investments in partnership firms;
       (h) Other non-current investments (specify nature).
       Under each classification, details shall be given of names of the
       bodies corporate (indicating separately whether such bodies are (i)
       subsidiaries, (ii) associates, (iii) joint ventures, or (iv) controlled
       special purpose entities) in whom investments have been made and
       the nature and extent of the investment so made in each such body
       corporate (showing separately investments which are partly-paid). In
       regard to investments in the capital of partnership firms, the names of
       the firms (with the names of all their partners, total capital and the
       shares of each partner) shall be given.
(ii)   Investments carried at other than at cost should be separately stated
       specifying the basis for valuation thereof.


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Guidance Note on Division I ­ Non Ind AS Schedule III to the Companies Act, 2013

(iii)   The following shall also be disclosed:
        (a) Aggregate amount of quoted investments and market value thereof;
        (b) Aggregate amount of unquoted investments;
        (c) Aggregate provision for diminution in value of investments
If a debenture is to be redeemed partly within 12 months and balance after
12 months, the amount to be redeemed within 12 months should be
disclosed as current and balance should be shown as non-current.
8.7.5.1 Trade Investment
Note 6(K)(i) of Part I requires that non-current investments shall be classified
as "trade investment" and "other investments". The term "trade investments"
is defined neither in Schedule III nor in Accounting Standards.
The term "trade investment" is, however, normally understood as an
investment made by a company in shares or debentures of another company,
to promote the trade or business of the first company.
8.7.5.2 Investment property
As per AS 13 Accounting for Investments, an investment property is an
investment in land or buildings that are not intended to be occupied
substantially for use by, or in the operations of, the investing enterprise.
8.7.5.3 Aggregate provision for diminution in value
As per the Schedule III, this amount should be disclosed separately in the
notes. However, as per AS13 all long-term (non-current) investments are
required to be carried at cost. However, when there is a decline, other than
temporary, in the value of a long-term investment, the carrying amount is
reduced to recognize the decline. Accordingly, the value of each long-term
investment should be carried at cost less provision for other than temporary
diminution in the value thereof. It is recommended to disclose the amount of
provision netted-off for each long-term investment.
However, the aggregate amount of provision made in respect of all non-
current investments should also be separately disclosed to comply with the
specific disclosure requirement in Schedule III.
8.7.5.4 Controlled special purpose entities
Under investments, there is also a requirement to disclose the names of


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 Guidance Note on Division I ­ Non Ind AS Schedule III to the Companies Act, 2013

bodies corporate, including separate disclosure of investments in "controlled
special purpose entities" in addition to subsidiaries, etc. The expression
"controlled special purpose entities" however, has not been defined either in
the Act or in the Schedule III or in the Accounting Standards. Accordingly, no
disclosures would be additionally required to be made under this caption. If
and when such terminology is explained/ introduced in the applicable
Accounting Standards, the disclosure requirement would become applicable.
8.7.5.5 Basis of valuation
The Schedule III requires disclosure of the "basis of valuation" of non-current
investments which are carried at other than cost. However, what should be
understood by such terminology has not been clarified. The same may be
interpreted in the following ways:
One view is that basis of valuation would mean the market value, or valuation
by independent valuers, valuation based on the investee's assets and
results, or valuation based on expected cash flows from the investment, or
management estimate, etc. Hence, for all investments carried at other than
cost, the basis of valuation for each individual investment should be
disclosed.
The other view is that, disclosure for basis of valuation should be either of:
·    At cost;
·    At cost less provision for other than temporary diminution;
·    Lower of cost and fair value.
However, making disclosures in line with the latter view would be sufficient
compliance with the disclosure requirements.
8.7.5.6 Quoted investments
The term quoted investments has not been defined in the Schedule III. The
expression "quoted investment", means an investment as respects which
there has been granted a quotation or permission to deal on a recognized
stock exchange, and the expression "unquoted investment" shall be
construed accordingly.
In case of investments in Mutual Fund which are not quoted on a market, but
for which the NAV is published on a regular basis, the company should
continue to disclose it as unquoted investments and may present its market
value in the financial statements as an additional disclosure based on such
NAV.


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Guidance Note on Division I ­ Non Ind AS Schedule III to the Companies Act, 2013

8.7.5.7 Under each sub-classification of Investments, there is a requirement
to disclose details of investments including names of the bodies corporate
and the nature and extent of the investment in each such boy corporate. The
term "nature and extent" should be interpreted to mean the number and face
value of shares. There is also a requirement to disclose partly-paid shares.
However, it is advisable to clearly disclose whether investments are fully paid
or partly paid.
8.7.5.8 Disclosure relating to partnership firms in which the company
has invested, etc. (under Current and Non-current Investments in the
Balance Sheet)
A company, as a juridical person, can enter into partnership. The Schedule
III provides for certain disclosures where the company is a partner in
partnership firms.
In the Balance Sheet, under the sub-heading "Current Investments" and
"Non-current Investments", separate disclosure is to be made of any
investment in the capital of partnership firm by the company. In addition, in
the Notes to Accounts separate disclosure is required with regard to the
names of the firms, along with the names of all their partners, total capital
and the shares of each partner.
The disclosure in the Balance Sheet relating to the value of the investment in
the capital of a partnership firm as the amount to be disclosed as on the date
of the Balance Sheet can give rise to certain issues, the same are discussed
in the following paragraphs.
(a)   In case of a change in the constitution of the firm during the year, the
      names of the other partners should be disclosed by reference to the
      position existing as on the date of the company's Balance Sheet.
(b)   The total capital of the firm to be disclosed should be with reference to
      the amount of the capital on the date of the company's Balance Sheet.
      If it is not practicable to draw up the Financial Statements of the
      partnership upto such date and, are drawn up to different reporting
      dates, drawing analogy from AS-21 and AS-27, adjustments should be
      made for the effects of significant transactions or other events that
      occur between those dates and the date of the parent's Financial
      Statements. In any case, the difference between reporting dates
      should not be more than six months. In such cases, the difference in
      reporting dates should be disclosed.


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 Guidance Note on Division I ­ Non Ind AS Schedule III to the Companies Act, 2013

(c)   For disclosure of the share of each partner it is suggested to disclose
      share of each partner in the profits of the firm rather than the share in
      the capital since, ordinarily, the expression "share of each partner" is
      understood in this sense. Moreover, disclosure is already required of
      the total capital of the firm as well as of the company's share in that
      capital. The share of each partner should be disclosed as at the date
      of the company's Balance Sheet
(d)   The Statement of investments attached to the Balance Sheet is
      required to disclose, inter alia, the total capital of the partnership firm
      in which the company is a partner. Where such a partnership firm has
      separate accounts for partner's capital, drawings or current, loans to or
      from partners, etc., disclosure must be made with regard to the total of
      the capital accounts alone, since this is what constitutes the capital of
      the partnership firm. Where, however, such accounts have not been
      segregated, or where the partnership deed provides that the capital of
      each partner is to be calculated by reference to the net amount at his
      credit after merging all the accounts, the disclosure relating to the
      partnership capital must be made on the basis of the total effect of
      such accounts taken together.
Separate disclosure is required by reference to each partnership firm in
which the company is a partner. The disclosure must be made along with the
name of each such firm and must then indicate the total capital of each firm,
the names of all the partners in each firm and the respective shares of each
partner in the respective firm.
8.7.5.9 A limited liability partnership is a body corporate and not a
partnership firm as envisaged under the Partnership Act, 1932. Hence,
disclosures pertaining to Investments in partnership firms will not include
investments in limited liability partnerships. The investments in limited liability
partnerships will be disclosed separately under other investments. Also,
other disclosures prescribed for Investment in partnership firms, need not be
made for investments in limited liability partnerships.
8.7.5.10 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. If the amount is material, details about the allotment since made or
when the allotment is expected to be completed may also be disclosed.


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Guidance Note on Division I ­ Non Ind AS Schedule III to the Companies Act, 2013

In case the investment is of current investment in nature, such share
application money shall be accordingly, disclosed under current investments.
8.7.6 Long-term loans & advances
(i)     Long-term loans and advances shall be classified as:
        (a) Capital Advances;
        (b) Security Deposits;
        (c)   Loans and advances to related parties (giving details thereof);
        (d) Other loans and advances (specify nature).
(ii)    The above shall also be separately sub-classified as:
        (a) Secured, considered good;
        (b) Unsecured, considered good;
        (c)   Doubtful.
(iii)   Allowance for bad and doubtful loans and advances shall be disclosed
        under the relevant heads separately.
(iv)    Loans and advances due by directors or other officers of the company
        or any of them either 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.
Under the Schedule III, Capital Advances are not be classified under Capital
Work in Progress, since they are specifically to be disclosed under this para.
Capital advances are advances given for procurement of Property, Plant and
Equipment and intangible assets which are non-current assets. Typically,
companies do not expect to realize them in cash. Rather, over the period,
these get converted into Property, Plant and Equipment and intangible
assets which, by nature, are non-current assets. Hence, capital advances
should be treated as non-current assets irrespective of when the Property,
Plant and Equipment and intangible assets are expected to be received and
should not be classified as Short-Term/Current.
Details of loans and advances to related parties need to be disclosed. Since
the Schedule III states that the terms used therein should be interpreted
based on applicable the Accounting Standards, the term "details" should be
interpreted to understand the disclosure requirements contained in AS 18


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 Guidance Note on Division I ­ Non Ind AS Schedule III to the Companies Act, 2013

Related Party Disclosure. Accordingly, making disclosures beyond the
requirements of AS-18 would not be necessary.
However, the company, in accordance with requirements of section 186(4) of
the Act, shall disclose 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.
Other loans and advances should include all other items in the nature of
advances recoverable in cash or kind such as Prepaid expenses, Advance
tax, CENVAT / VAT / Service tax / GST credit receivable, etc. which are not
expected to be realized within the next twelve months or operating cycle
whichever is longer, from the Balance Sheet date.
Each item of loans and advances should be further sub-classified as a)
Secured, considered good, b) Unsecured, considered good and c) Doubtful.
Further, the amount of allowance for bad and doubtful loans and advances is
required to be disclosed separately under the "relevant heads". Therefore,
the amount of such allowance also should be disclosed separately for each
category of loans and advances.
8.7.7 Other non-current assets
Other non-current assets shall be classified as:
(i)     Long term Trade Receivables (including trade receivables on deferred
        credit terms);
(ii)    Others (specify nature)
Long term Trade Receivables, shall be sub-classified as:
(i)     (a) Secured, considered good;
        (b) Unsecured considered good;
        (c)   Doubtful
(ii)    Allowance for bad and doubtful debts shall be disclosed under the
        relevant heads separately.
(iii)   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.

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Guidance Note on Division I ­ Non Ind AS Schedule III to the Companies Act, 2013

A receivable shall 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. The amounts due under contractual obligations cannot
be included within Trade Receivables. Such contractual obligations may
include dues in respect of insurance claims, sale of Property, Plant and
Equipment, contractually reimbursable expenses, interest accrued on trade
receivables, etc. Such receivables should be classified as "others" and each
such item should be disclosed nature-wise.
Guidance in respect of above items may also be drawn from the guidance
given in respect of Long-term loans &advances to the extent applicable.
As per AS 16 Borrowing Costs ancillary borrowing costs and discount or
premium relating to borrowings could be amortized over the loan period.
Further, share issue expenses, discount on shares, ancillary costs-discount-
premium on borrowing, etc., being special nature items are excluded from
the scope of AS 26 Intangible Assets (Para 5). Keeping this in view, certain
companies have taken a view that it is an acceptable practice to amortize
these expenses over the period of benefit, i.e., normally 3 to 5 years. The
Schedule III does not deal with any accounting treatment and the same
continues to be governed by the respective Accounting Standards/practices.
Further, the Schedule III is clear that additional line items can be added on
the face or in the notes. Keeping this in view, entity can disclose the
unamortized portion of such expenses as "Unamortized expenses", under the
head "other current/ non-current assets", depending on whether the amount
will be amortized in the next 12 months or thereafter.
8.8   Current assets
As per the Schedule III, all items of assets and liabilities are to be bifurcated
between current and non-current portions. In some cases, the items
presented under the "non-current" head of the Balance Sheet do not have a
corresponding "current" head especially for Assets. For example: Security
Deposits have been shown under "Long-term loans & advances", however,
the same is not reflected under the "short-term loans & advances". Since
Schedule III permits the use of additional line items, in such cases the
current portion should be classified under the Short-term category of the
respective balance as a separate line item and other relevant disclosures
e.g. doubtful amount, related provision etc. should be made.
8.8.1 Current investments
(i)   Current investments shall be classified as:


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 Guidance Note on Division I ­ Non Ind AS Schedule III to the Companies Act, 2013

       (a) Investments in Equity Instruments;
       (b) Investment in Preference Shares
       (c)   Investments in government or trust securities;
       (d) Investments in debentures or bonds;
       (e) Investments in Mutual Funds;
       (f)   Investments in partnership firms
       (g) Other investments (specify nature).
       Under each classification, details shall be given of names of the
       bodies corporate(indicating separately whether such bodies are
       (i) subsidiaries, (ii) associates, (iii) joint ventures, or (iv) controlled
       special purpose entities) in whom investments have been made and
       the nature and extent of the investment so made in each such body
       corporate (showing separately investments which are partly-paid). In
       regard to investments in the capital of partnership firms, the names of
       the firms (with the names of all their partners, total capital and the
       shares of each partner) shall be given.
(ii)   The following shall also be disclosed:
       (a) The basis of valuation of individual investments
       (b) Aggregate amount of quoted investments and market value
           thereof;
       (c)   Aggregate amount of unquoted investments;
       (d) Aggregate provision made for diminution in value of investments.
Guidance in respect of above items may be drawn from the guidance given in
respect of Non-current investments to the extent applicable.
Based on these criteria, if a debenture is to be redeemed partly within twelve
months and balance after twelve months, the amount to be redeemed within
twelve months should be disclosed as current and balance should be shown
as non-current.
Additionally, the Schedule III also require basis of valuation of individual
investment. It is pertinent to note that there is no requirement to classify
investments into trade & non-trade in respect of current investments.
The aggregate provision for diminution in the value of current investments
that needs to be separately disclosed is the amount written down based on
the measurement principles of Current Investments as per AS-13 on a
cumulative basis.

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Guidance Note on Division I ­ Non Ind AS Schedule III to the Companies Act, 2013

8.8.2 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;
        (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 the 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 of all finished goods other than
those acquired for trading purposes.
8.8.3 Trade Receivables (current)
(i)     Aggregate amount of Trade Receivables outstanding for a period
        exceeding six months from the date they are due for payment should
        be separately stated.
(ii)    Trade receivables shall be sub-classified as:
        (a) Secured, considered good;
        (b) Unsecured considered good;
        (c)   Doubtful.
(iii)   Allowance for bad and doubtful debts shall be disclosed under the
        relevant heads separately.
(iv)    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.
A trade receivable will be treated as current, if it is likely to be realized within

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 Guidance Note on Division I ­ Non Ind AS Schedule III to the Companies Act, 2013

twelve months from the date of Balance Sheet or operating cycle of the
business.
The Schedule III requires separate disclosure of "Trade Receivables
outstanding for a period exceeding six months from the date they became
due for payment" only for the current portion of trade receivables.
Where no due date is specifically agreed upon, normal credit period allowed
by the company should be taken into consideration for computing the due
date which may vary depending upon the nature of goods or services sold
and the type of customers, etc.
All other guidance given under Long-term Trade Receivables to the extent
applicable are applicable here also.
8.8.4 Cash and cash equivalents
(i)     Cash and cash equivalents shall be classified as:
        (a) Balances with banks;
        (b) Cheques, drafts on hand;
        (c)   Cash on hand;
        (d) Others (specify nature).
(ii)    Earmarked balances with banks (for example, for unpaid dividend)
        shall be separately stated.
(iii)   Balances with banks to the extent held as margin money or security
        against the borrowings, guarantees, other commitments shall be
        disclosed separately.
(iv)    Repatriation restrictions, if any, in respect of cash and bank balances
        shall be separately stated.
(v)     Bank deposits with more than twelve months maturity shall be
        disclosed separately.
Please also refer to the earlier discussion under the section on General
Instructions in para 6.4 for classification of items under this head.
"Other bank balances" would comprise of items such as balances with banks
to the extent of held as margin money or security against borrowings etc.,
and bank deposits with more than three months maturity. Banks deposits
with more than more than twelve months maturity will also need to be
separately disclosed under the sub-head `Other bank balances'. The non-
current portion of each of the above balances will have to be classified under
the head "Other Non-current assets" with separate disclosure thereof.

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8.8.5 Short-term loans & advances
(i)     Short-term loans and advances shall be classified as:
        (a) Loans and advances to related parties (giving details thereof);
        (b) Others (specify nature).
(ii)    The above shall also be sub-classified as:
        (a) Secured, considered good;
        (b) Unsecured, considered good;
        (c)   Doubtful.
(iii)   Allowance for bad and doubtful loans and advances shall be disclosed
        under the relevant heads separately.
(iv)    Loans and advances due by directors or other officers of the company
        or any of them either severally or jointly with any other person or
        amounts due by firms or private companies respectively in which any
        director is a partner or a director or a member shall be separately
        stated.
The guidance for disclosures under this head should be drawn from guidance
given for items comprised within Long-term Loans and Advances.
8.8.6 Other current assets (specify nature)
This is an all-inclusive heading, which incorporates current assets that do not
fit into any other asset categories e.g. unbilled Revenue, unamortized
premium on forward contracts etc.
In case any amount classified under this category is doubtful, it is advisable
that such doubtful amount as well as any provision made there against
should be separately disclosed.
8.8.7 Contingent liabilities and commitments
(i)     Contingent liabilities shall be classified as:
        (a) Claims against the company not acknowledged as debt;
        (b) Guarantees;
        (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;


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 Guidance Note on Division I ­ Non Ind AS Schedule III to the Companies Act, 2013

      (b) Uncalled liability on shares and other investments partly paid
      (c)   Other commitments (specify nature).
8.8.7.1 The provisions of AS-29 Provisions, Contingent Liabilities and
Contingent Assets, will be applied for determining contingent liabilities.
8.8.7.2 A contingent liability in respect of guarantees arises when a
company issues guarantees to another person on behalf of a third party e.g.
when it undertakes to guarantee the loan given to a subsidiary or to another
company or gives a guarantee that another company will perform its
contractual obligations. However, 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 "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.
8.8.7.3 The 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.
8.8.7.4 The word `commitment' has not been defined in the 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
such definition, the term `commitment' would simply imply future liability for
contractual expenditure. Accordingly, the term `Other commitments' would
include all expenditure related contractual commitments apart from capital
commitments such as commitments arising from long-term contracts for
purchase of raw material, employee contracts, lease commitments, etc. The
scope of such terminology is very wide and may include contractual
commitments for purchase of inventory, services, investments, sales,
employee contracts, etc. However, to give disclosure of all contractual
commitments would be contrary to the overarching principle under General
Instructions that "a balance shall be maintained between providing excessive

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Guidance Note on Division I ­ Non Ind AS Schedule III to the Companies Act, 2013

detail that may not assist users of Financial Statements and not providing
important information as a result of too much aggregation."
8.8.7.5 Disclosures relating to lease commitments for non-cancellable leases
are required to be disclosed by AS-19 Leases.
8.8.7.6 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.
8.8.7.7 The 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 in the
notes. It also requires separate disclosure of the arrears of fixed cumulative
dividends on preference shares.
8.8.7.8 The 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, there shall
be indicated by way of note how such unutilized amounts have been used or
invested.
8.8.7.9 The Schedule III also states that if, in the opinion of the Board, any
of the assets other than Property, Plant and Equipment 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. It is difficult to contemplate a
situation where any asset other than Property, Plant and Equipment and non-
current investments has a realizable value that is lower than its carrying
value, and the same is not given effect to in the books of account, since
Accounting Standards do not permit the same. AS13 Accounting for
Investments requires current investments to be valued at lower of cost and
fair value. AS2 Valuation of Inventories also requires inventories to be valued
at the lower of cost and net realizable value. Further, Allowance for bad and


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 Guidance Note on Division I ­ Non Ind AS Schedule III to the Companies Act, 2013

doubtful debts is required to be shown as a deduction from both Long-term
loans & advances and Other Non-current assets as well as Trade
Receivables and Short-term loans and advances as per Schedule III.
Hence, if the requirements of Accounting Standards and Schedule III are
followed, there may not be any need for making additional disclosures in this
regard.

9. Part II ­ Statement of Profit and Loss
Part II deals with disclosures relating to the Statement of Profit and Loss.
The format prescribed is the vertical form wherein disclosure for revenues
and expenses is in various line items. Part II of the Schedule contains items I
to XVI which lists items of Revenue, Expenses and Profit / (Loss). "General
Instructions for Preparation of Statement of Profit and Loss" govern the other
disclosure and presentation.
As per the Guidance Note `Terms Used in Financial Statements', the phrase
`Profit and Loss statement' is defined as "the Financial Statement which
presents the revenues and expenses of an enterprise for an accounting
period and shows the excess of revenues over expenses (or vice versa) It is
also known as profit and loss account."
As per Note 1 to "General Instructions for Preparation of Statement of Profit
and Loss", the provisions of this part also apply to the income and
expenditure account referred to in sub clause (ii) of clause (40) of section 2
of the Companies Act, 2013 in the same manner as they apply to a
Statement of Profit and Loss.
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
be aggregated based on their nature. Accordingly, functional classification of
expenses is prohibited.
As per the Framework for the Preparation and Presentation of Financial
Statements, Income and expenses are defined as follows:
(a)   Income is increase in economic benefits during the accounting period
      in the form of inflows or enhancements of assets or decreases of
      liabilities that result in increases in equity, other than those relating to
      contributions from equity participants.
(b)   Expenses are decreases in economic benefits during the accounting
      period in the form of outflows or depletions of assets or incurrences of


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Guidance Note on Division I ­ Non Ind AS Schedule III to the Companies Act, 2013

      liabilities that result in decreases in equity, other than those relating to
      distributions to equity participants.
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 2(A) to General Instructions for the Preparation of Statement of
Profit and Loss require that in respect of a company other than a finance
company, Revenue from operations is to be separately disclosed in the
notes, showing revenue from:
(a)   Sale of products
(b)   Sale of services
(c)   Other operating revenues
(d)   Less: Excise duty
9.1.2 As per AS-9 "Revenue Recognition", the above disclosure in respect of
Excise Duty needs to be shown on the face of the Statement of Profit and
Loss. Since Accounting Standards override Schedule III, the presentation in
respect of excise duty will have to be made on the face of the Statement of
Profit and Loss. In doing so, a company may choose to present the elements
of revenue from sale of products, sale of services and other operating
revenues also on the face of the Statement of Profit and Loss instead of the
Notes.
9.1.3 Indirect taxes such as Sales tax, Service tax, Purchase tax etc. are
generally collected from the customer on behalf of the government in majority
of the cases. However, this may not hold true in all cases and it is possible
that a company may be acting as principal rather than as an agent in
collecting these taxes. Whether revenue should be presented gross or net of
taxes should depend on whether the company is acting as a principal and
hence responsible for paying tax on its own account or, whether it is acting
as an agent i.e. simply collecting and paying tax on behalf of government
authorities. In the former case, revenue should also be grossed up for the tax
billed to the customer and the tax payable should be shown as an expense.
However, in cases, where a company collects tax only as an intermediary,
revenue should be presented net of taxes.
9.1.4 However, as per the Guidance Note on Value Added Tax, "Value
Added Tax (VAT) is collected from the customers on behalf of the VAT

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 Guidance Note on Division I ­ Non Ind AS Schedule III to the Companies Act, 2013

authorities and, therefore, its collection from the customers is not an
economic benefit for the enterprise and it does not result in any increase in
the equity of the enterprise". Accordingly, VAT should not be recorded as
Revenue of the enterprise. At the same time, the payment of VAT should not
be treated as an expense in the Financial Statements of the company.
9.1.5 Further, as per the definition of Revenue in the Guidance Note on
Terms Used in Financial Statement, "It excludes amounts collected on behalf
of third parties such as certain taxes". The Guidance Note on VAT further
states, "Where the enterprise has not charged VAT separately but has made
a composite charge, it should segregate the portion of sales which is
attributable to tax and should credit the same to `VAT Payable Account' at
periodic intervals".
9.1.6 On the introduction of Goods & Services Tax from 1 July 2017
onwards, 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 should be presented
net of GST collected.
9.1.7 For non-finance companies, revenue from operations needs to be
disclosed separately as revenue from
(a)   sale of products,
(b)   sale of services and
(c)   other operating revenues.
It is important to understand what is meant by the term "other operating
revenues" and which items should be classified under this head vis-à-vis
under the head "Other Income".
9.1.8 The term "other operating revenue" 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 sale of products or rendering of services. 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. The classification of income would also depend on
the purpose for which the particular asset is acquired or held. For instance, a
group engaged in manufacture and sale of industrial and consumer products
also has one real estate arm. If the real estate arm is continuously engaged
in leasing of real estate properties, the rent arising from leasing of real estate
is likely to be "other operating revenue". On the other hand, consider a

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Guidance Note on Division I ­ Non Ind AS Schedule III to the Companies Act, 2013

consumer products company which owns a 10 storied building. The company
currently does not need one floor for its own use and has given the same
temporarily on rent. In that case, lease rent is not an "other operating
revenue"; rather, it should be treated as "other income".
9.1.9 To take other examples, sale of Property, Plant and Equipment is not
an operating activity of a company, and hence, profit on sale of Property,
Plant and Equipment should be classified as other income and not as `other
operating revenue'. On the other hand, sale of manufacturing scrap arising
from operations for a manufacturing company should be treated as other
operating revenue since the same arises on account of the company's main
operating activity.
9.1.10 Net foreign exchange gain should be classified as Other Income. This
is because such gain or loss arises purely on account of fluctuation in
exchange rates and not on account of sale of products or services rendered,
unless the business of the company is to deal in foreign exchange.
9.1.11 As per Note 2(B) to General Instructions for Preparation of Statement
of Profit and loss, in respect of a finance company, revenue from operations
shall include revenue from
(a)     Interest; and
(b)     Other financial services
Revenue under each of the above heads is to be disclosed separately by
way of Notes to Accounts to the extent applicable.
To align with Division III to Schedule III, a finance company may disclose the
following as a separate line item, as may be applicable to its line of
businesses, for example:
(i)     Dividend Income
(ii)    Rental Income
(iii)   Fees and commission Income
9.1.12 The term finance company is not defined under the Companies Act,
2013, or Schedule III. Hence, the same should be taken to include all
companies carrying on activities which are in the nature of "business of non-
banking financial institution" as defined under section 45I(f) of the Reserve
Bank of India Act, 1935.
The relevant extract is reproduced below:
(a)     ``business of a non-banking financial institution'' means carrying on of

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 Guidance Note on Division I ­ Non Ind AS Schedule III to the Companies Act, 2013

the business of a financial institution referred to in clause (c) and includes
business of a non-banking financial company referred to in clause (f);
(c) ``financial institution'' means any non-banking institution which carries
on as its business or part of its business any of the following activities,
namely:­
(i)     the financing, whether by way of making loans or advances or
        otherwise, of any activity other than its own:
(ii)    the acquisition of shares, stock, bonds, debentures or securities
        issued by a Government or local authority or other marketable
        securities of a like nature:
(iii)   letting or delivering of any goods to a hirer under a hire-purchase
        agreement as defined in clause (c) of section 2 of the Hire-Purchase
        Act, 1972:
(iv)    the carrying on of any class of insurance business;
(v)     managing, conducting or supervising, as foreman, agent or in any
        other capacity, of chits or kuries as defined in any law which is for the
        time being in force in any State, or any business, which is similar
        thereto;
(vi)    collecting, for any purpose or under any scheme or arrangement by
        whatever name called, monies in lump sum or otherwise, by way of
        subscriptions or by sale of units, or other instruments or in any other
        manner and awarding prizes or gifts, whether in cash or kind, or
        disbursing monies in any other way, to persons from whom monies are
        collected or to any other person, but does not include any institution,
        which carries on as its principal business,­
        (a)   agricultural operations; or
        (aa) industrial activity; or
        (b)   the purchase or sale of any goods (other than securities) or the
              providing of any services; or
        (c)   the purchase, construction or sale of immovable property, so
              however, that no portion of the income of the institution is
              derived from the financing of purchases, constructions or sales
              of immovable property by other persons;
              Explanation.­ For the purposes of this clause, ``industrial
              activity'' means any activity specified in sub-clauses (i) to (xviii)

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Guidance Note on Division I ­ Non Ind AS Schedule III to the Companies Act, 2013

              of clause (c) of section 2 of the Industrial Development Bank of
              India Act, 1964;
(f)   ``non-banking financial company'' means­
      (i)     a financial institution which is a company;
      (ii)    a non-banking institution which is a company and which has as
              its principal business the receiving of deposits, under any
              scheme or arrangement or in any other manner, or lending in
              any manner;
      (iii)   such other non-banking institution or class of such institutions,
              as the bank may, with the previous approval of the Central
              Government and by notification in the Official Gazette, specify;
9.1.13 Accordingly, applying the aforesaid definition, the term "finance
company" would cover all NBFCs - Asset Finance companies, Investment
companies, Leasing and Hire Purchase companies, Loan companies, Infra
Finance companies, Core Investment companies, Micro-finance companies,
etc. Further, Housing Finance Companies regulated by National Housing
Bank should also be considered as a finance company.
9.2 Other income:
The aggregate of `Other income' is to be disclosed on face of the Statement
of Profit and Loss.
9.2.1 As per Note 4 to General Instructions for the preparation of Statement
of Profit and Loss `Other Income' shall be classified as:
(a)   Interest Income (in case of a company other than a finance company);
(b)   Dividend Income;
(c)   Net gain / loss on sale of investments;
(d)   Other non-operating income (net of expenses directly attributable to
      such income).
9.2.2 All kinds of interest income for a company other than a finance
company should be disclosed under this head such as interest on fixed
deposits, interest from customers on amounts overdue, etc.
9.2.3 Clause (a) of Note 5 (vii) requires a separate disclosure for Dividends
from subsidiary companies.


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9.2.4 Other income items such as interest income, dividend income and net
gain on sale of investments should be disclosed separately for Current as
well as Long-term Investments as required by AS13 "Accounting for
Investments". If it is a net loss the same should be classified under
expenses.
9.2.5 For other non-operating income, income should be disclosed under
this head net off expenses directly attributable to such income. However, the
expenses so netted off should be separately disclosed.
9.3   Share of profits/losses in a Partnership firm
9.3.1 Though, there is no specific requirement in the Schedule III to disclose
profit or losses on investments in a partnership firm, the same should be
disclosed as under.
9.3.2 The accounting of return on investment (i.e. profit share from
partnership) will depend on the terms of contract between Company and
partnership firm. The share of profit in partnership firm shall be recognised as
income in the statement of profit and loss as and when the right to receive
the profit share is established. Hence, the same should be accordingly
accounted for by the company in its Standalone Financial Statements.
9.3.3 Separate disclosure of profits or losses from partnership firms should
be made. In a case where the company was a partner during the year but is
not a partner at the end of the year, the disclosure should be made for the
period during which the company was a partner.
9.3.4 The company's share of the profits or losses of the partnership firm
should be calculated by reference to the company's own accounting year.
The Financial Statements of the partnership for computing the share of
profits and losses should be drawn up to the same reporting date. If it is not
practicable to draw up the Financial Statements of the partnership upto such
date and, are drawn up to a different reporting date, drawing analogy from
AS-21 and AS-27, adjustments should be made for the effects of significant
transactions or other events that occur between that date and the date of the
parent's Financial Statements. In such cases, the difference in reporting
dates should be disclosed.
9.3.5 In case the year ending of the company and of the firm fall on different
dates, the Financial Statements of the company should also contain a note to
indicate that the accounting period of the partnership firm in respect of which
the profits or losses have been accounted for in the company's books.

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9.3.6 If however, a partnership firm happens to be in the nature of a Jointly
Controlled Operation as defined in AS-27, the share of incomes, expenses,
assets or liabilities will have to be accounted for in the Standalone Financial
Statements as prescribed in AS-27.
9.3.7 In case the partnership firm is a Subsidiary under AS-21, Associate
under AS-23 or Jointly Controlled Entity/Jointly Controlled Operation under
AS-27, in the Consolidated Financial Statements, the share of profit/loss from
the firm should be accounted for in terms of the applicable Accounting
Standard as stated above.
9.3.8 The aforesaid principles should also be applied to accounting for the
share of profits and losses in an Association of Persons (AOP).
9.4   Share of profits/losses in a Limited Liability Partnership (LLP)
9.4.1 A Limited Liability Partnership, as per the LLP Act, is a body corporate.
The accounting of return on investment in LLP (i.e. profit share from LLP) will
depend on the terms of contract between Company and LLP. The share of
profit in LLP shall be recognised as income in the statement of profit and loss
as and when the right to receive its profit share is established by the
company.
9.4.2 Depending upon the terms of agreement between the Partners, the
LLP may be a Subsidiary under AS-21, Associate under AS-23 or Jointly
Controlled Entity under AS-27. Hence, accounting in respect of the same in
the Consolidated Financial Statements would be governed by the applicable
Accounting Standards.
9.4.3 Additionally, principles of para 9.3.4 and 9.3.5 above will apply to an
LLP as well.
9.5   Expenses
The aggregate of the following expenses are to be disclosed on the face
of the Statement of Profit and Loss:
      Cost of materials consumed
      Purchases of Stock-in-Trade
      Changes in inventories of finished goods, work in progress and stock
      in trade
      Employee benefits expense
      Finance costs


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       Depreciation and amortization expense
       Other expenses
9.5.1 Cost of materials consumed
9.5.1.1 This disclosure is applicable for manufacturing companies. Materials
consumed would consist of raw materials, packing materials (where
classified by the company as raw materials) and other materials such as
purchased intermediates and components which are `consumed' in the
manufacturing activities of the company. Where packing materials are not
classified as raw materials the consumption thereof should be disclosed
separately. However, intermediates and components which are internally
manufactured are to be excluded from the classification:
9.5.1.2 For purpose of classification of inventories, internally manufactured
components may be disclosed as below:
i.     where such components are sold without further processing they are
       to be disclosed as 'finished products'.
ii.    where such components are sold only after further processing, the
       better course is to disclose them as 'work-in-progress' but they may
       also be disclosed as 'manufactured components' subject to further
       processing or with such other suitable description as 'semi-finished
       products' or 'intermediate products'.
iii.   where such components are sometimes sold without further
       processing and sometimes after further processing it is better to
       disclose them as 'manufactured components'.
9.5.1.3 For the purpose of interpreting the requirement to classify the raw
materials, some guidance may be necessary with regard to the question as
to what constitutes raw materials. According to the strict dictionary
connotation of this term, raw materials would include only materials obtained
in the state of nature. Such a definition would, however, be unrealistic in
context of this requirement because it would exclude even a basic material
such as steel. Generally speaking, the term "raw materials" would include
materials which physically enter into the composition of the finished product.
Materials, such as stores, fuel, spare parts etc., which do not enter physically
into the composition of the finished product, would therefore, be excluded
from the purview of the term "raw materials".
9.5.1.4 The requirement is silent with regard to containers and packaging
materials. It is, therefore, open to question whether such materials constitute


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Guidance Note on Division I ­ Non Ind AS Schedule III to the Companies Act, 2013

a category of "raw materials" for the purpose of the classification. The matter
should be decided in the light of the facts and circumstances of each case,
the nature of the containers and packaging materials, their relative value in
comparison to the raw materials consumed, and other similar considerations.
Where, however, packaging materials, because of their nature are included
in raw materials it is preferable to show the description as "raw materials
including packaging materials consumed".
9.5.1.5 Since in case of a company which falls under the category of
manufacturing or manufacturing and trading company, disclosure is required
with regard to raw materials consumed, care should be taken to ensure that
the figures relate to actual consumption rather than "derived consumption".
The latter figure is ordinarily obtained by deducting the closing inventory from
the total of the opening inventory and purchases, but this figure may not
always represent a fair indication of actual consumption because it might
conceal losses and wastages. On the other hand, if the figure of actual
consumption can be compiled from issue records or other similar data, it is
likely to be more accurate. Where this is not possible, the derived figure of
consumption may be shown and it is left to the company, according to the
circumstances of each case, to determine whether any footnote is required to
indicate that the consumption disclosed is on the basis of derived figures
rather than actual records of issue.
9.5.1.6 Where the consumption is disclosed on the basis of actual records
of issue, a further question arises with regard to the treatment of shortages,
losses and wastages. In most manufacturing companies, these are
inevitable. It is, therefore, suggested that the company should itself establish
reasonable norms of acceptable margins. Any shortages, losses or wastages
which are within these norms may be regarded as an ordinary incidence of
the manufacturing process and may, therefore, be included in the figure of
consumption. On the other hand, any shortages, losses or wastages which
are beyond the permitted margin or when they are known to have occurred
otherwise than in the manufacturing process, should not be included in the
consumption figures. Whether or not such abnormal variations need to be
separately disclosed in the accounts would depend upon the facts and
circumstances of each case. The General Instructions for Preparation of
Statement of Profit and Loss does not require any specific disclosures.
9.5.1.7 In the case of industries where there are several processes,
materials may move from process to process, so that the finished product of
one department constitutes the raw materials of the next. Since the


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 Guidance Note on Division I ­ Non Ind AS Schedule III to the Companies Act, 2013

disclosure requirement provides only for disclosure of raw material under
broad heads and goods purchased under broad heads and also having
regard to the fact that the consumption of raw materials for production of
such intermediates would have to be accounted as raw materials consumed,
it follows that internal transfers from one department to another should be
disregarded in determining the consumption figures to be disclosed. .
9.5.2 Purchases of Stock in Trade
Stock-in-trade refers to goods purchased normally with the intention to resell
or trade in. In case, any semi-finished goods/materials are purchased with an
intention of doing further processing activities on the same, the same should
be included in `cost of materials consumed' rather than under this item.
9.5.3 Changes in inventories of finished goods, work-in-progress and
      stock-in-trade
This requires disclosure of difference between opening and closing
inventories of finished goods, work-in-progress and stock-in-trade. The
difference should be disclosed separately for finished goods, work in
progress and stock in trade.
9.5.4 Employee benefits expense [Note 5(i)(a)]
This requires disclosure of the following details:
9.5.4.1 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.
The term employee should be deemed to include directors who are either in
whole-time or part-time employment of the company. It will exclude those
directors who attend only Board meetings and are not under a contract of
service with the company. Those who act as consultants or advisers without
involving the relationship of master and servant with the company should
also be excluded. A distinction should be made between persons engaged
under a contract of service and those engaged under a contract for services.
Only the former are to be included in the computation. Whether part-time
employees are to be included would depend on the facts and circumstances
of each case - the basic criterion being whether they are employed under a
contract of service or a contract for services.

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Guidance Note on Division I ­ Non Ind AS Schedule III to the Companies Act, 2013

9.5.4.2 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 Gratuity fund,
Superannuation fund, ESI, Labour Welfare Fund etc. are to be disclosed
here.
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.
9.5.4.3 Expense on Employee Stock Option Scheme (ESOP) and
Employee Stock Purchase Plan (ESPP)
The amount of expense under this head and all disclosures should be
determined in accordance with the Guidance Note on Accounting for
Employee Share based Payments.
9.5.4.4 Staff welfare expense
The total expenditure on Staff welfare is to be disclosed herein.
9.5.5 As per Note 3 of to the General Instructions for the Preparation of
the Statement of Profit and Loss, disclosure of Finance costs is to be
bifurcated under the following:
(A)   Interest expense
(B)   Other borrowing costs
(C)   Applicable net gain/loss on foreign currency transactions and
      translation
A)    Interest expense
This would cover interest paid on borrowings from banks and others, on
debentures, bonds or similar instruments etc. Finance charges on finance
leases are in the nature of interest expense and hence should also be
classified as interest expense.
B)    Other borrowing costs
Other borrowing costs would include commitment charges, loan processing
charges, guarantee charges, loan facilitation charges, discounts/premium on
borrowings, other ancillary costs incurred in connection with borrowings, or
amortization of such costs, etc.



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C)    Applicable net gain/loss on foreign currency transactions and
      translation
AS 11 and AS 16 deal with foreign exchange differences arising on foreign
currency transactions included in the financial statements of an entity.
All exchange differences within the purview of AS 11 are recognized as
exchange differences and presented accordingly. However, all exchange
differences arising from foreign currency borrowings are within the purview of
AS 16 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 AS 16 ­ `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 difference eligible for capitalization are determined in accordance
with para 4(e) of AS 16.
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 difference in accordance with
para 4(e) of AS 16. All other borrowing costs are recognized as an expense.
For presenting foreign exchange differences arising on foreign currency
borrowings in statement of profit and loss, there is no specific requirement to
apply the limit prescribed in paragraphs 4(e) of AS 16 since the nature of the
exchange difference on foreign currency borrowing 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
AS 16 can be presented under the head `finance costs'.
9.5.6 Depreciation and amortization expense [Note 5(i)(b)]
A company has to disclose depreciation provided on Property, Plant and
Equipment and amortization of intangible assets under this head.
9.5.7 Other Expenses
All other expenses not classified under other heads will be classified here.
For this purpose, any item of expenditure which exceeds one percent of the
revenue from operations or `Rs. 1,00,000, whichever is higher, needs to be
disclosed separately.


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Guidance Note on Division I ­ Non Ind AS Schedule III to the Companies Act, 2013

Further Note 5(vi) requires a separate disclosure of each of the following
items, which will also be classified under `Other expenses'
      Consumption of stores and spare parts;
      Power and fuel;
      Rent;
      Repairs to buildings;
      Repairs to machinery;
      Insurance;
      Rates and taxes, excluding taxes on income;
      Miscellaneous expenses.
9.6   Exceptional items
The term `Exceptional items' is not defined in Schedule III. However, AS-5
"Net Profit or Loss for the period, Prior period items and changes in
Accounting Policies" has a reference to such items in Paras 12, 13 and 14.
"Para 12: When items of income and expense within profit or loss from
ordinary activities are of such size, nature or incidence that their disclosure is
relevant to explain the performance of the enterprise for the period, the
nature and amount of such items should be disclosed separately.
Para 13: Although the items of income and expense described in paragraph
12 are not extraordinary items, the nature and amount of such items may be
relevant to users of Financial Statements in understanding the financial
position and performance of an enterprise and in making projections about
financial position and performance. Disclosure of such information is
sometimes made in the notes to the Financial Statements.
Para 14: Circumstances which may give rise to the separate disclosure of
items of income and expense in accordance with paragraph 12 include: the
write-down of inventories to net realisable value as well as the reversal of
such write-downs; a restructuring of the activities of an enterprise and the
reversal of any provisions for the costs of restructuring;"
      disposals of items of Property, Plant and Equipment;
      disposals of long-term investments;
      legislative changes having retrospective application;
      litigation settlements; and
      other reversals of provisions.

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 Guidance Note on Division I ­ Non Ind AS Schedule III to the Companies Act, 2013

In case the company has more than one such item of income / expense of
the above nature, the aggregate of such items should be disclosed on the
face of the Statement of Profit and Loss. Details of the all individual items
should be disclosed in the Notes.[Note 5 (i) (l) to the General Instructions for
preparation of the Statement of Profit and Loss]
9.7   Extraordinary items
The term `Extraordinary items' is not defined in Schedule III. However, AS 5
"Net Profit or Loss for the period, Prior period items and changes in
Accounting Policies" at para 4.2 defines `extraordinary items' as:
`Extraordinary items are income or expenses that arise from events or
transactions that are clearly distinct from the ordinary activities of the
enterprise and, therefore, are not expected to recur frequently or regularly.
Further para 8 of AS-5 discusses about the disclosure of extraordinary items
as below:
Extraordinary items should be disclosed in the Statement of Profit and Loss
as a part of net profit or loss for the period. The nature and the amount of
each extraordinary item should be separately disclosed in the Statement of
Profit and Loss in a manner that its impact on current profit or loss can be
perceived."
In case the company has more than one such item of income / expense of
the above nature, the aggregate of such items should be disclosed on the
face of the Statement of Profit and Loss. Details of the all individual items
should be disclosed in the Notes. [Note 5 (i) (l) to the General Instructions for
Preparation of the Statement of Profit and Loss].
9.8   Tax expense:
This is to be disclosed on the face of the Statement to Profit and Loss and
bifurcated into:
(1)   Current tax and
(2)   Deferred tax
9.8.1 Current tax
9.8.1.1 The term `Current tax' has been defined under AS-22 "Accounting
for Taxes" on Income as the amount of income tax determined to be payable
(recoverable) in respect of the taxable income (tax loss) for a period. Hence,
details of all taxes on income payable under the applicable taxation laws
should be disclosed here.


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Guidance Note on Division I ­ Non Ind AS Schedule III to the Companies Act, 2013

9.8.1.2 Presentation for Minimum Alternate Tax (MAT) credit should be
made as prescribed by the ICAI Guidance Note on "Accounting for Credit
Available in Respect of Minimum Alternative tax under the Income-tax Act,
1961'. The relevant portion is as under:
"Profit and Loss Account:
15. According to paragraph 6 of Accounting Standards Interpretation (ASI) 6,
`Accounting for Taxes on Income in the context of Section 115JB of the
Income-tax Act, 1961', issued by the Institute of Chartered Accountants of
India, MAT is the current tax. Accordingly, the tax expense arising on
account of payment of MAT should be charged at the gross amount, in the
normal way, to the profit and loss account in the year of payment of MAT. In
the year in which the MAT credit becomes eligible to be recognised as an
asset in accordance with the recommendations contained in this Guidance
Note, the said asset should be created by way of a credit to the profit and
loss account and presented as a separate line item therein."
The Disclosure in this regard should be made as under:
Current tax (MAT)                                                     XX
Less : MAT credit entitlement                                         (XX)
Net Current tax                                                       XX
9.8.1.3 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.
9.8.1.4 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.
9.8.1.5 Excess/Short provision of tax relating to earlier years should be
separately disclosed.
9.8.2 Deferred tax
9.8.2.1 Any charge / credit for deferred taxes needs to be disclosed
separately on the face of the Statement of Profit and Loss.
9.8.2.2 AS 22 "Accounting for Taxes on Income" defines `Deferred tax' as
the tax effect of timing differences.


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 Guidance Note on Division I ­ Non Ind AS Schedule III to the Companies Act, 2013

Timing differences are defined as "differences between taxable income and
accounting income for a period that originate in one period and are capable
of reversal in one or more subsequent periods."
9.9   Profit / (loss) for the period from Discontinuing operations
9.9.1 The term 'Discontinuing operations' is defined in AS 24 "Discontinuing
operations" as a component of an enterprise:
(a)   that the enterprise, pursuant to a single plan, is:
      (i)     disposing of substantially in its entirety, such as by selling the
              component in a single transaction or by demerger or spin-off of
              ownership of the component to the enterprise's shareholders; or
      (ii)    disposing of piecemeal, such as by selling off the component's
              assets and settling its liabilities individually; or
      (iii)   terminating through abandonment; and
(b)   that represents a separate major line of business or geographical area
      of operations; and
(c)   that can be distinguished operationally and for financial reporting
      purposes.
9.9.2 Profit or loss from Discontinuing 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 AS-24 Para 32(a) which requires the
amount of pre-tax profit or loss from ordinary activities attributable to the
discontinuing operation during the current financial reporting period, and the
income tax expense related thereto to be disclosed on the face of the
Statement of Profit and Loss.
9.9.3 Further, AS-24 Para 32(b) requires the following disclosure to be made
on the face of the Statement of Profit and Loss as well:
"(b) the amount of the pre-tax gain or loss recognised on the disposal of
assets or settlement of liabilities attributable to the discontinuing operation."
Accordingly, such disclosures for discontinuing operations should be made
wherever applicable.
9.10 Tax expense of discontinuing operations
In case there are any taxes payable / tax credits available on profits / losses
of discontinuing operations, the same needs to be disclosed as a separate
line item on the Statement of Profit and Loss.


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Guidance Note on Division I ­ Non Ind AS Schedule III to the Companies Act, 2013

9.11 Earnings per equity share
Computation of Basic and Diluted Earnings Per Share should be made in
accordance with AS20 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 AS20.

10 Other additional information to be disclosed by way
   of Notes to Statement of Profit and Loss
Besides the above disclosures, Para 5 of the General instructions for
Preparation of Statement of Profit and Loss also require disclosure on the
following items:
10.1 Adjustments to the carrying amount of investments [Clause
(h) of Note 5(i)]
In case there are any adjustments to carrying amount of investments
pursuant to diminution in value of the investment (or reversal thereof) in
conformity with AS 13 "Accounting for Investments", the same should be
disclosed here.
10.2 Net gain or loss on foreign currency translation (other than
considered as finance cost) Clause (i) of Note 5(i)
Any gains / losses on account of foreign exchange fluctuations are to be
disclosed separately as per AS11. Thus net exchange loss should be
classified under `other expenses' and the amount so included should be
separately disclosed. Under this head, exchange differences to the extent
classified as borrowing costs as per Para 4(e) of AS-16 should not be
disclosed. Refer para 9.5.5 [Note 3(c) of Schedule III].
10.3 Payments to the auditor [Clause (j) of Note 5(i)]
Payments covered here should be for payments made to the firm of
auditor(s). Expenses incurred towards such auditor's remuneration should be
disclosed under each of the following sub-heads as follows:
As:
(a)   Auditor,
(b)   For taxation matters,
(c)   For company law matters,
(d)   For management services,

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(e)   For other services,
(f)   For reimbursement of expenses;
10.4 Prior period items [Clause (m) of Note 5 (i) ]
The term `Prior period Items' is not defined in Schedule III. AS 5 " Net Profit
or Loss for the period, Prior period items and changes in Accounting
Policies", in para 4.3 defines `Prior period items' as "Prior period items are
income or expenses which arise in the current period as a result of errors or
omissions in the preparation of the Financial Statements of one or more prior
periods".
10.5 The Schedule III requires the                    following     additional
information to be given by way of notes:
Nature of company                        Disclosures required
Manufacturing companies                  Raw materials under broad heads
                                         Goods purchased under broad heads
Trading companies                        Purchases of goods traded under
                                         broad heads
Companies rendering or supplying Gross income derived from services
services                         rendered under broad heads
Company that falls under more It will be sufficient compliance with the
than one category             requirements, if purchases, sales and
                              consumption of raw material and the
                              gross income from services rendered
                              are shown under broad heads.

10.6 The disclosure requirements to be made for the above in the
Financial Statements are discussed as under:
The disclosures required as above are not very clear and give rise to the
following questions:
(a)   Whether a company is required to disclose quantitative details or not?
(b)   Whether a manufacturing company will disclose purchase, sale or
      consumption of raw materials?
(c)   What is meant by "good purchased" in case of manufacturing
      companies?


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(d)   While there is a requirement to disclose gross income in case of a
      service company and sales in case of a company falling under more
      than one category, there is no clear requirement to disclose sales for a
      manufacturing or a trading company.
(e)   With regard to a company falling under more than one category
      different interpretations seem possible. One interpretation is that it
      should disclose purchase, sale and consumption for raw material. The
      other interpretation is that purchase relates to traded goods, sale
      relates to all goods sold (both manufactured goods and traded goods)
      and for raw material, only consumption needs to be disclosed.
10.7 Since the Schedule III gives a note stating that "Broad heads shall be
decided taking into account the concept of materiality and presentation of
true and fair view of Financial Statements", a company may consider the
following in deciding the disclosures required:
(a)   Apparently, there is no need to give quantitative details for any of the
      items.
(b)   Considering the ambiguity and on a conservative interpretation, a
      manufacturing company may disclose the following under broad
      heads:
      (i)     Consumption of major items of raw materials (including other
              items classified as raw material such as intermediates/
              components/packing material)
      (ii)    Goods purchased for trading (if any)
      (iii)   Though the Schedule III does not specifically require, it is also
              suggested to disclose major items of opening and closing stock.
              However, it is not mandatory.
      (iv)    Considering the requirement to disclose gross income in case of
              a service company and sales in case of a company falling in
              more than one category, disclosure of sales of finished goods
              should also be made under broad heads.
(c)   The term "broad heads" may be interpreted to mean broad categories
      of raw materials, goods purchased, etc. These categories should be
      decided based on the nature of each business and other facts and
      circumstances. Normally, 10 percent of total value of sales/services,
      purchases of trading goods and consumption of raw material is
      considered as an acceptable threshold for determination of broad

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 Guidance Note on Division I ­ Non Ind AS Schedule III to the Companies Act, 2013

        heads. Any other threshold can also be considered taking into account
        the concept of materiality and presentation of true and fair view of
        Financial Statements.
(d)     Similar principle may be followed to decide disclosure requirement in
        other cases.
10.8 Based on the above perspectives, given below is a suggested format
for making this disclosure:
10.8.1 Manufacturing company
(Amount in `)
Particulars                                                  Consumption
Raw materials
Raw material A                                               XX
                                                             (YY)
Raw material B                                               XX
                                                             (YY)
Others                                                       XX
                                                             (YY)
Total                                                        XX
                                                             (YY)

Particulars                                                  Purchases
Goods purchased
Traded item A                                                XX
                                                             (YY)
Traded item B                                                XX
                                                             (YY)
Others                                                       XX
                                                             (YY)
Total                                                        XX
                                                             (YY)



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Particulars                 Sales values       Closing          Opening
                                               Inventory        Inventory
Manufactured goods
Finished goods A            XX                 XX               XX
                            (YY)
Finished goods B            XX                 XX               XX
                            (YY)
Others                      XX                 XX               XX
                            (YY)
Total                       XX                 XX               XX
                            (YY)
Traded goods
Traded goods A              XX                 XX               XX
                            (YY)
Traded goods B              XX                 XX               XX
                            (YY)
Others                      XX                 XX               XX
                            (YY)
Total                       XX                 XX               XX
                            (YY)


Particulars                                          WIP
Work in Progress
Goods A WIP                                          XX
                                                     (YY)
Goods B WIP                                          XX
                                                     (YY)
Others                                               XX
                                                     (YY)
Total                                                XX
                                                     (YY)


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 Guidance Note on Division I ­ Non Ind AS Schedule III to the Companies Act, 2013

10.8.2 Trading company
Particulars                           Purchase               Sales
Traded goods
Traded goods A                        XX                     XX
                                      (YY)                   (YY)
Traded goods B                        XX                     XX
                                      (YY)                   (YY)
Others                                XX                     XX
                                      (YY)                   (YY)
Total                                 XX                     XX
                                      (YY)                   (YY)
10.8.3 Service Company
Particulars                                      Amount
Services rendered
Service A                                        XX
                                                 (YY)
Service B                                        XX
                                                 (YY)
Others                                           XX
                                                 (YY)
Total                                            XX
                                                 (YY)
Note: Figures in brackets represent previous year figures.
A company falling under more than one category will make the above
disclosures, to the extent relevant.
10.9 The aggregate, if material, of any amounts set aside or
proposed to be set aside, to reserve [Clause (a) of Note 5(iv)]
10.9.1 Disclosure is required for amounts set aside or proposed to be set
aside to reserves out of the profits for the period. The said transfers can be
in terms of the applicable statute under which the Financial Statements are
prepared i.e., the Companies Act, 2013 or any other applicable statute e.g.
Income Tax Act, 1961, or RBI Act, 1934, etc. Further, profits may also be
appropriated to free reserves as deemed appropriate by the management.

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10.9.2 The transfer to reserves as above should, however, not include
provisions made to meet any specific liability, contingency or commitment
known to exist at the date as on which the Balance Sheet is made up.
10.10 The aggregate, if material, of any amounts withdrawn from
such reserves [Clause (b) of Note 5 (iv):
In case the company has made any withdrawals from any reserves created in
terms of Clause (a) of Note5 (iv) above, the same is to be disclosed
separately.
It may be noted that such setting aside as well as withdrawal from reserves is
to be disclosed under applicable Line item of Reserves and Surplus, and not
under the Statement of Profit and Loss since the same is an appropriation of
profits and not a charge against revenue.
10.11 The aggregate, if material, of the amounts set aside to
provisions made for meeting specific liabilities, contingencies or
commitments and amounts withdrawn from such provisions, as
no longer required [Clause (a) of Note5(v) and Clause (b) of
Note5(v)]
The amounts in respect of the items under this requirement should be
separately disclosed as a charge to the Statement of Profit and Loss.
Provisions no longer required should be credited to the Statement of Profit
and Loss.
10.12 Clause (b) of Note 5(vii) requires disclosure for `Provisions
for losses of subsidiary companies'.
However, as per AS-13, a provision in respect of losses made by subsidiary
companies is made only when the same results in a `other than temporary'
diminution in the value of investments in the subsidiary. Accordingly, the
aforesaid disclosure should be made separately only where such a provision
has been made in respect of the investment in such loss-making subsidiary.
10.13 Clause (k) of Note 5(i) requires disclosure for `expenditure
incurred on corporate social responsibility activities'.
This new requirement introduced by the Companies Act 2013 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


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Social Responsibility Activities issued 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:
                                                Paid in Yet to be Total
                                                cash    paid in cash
       (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 Accounting Standard (AS) 18, Related Party Disclosures.
(d)   Where a provision is made in accordance with paragraph 8 above
      the same should be presented as per the requirements of Schedule III
      to the Companies Act, 2013. Further, movements in the provision
      during the year should be shown separately.

11 Other Disclosures
The Statement of Profit and Loss 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 ­

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      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 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:-
             Export of goods calculated on F.O.B. basis;
             Royalty, know-how, professional and consultation fees;
             Interest and dividend;
             Other income, indicating the nature thereof
11.1 Value of imports calculated on C.I.F. basis by the company during
the financial year [Clause (a) of Note 5(viii)]
The above disclosure is to be given in respect of ­
      Raw materials;
      Components and spare parts;
      Capital goods.
11.1.1 One of the requirements of disclosure as a note to the Statement of
Profit and Loss is the value of imports of raw materials calculated on C.I.F.
basis. The manner in which the term "raw materials" should be interpreted for
this purpose, is as discussed in para 9.5.1.3 of this Guidance Note.
11.1.2 Disclosure is also required to be made as to the value of imports of
components and spare parts and capital goods respectively. The term


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"components" may be interpreted in the same manner as the term
"intermediates or components" in connection with the requirement, discussed
earlier in para 9.5.1.2 of this Guidance Note, to disclose the consumption of
purchased components or intermediates. The term "spare parts" would
ordinarily relate to spare parts for plant and machinery and other capital
equipment. The total value of imports of components and spare parts may be
disclosed in the aggregate. It may be appropriate to sub-classify the value of
imports between components and spare parts respectively since the nature
of these two items is not entirely similar. Such separate classification
however, is not a mandatory requirement of the Schedule III. However,
wherever the records for raw materials and components are maintained
together, the information required under this clause pertaining to components
can be presented collectively with raw materials.
11.1.3 As regards "capital goods", disclosure would be involved in respect
of imported plant and machinery, furniture and fixtures, transport equipment,
intangible assets and other types of expenditure which is treated as capital
expenditure in the books of account. It is undoubtedly anomalous to disclose
the value of imports of capital goods by way of a note on the Statement of
Profit and Loss, since by the very definition, capital assets do not form part of
the Statement of Profit and Loss. However, since this is the specific
requirement of the Schedule III, it would have to be complied as such. Since
this disclosure is required for the Statement of Profit and Loss, it would not
be advisable to disclose the imports of capital goods by way of a note on
Property, Plant and Equipment or Capital work-in-progress, even though it
would be more appropriate to do so.
11.1.4 It is significant that this requirement covers only imported spare
parts. It apparently does not apply to goods imported for sale, imported
stores, etc. However, the practice followed by most companies is that
imported stores are being clubbed with imported spare parts for the purposes
of this disclosure. This is probably due to the practical difficulty involved in
separating stores from spare parts. Hence, where it is not possible to
segregate the two owing to practical difficulties, the total value of imports of
stores and spare parts may be shown against a caption which clearly
indicates that the value shown relates to both the stores as well as the spare
parts.
11.1.5 The disclosure in respect of imports of the foregoing items is to be
made on accrual basis. This is because disclosure is required in respect of
the value of imports "during the financial year". Consequently, if the particular


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Guidance Note on Division I ­ Non Ind AS Schedule III to the Companies Act, 2013

item has been imported during the accounting year, it should be disclosed as
such, even though the payment is not made in that year.
11.1.6 It is also to be noted that the disclosure under this requirement
relates to the imports as such. It is not linked with the consumption of the
material or utilization of capital goods.
11.1.7 While a subsequent requirement relates to expenditure in foreign
currency for designated items, the requirement presently under discussion is
not linked with any particular expenditure in foreign currency or local
currency. Consequently, the value of imports of raw materials, components
and spare parts and capital goods is to be disclosed irrespective of whether
or not such imports have resulted in expenditure in foreign currency. It is
possible that imports may have been arranged on Rupee payment terms
without involving any foreign currency expenditure but even so, the value of
the imports would have to be suitably disclosed.
11.1.8 Disclosure should be made in Indian currency. Where the imports
involve foreign currency expenditure, the amount be disclosed would be the
corresponding Rupee value of the imports as translated in the books of
account on normal principles relating to the translation of foreign currencies.
11.1.9 The value of the imports is to be calculated on C.I.F. basis ­ that is
inclusive of cost, insurance and freight. It is possible that the imported
materials may have been shipped by an Indian carrier and the insurance may
have been arranged with an Indian insurer, so that, really, there is no
element of import of services with regard to the insurance and freight. Even
so, the Schedule III requires the value of the imports to be disclosed on a
C.I.F. basis, and while this may be anomalous in the types of situations
indicated above, the requirement should ordinarily be complied with. If for
any reason, there is some practical difficulty in disclosing the value of the
imports on C.I.F. basis, a footnote should be appended to the statement
indicating the precise method by which the value of imports has been arrived
at. For example, it may be stated that, because of practical difficulties in
disclosing the value of imports on C.I.F. basis, such disclosure has been
made on F.O.B. basis. Without attempting to particularize the various
circumstances under which it may be difficult to disclose the value of imports
on a C.I.F. basis, one example may be cited. A company may have standing
arrangements with a shipping line or with an insurer so that all imports are
covered through such a standing arrangement, In that case, it may be
difficult to allocate the insurance or freight to each specific shipment.


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Similarly, if a company is a self-insurer, or if it owns its own fleet of ships,
disclosure of the value of imports cannot be made on a C.I.F. basis. In
situations of this kind the matter should be covered by a suitable explanatory
note but otherwise, wherever possible, the value of imports should be
disclosed on a C.I.F. basis. It may be noted that the requirement to disclose
the value on a C.I.F. basis relates to the method of computation of the value,
rather than the terms of the import contract. It is not to be implied that this
method of valuation is restricted to a case where the import contract is itself
on a C.I.F. basis.
11.1.10 Disclosure is required with regard to the value of imports "by the
company". This implies that only direct imports by the company are involved
in the disclosure. If the company purchases imported materials in the open
market, no disclosure would be necessary under this requirement. Similarly,
if the company canalized its imports through another agency such as the
State Trading Corporation, no disclosure would be required, since it is the
latter agency which is the importing entity. On the other hand, if a company
purchases import entitlements and thereafter imports materials on the basis
of those entitlements, the value of such imports would need to be disclosed,
since they are the imports of the company, irrespective of the manner in
which the company procured the import entitlements. Within this rather broad
statement of the case, it is apprehended that practical difficulties may arise in
determining whether or not a particular import has been made "by the
company".
11.1.11 For the purpose of this requirement, only direct imports are to be
taken into consideration. Imported materials purchased locally, and imports
canalized through other sources, need not be disclosed. While this distinction
may be clear in the large majority of cases, problems may arise in individual
cases. In particular, in the case of indirect imports, care should be taken to
determine whether the source from which the imports have been obtained
represent an agency or an independent principal. If a company has
appointed a person or a company as its agent for the purpose of securing the
import of raw materials, etc., the imports through such agent must be
regarded as the company's imports, and the value of such imports should be
disclosed pursuant to the requirement under this Note. On the other hand, if
another person or company has already imported the materials and the
company in question merely purchases such imported materials, on a
principal to principal basis, (except in cases where importing the materials is


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Guidance Note on Division I ­ Non Ind AS Schedule III to the Companies Act, 2013

done under specific requisition resulting in substance agent-principal
relationship) the value of such imports should be ignored by the latter
company, and included by the former.
11.1.12 The value of imports should also include goods which are in transit
on the Balance Sheet date, provided significant risks and rewards of
ownership in those goods have already passed to the purchasing company.
For the purpose of determining whether or not the property has passed,
reference may be made to the terms of the import contract, and recognized
legal principles, relating to this matter. Conversely, goods-in-transit at the
beginning of the year should be excluded on a similar basis so that they do
not form part of the value of the current year's imports or succeeding years
for the purpose of the same disclosure relating to the value of imports.
11.1.13 Since the requirement is to disclose the value of imports during the
accounting year, it may be necessary to determine when the significant risks
and rewards of ownership to the goods has passed from the overseas
exporter to the Indian importer in accordance with the well-recognized legal
principles relating to this matter, irrespective of the fact whether or not the
goods have been physically received.
11.1.14 A particular problem may, however, arise in the case of import of
capital goods where delivery is to be made in installments through part
shipments from time to time. The contract may provide for the total value of
the entire shipment and it may, therefore, be difficult to determine the
separate value of the part shipments received during the accounting year.
Since the disclosure which is required is in respect of imports during the
accounting year, it may be necessary to estimate, on a reasonable basis, the
separate value of part shipments. If such estimates are reasonable, no
objection needs be taken thereto.
11.1.15 It follows from this that, in appropriate cases, the disclosure would
include the value of goods in transit at the end of the year if the significant
risks and rewards of ownership in such goods has already passed to the
Indian importer. Conversely, it may be necessary to exclude the value of the
opening inventory in transit if the title to such inventory had already passed
to the Indian importer prior to the end of the previous year.
11.1.16 For the purpose of working out the C.I.F. value of imports, it may be
necessary to make approximations in suitable cases. For example, a
company may be actually importing materials on the basis of F.O.B.
contracts so that the values directly available from its records would be those

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relating to F.O.B. terms. In such cases, a standard formula may be applied in
order to convert the F.O.B. values to C.I.F. For example, the company's
accountant may calculate that a loading of, say, eleven per cent on the
F.O.B. values is ordinarily adequate and correct in order to convert the
F.O.B. values to C.I.F. If such approximations are reasonable, no objection
should ordinarily be taken thereto.
11.2 Expenditure in foreign currency during the financial year [Clause
(b) of Note 5 (viii)]
The above is to be disclosed for expenditure incurred on account of royalty,
know-how, professional and consultation fees, interest and other matters;
11.2.1 In addition to the requirement discussed earlier relating to the
disclosure of the value imported materials, and the disclosure relating to the
consumption of imported materials as compared to indigenous materials,
there is also a further requirement to disclose expenditure in foreign currency
on account of royalty, know-how, professional consultation fees, interest, and
other matters.
11.2.2 In this particular case, the disclosure is to be made with regard to
the expenditure in foreign currency. Consequently, if no foreign currency
expenditure is involved, no disclosure would be required, even though the
specific services covered by this requirement have been imported free of
cost or against Rupee payment or against any other method of payment or
adjustment not involving the expenditure of foreign currency. Although the
disclosure is required to be made with regard to items involving expenditure
in foreign currency, the amount to be disclosed would be the Indian Rupee
amount. It should be noted that every company is required to follow accrual
system of accounting and the requirement refers to `expenditure', the
disclosure should be on the basis of the expenditure incurred and recorded in
the books of account and not on the basis of remittance. The appropriate
Rupee figure can be obtained by converting the foreign exchange figure
through the application of a rate of exchange which is suitable for that
purpose, having regard to normal principles of foreign currency
translation/conversion in accounts. If so desired, the foreign currency figure
may also be given as additional information but this cannot be regarded as
mandatory.
11.2.3 While the requirement relating to the disclosure of imports clearly
specifies the different heads under which the disclosure is to be made, and
while the requirement relating to foreign exchange earnings also similarly
indicates the specific heads under which the disclosure is to be classified,

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Guidance Note on Division I ­ Non Ind AS Schedule III to the Companies Act, 2013

there is no such requirement with regard to the disclosure of expenditure in
foreign currency. It is true that the specific items in respect of which such
disclosure is to be made have been indicated, but this does not by itself
imply that the disclosure is to be classified with reference to those items. At
the same time, since such classification should not be difficult, it is advisable
to classify the foreign currency expenditure between royalty, know-how,
professional consultation fess, interest and other matters. In other words, the
classification as between these items is certainly desirable but is probably
not mandatory, having regard to the precise terms of the Schedule III. It may
also be noted that under old Schedule VI of Companies Act, 1956, for the
same requirement, the practice has been to classify between different heads
and disclose.
11.2.4 The various items specified above do not call for any particular
comments since they are expressed through well understood terms. The
residual item relating to "other matters" appears to be sufficiently exhaustive
so as to cover any items for which foreign currency expenditure is involved. It
is necessary to point out that disclosure is required with regard to "other
matters" rather than with regard to "other similar matters". Consequently, it
would not be reasonable to infer that disclosure is limited to items of a nature
similar to royalty, know-how, professional consultation fees and interest. At
the same time, however, it would be unreasonable to suggest that disclosure
should be made once again with regard to the expenditure involved in foreign
currency for an item whose import value has already been disclosed in
response to the earlier requirement. Ordinarily, the requirement presently
under discussion relates to expenditure on intangible items rather than on the
import of tangible goods. However, if any foreign currency expenditure on the
import of tangible goods has not been disclosed pursuant to the earlier
requirements, it would need to be disclosed under this requirement. For
example, foreign currency expenditure on the import of stores may not have
been disclosed on the basis that the earlier requirement necessitates
disclosure only with regard to the value of imports of "components and spare
parts". In that case, the foreign currency expenditure involved in the import of
stores would need to be disclosed under the requirement presently under
discussion since this requirement covers "expenditure in foreign currency" on
account of royalty, know-how, professional consultation fees, interest and
other matters. Disclosure would also be involved under this requirement of
any foreign currency expenditure in the payment of taxes in an overseas
country on income earned in that country in a case where the payment of such
taxes involves actual remittance from India. Where, however, the payment of


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 Guidance Note on Division I ­ Non Ind AS Schedule III to the Companies Act, 2013

taxes in the overseas country is made through deduction at source rather than
by actual remittance from India, the method of disclosure has been suggested
in a subsequent paragraph of this Note dealing with foreign exchange
earnings where it has been recommended that foreign exchange earnings
received subject to deduction of tax at source should be disclosed both gross
and net.
11.2.5 The disclosure of expenditure in foreign currency is to be made on
accrual basis since all the items in the Statement of Profit and Loss are
stated on an accrual basis.
11.2.6 A further question which needs to be resolved is whether the
disclosure is to be made of the gross amount of the expenditure, or of the
net amount after tax deduction at source, in a case where such deduction is
involved. So far as the company in concerned the gross expenditure is the
amount of expenditure incurred in foreign currency even though a part of it
may have been paid in Rupees to the Government to meet the statutory
obligation of deducting tax at source. Deduction of tax at source by itself is
not the finality of the matter and is merely a preliminary stage towards
settlement of tax liability of the non-resident. Ultimately, on assessment of
the non-resident, the full amount of tax deducted at source may have to be
refunded. In view of this, the preferable course seems to be to disclose the
gross expenditure that has been incurred by the company.
11.2.7 Disclosure is to be limited only to those cases where the company
itself incurs foreign currency expenditure. Where expenditure involves
foreign currency but the original payment by the company itself is in Rupees,
no disclosure is necessary. For instance, if a company has borrowed a loan
from a Government agency and incurs expenditure in payment of interest on
that loan, the company may be aware that the interest paid by it to the
Government agency in Rupees will ultimately be remitted by the Government
agency to a foreign lender. However, since the company itself does not incur
any foreign currency expenditure, no disclosure is required in its accounts.
11.3 Total value of all imported raw materials, spare parts and
components consumed during the 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;
[Clause (c) of Note 5(viii)]
11.3.1 Apart from the disclosure relating to the C.I.F. value of imports,
separate disclosure is also required with reference to the value of imported
raw materials, spare parts and components consumed during the accounting

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Guidance Note on Division I ­ Non Ind AS Schedule III to the Companies Act, 2013

year. There is no guidance, for the purpose of this requirement, as to the
manner in which the imported materials are to be evaluated i.e., C.I.F. basis
or F.O.B. basis or any other basis. Even though the value of materials
imported by the company itself is required to be stated on a C.I.F. basis, it
does not follow that this basis is necessarily appropriate to the disclosure of
the value of imported materials consumed. In the latter case, it would be
more appropriate to make the disclosure on the basis of the actual cost to
the company of the imported materials which have been consumed, since it
is this cost which enters into the company's accounts. Consequently, the
value of imported materials consumed should include not only their cost but
also incidental expenses directly related to the purchase of such materials.
There is another reason for this suggestion and that is based on the fact that
the value imported materials consumed is required to be compared with the
value of indigenous materials consumed. Moreover, in the company's
accounts, the total figure shown for consumption of materials (inclusive of
indigenous and imported materials) would ordinarily be based on the value
inclusive of the cost of such materials and various incidental charges.
Therefore, in order to facilitate correlation with the total amount shown for
consumption of materials in the Statement of Profit and Loss account as well
as in order to facilitate comparison between the value of indigenous
consumption and imported consumption, it is desirable that the value of
imported materials consumed should be stated on a similar and consistent
basis by including the cost of such materials and various incidental charges.
11.3.2 On the face of it, it would appear that this requirement duplicates the
earlier requirement relating to the disclosure of the value of imports of raw
materials, components and spare parts. However, there is a difference. The
earlier requirement relates to the disclosure of the value of imports per se
irrespective of whether or not the materials imported have been consumed in
the company's operations. The latter requirement, on the other hand relates
only to the value of the imported materials consumed in the company's
operation.
11.3.3 As in the case of earlier requirement, it is not relevant to consider
whether or not the imported materials which have been consumed have
necessitated expenditure in foreign currency. Even if no foreign currency
expenditure is involved, the value of consumption of imported materials is
still required to be disclosed.
11.3.4 The disclosure is to be made in Indian currency by applying normal
methods for the translation of foreign currencies where the original
expenditure was incurred in a foreign currency.

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 Guidance Note on Division I ­ Non Ind AS Schedule III to the Companies Act, 2013

11.3.5 A question may arise whether to include the consumption of locally
purchased materials of foreign origin. Apart from the difficulties of
ascertaining which locally purchased materials are of imported origin, it is
logical to interpret this requirement as requiring disclosure only of materials
imported directly or indirectly by the company. This would include materials
imported directly by the company as well as indirect imports made to be
company's knowledge or at its request through canalizing agents such as the
State Trading Corporation.
11.3.6 It is not entirely clear whether the requirement herein implies that the
value of imported raw materials, spare parts and components should be
separately disclosed for each of these three items, or whether a composite
disclosure for all the three items taken together is sufficient. The latter part of
this clause states that "the percentage of each to the total consumption" is
also to be disclosed. This may be taken to imply that the consumption is to
be shown separately for raw materials, spare parts and components
respectively. However, wherever the records for raw materials and
components are maintained together, the information required under this
clause can be presented collectively.
11.3.7 While raw materials are undoubtedly consumed in the course of
operations, this term is hardly appropriate to spare parts and components.
Spare parts may be utilized for repairs and maintenance or for other similar
purposes, and components may be assembled into the finished product. In
either case, the spare parts and components can hardly be said to have been
"consumed". However, without going into the semantics relating to the word
"consumed", the intention appears to be reasonably clear and disclosure
may, therefore, be made on the basis of indicating the value of imported
spare parts and components utilized in the company's operations.
11.3.8 In addition to disclosing the value of imported raw materials spare
parts and components consumed during the accounting year, disclosure is
also required with regard to the value of indigenous raw materials, spare
parts and components similarly consumed during that year. In both cases,
the value of the consumption should be determined on the same identical
basis, so that like is compared with like. Thereafter, it is also required that
the relative percentages of consumption value in respect of imported items
and indigenous items should be stated as a percentage of total consumption
for each of the categories of raw materials, spare parts and components
respectively.



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Guidance Note on Division I ­ Non Ind AS Schedule III to the Companies Act, 2013

11.3.9 Care should be taken to ensure that the total consumption agrees with
the figures in the Statement of Profit and Loss. In the case of consumption of
raw materials, the separate figures for such consumption is generally
disclosed in one figure in the Statement of Profit and Loss, in which case, the
total consumption classified as between imported and indigenous should
agree with this figure. Sometimes, however, the total consumption of raw
materials is not shown as one figure in the Statement of Profit and Loss.
Instead, a note is given indicating the consumption of raw materials shown
under more than one head of account. In that case, care should be taken to
ensure that the total figure for consumption of raw materials analysed as
between imported and indigenous agrees with the total consumption shown
in the Statement of Profit and Loss inclusive of the figure of consumption
charged to other heads of account.
11.3.10 The term "spare parts" for the purpose of the foregoing requirements
would refer to spares for plant and machinery and other items of a similar
nature or intended for a similar purpose. This term would not ordinarily
include stores. The term "stores" refers to materials and supplies which
assist the manufacturing process but which do not directly enter into the
furnished product. It is a term of wider import than "spare parts" and
ordinarily, the term "stores" would include "spare parts". Since the present
requirement is limited to spare parts, it would appear to be unnecessary to
disclose the separate figures relating to the consumption of stores ­ imported
and indigenous. It is somewhat curious that disclosure should be required
with regard to spare parts and not with regard to stores, but this is
nevertheless, the logical interpretation of the words used in the relevant
clause. Where the segregation between stores and spare parts is not
possible owing to practical difficulties, the value of consumption of imported
and indigenous stores and spare parts may be shown against a caption
which clearly indicates that the value shown relates to both stores and spare
parts.
11.3.11 As regards spare parts, the substantive requirement of Schedule III
(Other expenses para 9.5.7) requires a composite figure to be disclosed in
respect of consumption of stores and spare parts, whereas the analysis here
is required only in respect of consumption of spare parts. Consequently, the
total figure analysed for consumption of spare parts may not agree directly
with the figure disclosed in the Statement of Profit and Loss for consumption
of stores and spare parts, unless in the Statement of Profit and Loss, these


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 Guidance Note on Division I ­ Non Ind AS Schedule III to the Companies Act, 2013

two figures are separately itemized. In any case, however, a reconciliation
statement should be kept on the company's working paper files to indicate
that the figures have been agreed.
11.3.12 As regards components, the clause does not indicate clearly
whether the classification of imported and indigenous components is to be
restricted to purchased components, or whether it would also include
components manufactured internally. Normally, imported components would
in any case be restricted to those which are purchased, with the possible
exception of a rare case in which components are fabricated outside India by
a branch or department of the same company and are then shipped to India
for incorporation into the finished product. Ignoring such an exception, it
would appear that if imported components are to be restricted to those which
are purchased, indigenous components would also have to be similarly
restricted, otherwise the comparison would be vitiated. Consequently, it is
suggested that this requirement may be interpreted in a manner whereby the
classification of components between imported and indigenous would be
limited to purchased components, ignoring any components which are
manufactured internally.
11.3.13 Under some systems accounting, the consumption is originally
charged in the accounts on the basis of standard or pre-determined rates.
Periodically, an adjustment is made in the total consumption account in order
to accord with the actual rates at which relevant materials may have been
purchased. A problem may arise with reference to the classification of the
total net debit or credit for such price adjustment as between imported and
indigenous consumption. The most obvious method of solving this difficulty ­
which should be acceptable in most cases ­ is to allot the total debit or credit
adjustment between imported and indigenous consumption, in the same ratio
as the figure for imported and indigenous consumption prior to such debit or
credit adjustment. A similar procedure may also be followed in the case of
any other special debit or credit adjustments which are entered in the
consumption accounts to reflect adjustments to the total consumption figure.
On a slightly different context, a similar problem arises where the same item
is partly purchased locally and partly imported and stocks are not physically
kept separately. In such cases, it appears to be permissible to assume that
consumption is on a pro-rata basis, e.g., in the ratio of opening stock plus
purchase.

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11.4 Total 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 [Clause (d) of Note 5(viii)];
11.4.1 The requirement is to the disclosure with regard to the amount
remitted to non-resident shareholders on account of dividends. This
disclosure is to be made with reference to the amount remitted during the
accounting year in foreign currencies. Consequently, if the dividend has been
paid to a non-resident shareholder in Indian Rupees, disclosure would not
appear to be necessary. Also, if a non-resident shareholder has indicated
that all dividends payable to him are to be deposited in a Rupee account with
his bankers in India, and if such deposit is actually made on the basis of the
necessary sanctions from the Reserve Bank of India, no disclosure would be
required because such a deposit does not constitute any payment in foreign
currency. It is possible that the non-resident shareholder may ultimately
arrange for foreign currency remittances out of his Rupee bank account but
this would be no concern of the company which pays the dividends into his
Rupee bank account. However, by way of additional information, deposits
regarding such dividends paid in the bank account may be given, indicating
the fact.
11.4.2 As in the case of other disclosure relating to imports, exports, foreign
exchange expenditure and earnings, etc. the amount to be disclosed in
respect of foreign currency dividends is to be stated in Indian Rupees. If so
desired, additional information may be furnished with regard to the foreign
currency equivalent to the dividend, which has been remitted, but the basic
requirement is to disclose the rupee amount. Disclosure of the foreign
currency equivalent is not mandatory.
11.4.3 Since disclosure is required with regard to the "amount remitted during
the year", it would appear that the information is to be furnished in the year of
actual payment of dividend rather than in the year in which the dividend is
proposed or declared. In other words, the disclosure should be made on a
cash basis, contrary to the fact that the other disclosures are to be made on
accrual basis.
11.4.4 In addition to the disclosure relating to the amount of dividends
remitted in foreign currency, further disclosure is also required with regard to
the number of non-resident shareholders to whom the dividends were

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 Guidance Note on Division I ­ Non Ind AS Schedule III to the Companies Act, 2013

remitted, the number of shares held by them, and the year to which the
dividends relate. These requirements should not be difficult to comply with
and no particular problem in likely to be encountered.
11.4.5 A question may arise as to whether or not any information is to be
furnished with regard to the number of non-resident shareholders and the
number of shares held by them, in particular year in which no dividend has
been remitted to the non-resident shareholders. The answer is in negative,
since, as already indicated earlier, the information relating to the number of
non-resident shareholders and the number of shares held by them is
intended to be linked to the basic information relating to the dividends
remitted to non-resident shareholders.
11.5 Earnings in Foreign exchange [Clause (e) of Note 5 (viii)]
11.5.1 Foreign exchange earnings have to be classified under the following
heads:-
(i)     export of goods calculated on F.O.B. basis;
(ii)    royalty, know-how, professional and consultation fees;
(iii)   interest and dividends; and
(iv)    other income (indicating the nature thereof).
11.5.2In this case also, as in the case of disclosure relating to foreign
currency expenditure, the question arises as to whether foreign currency
earnings have to be disclosed on a cash basis or on an accrual basis. The
considerations relating to this aspect of the matter are similar to those
discussed earlier in connection with the requirement relating to the disclosure
of foreign currency expenditure. Since the Statement of Profit and Loss is
prepared on an accrual basis, it may be suggested that foreign currency
earnings should also be disclosed on a similar basis.
11.5.3 Since, foreign exchange earnings are to be disclosed on an accrual
basis, the subsequent receipt of foreign exchange in a later year should be
ignored, as otherwise the same earnings would be disclosed twice.
11.5.4 A further question which arises is whether the foreign exchange
earnings should be disclosed gross of tax or whether they should be
disclosed net of any tax deducted at source in the overseas country in which
earnings have arisen. One way of looking at the matter is that the actual
amount of earnings is the amount received after deduction of overseas tax at
source, where such deduction is involved. On the other hand, the tax which

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Guidance Note on Division I ­ Non Ind AS Schedule III to the Companies Act, 2013

is deducted at source in the overseas country is available by way of credit
against the tax payable in that country. But for this credit, actual or
constructive remittance may be involved from India to the overseas country
for the purpose of meeting the tax liability in that country. It is, therefore,
suggested that the more appropriate basis of disclosure would be gross of
tax with a mention of the net of tax earnings and tax deducted at source. A
further advantage of this method of disclosure is that the amount which is so
disclosed would agree with the financial accounts, since, in the books of
accounts kept in India, the gross amount of the foreign exchange earnings
would be credited to revenue, while the tax deducted at source would be
debited to an appropriate account relating to payment of taxes.
11.5.5 While the requirement relating to the disclosure of imports requires
the "value of imports" to be disclosed, the disclosure of exports requires the
"earnings from export of goods" to be disclosed. It would probably have been
more consistent if the relevant clause had required the value of exports to be
disclosed, rather than the earnings.
11.5.6 Considerations that apply in determining whether a purchase is an
import by the company will also apply in determining whether sales is an
export by the company. Any sales made direct by the company through an
agent to any overseas buyer is an export by the company. However, goods
sold to any canalizing agent like the State Trading Corporation for export is
not the company's export.

12 Multiple Activity Companies
Where a company has multiple activities e.g. both manufacturing and trading
i.e. it falls under more than one category, it should comply with the various
disclosure requirements relating to each of its classified activities. For
instance, in respect of its manufacturing activities, such a company should
comply with the requirements relating to a manufacturing company, whereas
in respect of its trading or service activities, it should comply with the
requirements relating to those categories of companies. However, in case of
complexities in segregating the required information it would be sufficient
compliance if the information is disclosed with respect to main activities with
a suitable disclosure explaining the reasons thereof.

13 Consolidated Financial Statements
The Companies Act 2013 has mandated that the companies which have one
or more subsidiaries / associates (which as per the Act includes joint

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 Guidance Note on Division I ­ Non Ind AS Schedule III to the Companies Act, 2013

ventures) are required to prepare Consolidated Financial Statements, except
under certain circumstances exempted under the Act and Rules.
The companies are expected to prepare the standalone financial statements
and in addition prepare the consolidated financial statements also.
Schedule III provides for general instructions in regard to the preparation of
consolidated financial statements. This is a new addition brought in under
Companies Act 2013.
13.1. General requirement
Where the company is required to prepare consolidated financial statements,
the company shall mutatis mutandis follow the requirements of Schedule III
for the standalone 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.
This would also indicate the need to obtain such information for all the
subsidiaries / associates of the consolidated financial statements, including
where such subsidiaries / associates are not audited under the Companies
Act 2013.
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
to a consolidated financial statement. MCA has also clarified vide General
Circular No. 39 / 2014 dated 14th October 2014 that Schedule III to the Act
[Refer Annexure D (Pg 135)] 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 Schedule III shall apply to a CFS, subject
to the following exemptions / modifications based on the relevance to the
CFS:

Schedule III Requirement                 Applicability to CFS (if left blank,
                                         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.


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Guidance Note on Division I ­ Non Ind AS Schedule III to the Companies Act, 2013


Capital reserve or goodwill arising on Needs to be shown as a separate
consolidation                          line item on the face of the Balance
                                       Sheet
                                          Note: IFRS / Ind AS does not require
                                          this to be stated separately.
                                          However, as per AS, differing
                                          treatment is given to goodwill arising
                                          on amalgamation and goodwill
                                          arising on consolidation and even
                                          SEBI format requires this to be
                                          separately disclosed.
(a) Period and amount of continuing       On all these items, disclosure can be
    default as on the Balance Sheet       limited to those which are material to
    date in repayment of loans and        the CFS; materiality could be
    interest, shall be specified          considered at 10% of the respective
    separately in each case.              balance sheet item
(b) Loans and advances due by
    directors or other officers of the
    company or any of them either
    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


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 Guidance Note on Division I ­ Non Ind AS Schedule III to the Companies Act, 2013

    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
    Note: This item is required to be
    disclosed even if it is exempted
    as per AS- 21 by keeping it here,
    as it is only reinforcing the
    regulatory    requirement      for
    reporting ­ what is required by
    AS 21 cannot override regulatory
    requirements
Application money received for           Separate notes should be given for
allotment of securities and due for      such monies due outside the group
refund and interest accrued thereon.     in respect of entities which are
Share application money includes         consolidated.
advances towards allotment of share
capital. The terms and conditions
including the number of shares
proposed to be issued, the amount of
premium, if any, and the period
before which shares shall be allotted
shall be disclosed. It shall also be
disclosed whether the company has
sufficient authorized capital to cover
the share capital amount resulting
from allotment of 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


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Guidance Note on Division I ­ Non Ind AS Schedule III to the Companies Act, 2013

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'
Requirement to disclose excise duty To be disclosed where such
separately                          information is available for the
                                    entities consolidated.
                                    Note: Though AS 9 states excise to
                                    be shown separately, where
                                    subsidiaries are not disclosing it, it
                                    would not be practical and also no
                                    benefit is derived by disclosure of
                                    this.
(a) Payments to the auditor as (a) Not relevant at CFS level and hence,
    auditor,(b) for taxation matters, may be dispensed with
    (c) for company law matters, (d)
    for management services, (e) for
    other      services,     (f)  for
    reimbursement of expenses
(b) In case of Companies covered
    under section 135, amount of
    expenditure       incurred    on
    corporate social responsibility
    activities
(c) Raw materials under broad
    heads
(d) goods purchased under broad
    heads

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 Guidance Note on Division I ­ Non Ind AS Schedule III to the Companies Act, 2013

(e) In the case of trading
    companies, purchases in respect
    of goods traded in by the
    company under broad heads
(f) In the case of companies
    rendering or supplying services,
    gross income derived form
    services rendered or supplied
    under broad heads
(g) 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
(h) In the case of other companies, Not relevant at CFS level and hence,
    gross income derived under may be dispensed with
    broad heads
(i) In the case of all concerns
    having works in progress, works-
    in-progress under broad heads
(j) 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
(k) Expenditure in foreign currency
    during the financial year on


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Guidance Note on Division I ­ Non Ind AS Schedule III to the Companies Act, 2013

    account of royalty, know-how,
    professional and consultation
    fees, interest, and other matters
(l) Total value if all imported raw
    materials, spare parts and
    components consumed during
    the 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
(m) The amount remitted during the Not relevant at CFS level and hence,
    year in foreign currencies on may be dispensed with
    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
(n) 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

13.2. Accounting Standards
The Consolidated Financial Statements shall also disclose the information as
required under the various accounting standards applicable.


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 Guidance Note on Division I ­ Non Ind AS Schedule III to the Companies Act, 2013

13.3. Minority Interest
Profit or loss attributable to "minority interest" shall be shown as an allocation
for the period in the statement of profit and loss.
In the Balance Sheet, "minority interest" shall be presented within equity
separately from equity of the owners of the parent.
13.4. Additional information on the entities included in the
consolidated financial statements
Schedule III requires specific disclosure of additional information on the
entities which are included in the consolidated financial statement in the
following format.

Name of the      Net Assets i.e., total assets        Share in profit or loss
 entity in          minus total liabilities
                   As % of           Amount         As % of           Amount
                 Consolidated                     Consolidated
                  net assets                      profit or loss
          1               2                3                4                5
Parent
Subsidiaries
Indian
1
2
3
...
.....
Foreign
1
2
3
...
.....



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Guidance Note on Division I ­ Non Ind AS Schedule III to the Companies Act, 2013


Minority
interest in all
subsidiaries
Associates
(Investment
as per equity
method)
Indian
1
2
3
...
...
Foreign
1
2
3
...
.....
Joint
Ventures (as
per
proportionate
consolidation/
Investment
as per equity
method)
1
2
3
...
.....


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 Guidance Note on Division I ­ Non Ind AS Schedule III to the Companies Act, 2013

Foreign
1
2
3
...
.....
TOTAL
In this context, it needs to be considered that in order to ensure that the total
can be matched with the reported profits and net assets in the consolidated
financial statements, the inter-company eliminations needs to be adjusted to
the respective entities which are part of the consolidated financial
statements. This would require management to take judgements as to which
entity the profit element and inter-company balances are to be adjusted from
in providing for an entity wise break up of net profits and net assets.
13.5. Entities not consolidated
Entities which are not covered in the consolidated financial statement,
whether subsidiaries, associates or joint ventures are to be listed in the
consolidated financial statement along with the reasons for not consolidating
such entities. This requirement is also in line with the requirements of the
accounting standard on consolidated financial statements.
13.6 Comparative figures
Schedule III states that except for the first financial statements prepared by a
company after incorporation, presentation of comparative amounts is
mandatory. Schedule III however, clarifies that in case of any conflict
between Accounting Standards and Schedule III, Accounting Standards will
prevail over the requirements of Schedule III. The transitional provisions of
AS 21 exempt presentation of comparative numbers in the first set of
consolidated financial statements prepared, even by an existing group.
Hence, an existing group preparing consolidated financial statements for the
first time under AS 21, need not present comparative information.
13.7 Definition of terms relevant for consolidation
The terms "Control", "Subsidiary" and "Associate" are defined very differently
in the Companies Act as compared to definition in Accounting Standards.
Rule 6 of the Companies (Accounts) Rules however states that consolidated







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Guidance Note on Division I ­ Non Ind AS Schedule III to the Companies Act, 2013

financial statements shall be prepared in accordance with the provisions of
Schedule III of the Act and the applicable accounting standards. Accordingly,
for removal of all doubts it is hereby clarified that for the purposes of
preparing consolidated financial statements, the definitions of the above
terms as given in Accounting Standards should be followed.




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                                                    Annexure A
                               SCHEDULE III
                             (See section 129)
GENERAL INSTRUCTIONS FOR PREPARATION OF BALANCE SHEET
AND STATEMENT OF PROFIT AND LOSS OF A COMPANY
Division I
Financial Statements for a company whose Financial Statements are
required to comply with the Companies (Accounting Standards) Rules,
2006
GENERAL INSTRUCTIONS
1.    Where compliance with the requirements of the Act including
      Accounting Standards as applicable to the companies 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 of this Schedule shall stand
      modified accordingly.
2.    The disclosure requirements specified in this Schedule are in addition
      to and not in substitution of the disclosure requirements specified in
      the Accounting Standards prescribed under the Companies Act, 2013.
      Additional disclosures specified in the Accounting Standards shall be
      made in the notes to accounts or by way of additional statement
      unless required to be disclosed on the face of the Financial
      Statements. Similarly, all other disclosures as required by the
      Companies Act shall be made in the notes to accounts in addition to
      the requirements set out in this Schedule.
3. (i) Notes to accounts 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.
Guidance Note on Division I ­ Non Ind AS Schedule III to the Companies Act, 2013

(ii)      Each item on the face of the Balance Sheet and Statement of Profit
          and Loss shall be cross-referenced to any related information in the
          notes to accounts. In preparing the Financial Statements including the
          notes to accounts, 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.
4. (i) Depending upon the turnover of the company, the figures appearing in
       the Financial Statements may be rounded off as given below:--
Turnover                                          Rounding off
(i) less than one hundred crore                   To the nearest hundreds, thousands,
     rupees                                       lakhs or millions, or decimals thereof.
(ii) one hundred crore rupees or                  To the nearest, lakhs, millions or
     more                                         crores, or decimals thereof.
(ii)      Once a unit of measurement is used, it should 1 be used uniformly in
          the Financial Statements.
5.        Except in the case of the first Financial Statements laid before the
          Company (after its incorporation) the corresponding amounts
          (comparatives) for the immediately preceding reporting period for all
          items shown in the Financial Statements including notes shall also be
          given.
6.        For the purpose of this Schedule, the terms used herein shall be as
          per the applicable Accounting Standards.
Notes
This part of Schedule sets out the minimum requirements for disclosure on
the face of the Balance Sheet, and the Statement of Profit and Loss
(hereinafter referred to as "Financial Statements" for the purpose of this
Schedule) and Notes. 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
company's financial position or performance or to cater to industry/sector-
specific disclosure requirements or when required for compliance with the
amendments to the Companies Act or under the Accounting Standards.

1   Amended pursuant to MCA Notification G.S.R. 1022(E), dated 11th October, 2018

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 Guidance Note on Division I ­ Non Ind AS Schedule III to the Companies Act, 2013

                        PART I ­ Form of BALANCE SHEET
                       Name of the Company.........................
                       Balance Sheet as at ...........................
                                  (Rupees in............)

      Particulars                      Note Figures as at                Figures as at
                                       No   the    end   of              the    end   of
                                            (Current                     (Previous
                                            reporting                    reporting
                                            period) (in Rs.)             period) (in Rs.)
                                            __________                   __________
                                            (DD/MM/YYYY)                 (DD/MM/YYYY)
                   1                     2               3                      4
I.    EQUITY            AND
      LIABILITIES
      Shareholders' funds
      (a) Share capital
      (b)    Reserves    and
            surplus
      (c)Money            received
          against            share
          warrants
(2)   Share     application
      money       pending
      allotment
(3)   Non-current liabilities
      (a)               Long-term
      borrowings
      (b)       Deferred        tax
      liabilities (Net)
      (c) Other Long term
      liabilities
      (d)               Long-term
      provisions

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(4)      Current liabilities
         (a)        Short-term
         borrowings
         (b) Trade payables:-
            (A) total outstanding
            dues      of    micro
            enterprises       and
            small     enterprises;
            and
            (B) total outstanding
            dues of creditors
            other than micro
            enterprises       and
            small enterprises 2


         (c)       Other      current
         liabilities
         (d)               Short-term
         provisions
         TOTAL
II.      ASSETS
(1)      Non Current Assets
         (a) Property, Plant and
         Equipment 3
         (i) Tangible assets
         (ii) Intangible assets
         (iii) Capital       work-in-
         progress
         (iv) Intangible assets
         under development
         (b)         Non-current
         investments


2   Inserted pursuant to MCA Notification G.S.R. 679(E), dated 4th September, 2015
3   Amended pursuant to MCA Notification G.S.R. 1022(E), dated 11th October, 2018

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 Guidance Note on Division I ­ Non Ind AS Schedule III to the Companies Act, 2013


      (c) Deferred tax assets
      (net)
      (d) Long-term loans and
      advances
      (e) Other non-current
      assets
(2)   Current assets
      (a) Current investments
      (b) Inventories
      (c) Trade receivables
      (d) Cash and cash
      equivalents
      (e) Short-term      loans
      and advances
      (f) Other current assets
      TOTAL

See accompanying notes to the financial statements
Notes
GENERAL INSTRUCTIONS FOR PREPARATION OF BALANCE SHEET
1.      An asset shall be classified as current when it satisfies any of the
        following criteria:
        (a)   it is expected to be realized in, or is intended for sale or
              consumption in, the company's normal operating cycle;
        (b)   it is held primarily for the purpose of being traded;
        (c)   it is expected to be realized within twelve months after the
              reporting date; or
        (d)   it is Cash or cash equivalent unless it is restricted from being
              exchanged or used to settle a liability for at least twelve months
              after the reporting date.
        All other assets shall be classified as non-current.

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2.    An operating cycle is the time between the acquisition of assets for
      processing and their realization in Cash or cash equivalents. Where
      the normal operating cycle cannot be identified, it is assumed to have
      a duration of 12 months.
3.    A liability shall be classified as current when it satisfies any of the
      following criteria:
      (a)    it is expected to be settled in the company's normal operating
             cycle;
      (b)    it is held primarily for the purpose of being traded;
      (c)    it is due to be settled within twelve months after the reporting
             date; or
      (d)    the company does not have an unconditional right to defer
             settlement of the liability for at least twelve months after the
             reporting date. Terms of a liability that could, at the option of the
             counterparty, result in its settlement by the issue of equity
             instruments do not affect its classification.
      All other liabilities shall be classified as non-current.
4.    A receivable shall be classified as a `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.
5.    A payable shall be classified as a `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.
6.    A company shall disclose the following in the Notes to Accounts:
A. Share Capital
For each class of share capital (different classes of preference shares to be
treated separately):
(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 reporting period;

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    Guidance Note on Division I ­ Non Ind AS Schedule III to the Companies Act, 2013

(e)       the rights, preferences and restrictions attaching to each class of
          shares including restrictions on the distribution of dividends and the
          repayment of capital;
(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 5
          percent shares specifying the number of shares held;
(h)       shares reserved for issue under options and contracts/commitments
          for the sale of shares/disinvestment, including the terms and amounts;
(i)       For the period of five years immediately preceding the date as at
          which the Balance Sheet is prepared:
                  Aggregate number and class of shares allotted as fully paid up
                  pursuant to contract(s) without payment being received in cash.
                  Aggregate number and class of shares allotted as fully paid up
                  by way of bonus shares.
                  Aggregate number and class of shares bought back.
(j)       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.
(k)       Calls unpaid (showing aggregate value of calls unpaid by directors and
          officers)
(l)       Forfeited shares (amount originally paid up)
B. Reserves and Surplus
(i)       Reserves and Surplus shall be classified as:
          (a)     Capital Reserves;
          (b)     Capital Redemption Reserve;
          (c)     Securities Premium 4;
          (d)     Debenture Redemption Reserve;

4   Word "Reserve" omitted pursuant to MCA Notification G.S.R. 1022 (E), dated 11th October, 2018

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Guidance Note on Division I ­ Non Ind AS Schedule III to the Companies Act, 2013

        (e)   Revaluation Reserve;
        (f)   Share Options Outstanding Account;
        (g)   Other Reserves ­ (specify the nature and purpose of each
              reserve and the amount in respect thereof);
        (h)   Surplus i.e. balance in Statement of Profit and Loss disclosing
              allocations and appropriations such as dividend, bonus shares
              and transfer to/from reserves etc.
        (Additions and deductions since last Balance Sheet to be shown under
        each of the specified heads)
(ii)    A reserve specifically represented by earmarked investments shall be
        termed as a `fund'.
(iii)   Debit balance of statement of profit and loss shall be shown as a
        negative figure under the head `Surplus'. Similarly, the balance of
        `Reserves and Surplus', after adjusting negative balance of surplus, if
        any, shall be shown under the head `Reserves and Surplus' even if the
        resulting figure is in the negative.
C.      Long-Term Borrowings
(i)     Long-term borrowings shall be classified as:
        (a)   Bonds/debentures.
        (b)   Term loans
                  From banks
                  From other parties
        (c)   Deferred payment liabilities.
        (d)   Deposits.
        (e)   Loans and advances from related parties.
        (f)   Long term maturities of finance lease obligations
        (g)   Other loans and advances (specify nature).
(ii)    Borrowings shall further be sub-classified as secured and unsecured.
        Nature of security shall be specified separately in each case.
(iii)   Where loans have been guaranteed by directors or others, the
        aggregate amount of such loans under each head shall be disclosed.


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 Guidance Note on Division I ­ Non Ind AS Schedule III to the Companies Act, 2013

(iv)    Bonds/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 farthest
        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.
(v)     Particulars of any redeemed bonds/ debentures which the company
        has power to reissue shall be disclosed.
(vi)    Terms of repayment of term loans and other loans shall be stated.
(vii)   Period and amount of continuing default as on the Balance Sheet date
        in repayment of loans and interest, shall be specified separately in
        each case.
D. Other Long term Liabilities
Other Long term Liabilities shall be classified as:
(a)     Trade payables
(b)     Others
E. Long-term provisions
The amounts shall be classified as:
(a)     Provision for employee benefits.
(b)     Others (specify nature).
F. Short-term borrowings
(i)     Short-term borrowings shall be classified as:
        (a)   Loans repayable on demand
                  From banks
                  From other parties
        (b)   Loans and advances from related parties.
        (c)   Deposits.
        (d)   Other loans and advances (specify nature).
(ii)    Borrowings shall further be sub-classified as secured and unsecured.
        Nature of security shall be specified separately in each case.

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Guidance Note on Division I ­ Non Ind AS Schedule III to the Companies Act, 2013

(iii)     Where loans have been guaranteed by directors or others, the
          aggregate amount of such loans under each head shall be disclosed.
(iv)      Period and amount of default as on the Balance Sheet date in
          repayment of loans and interest, shall be specified separately in each
          case.
FA. Trade Payables 5
The following details relating to Micro, Small and Medium Enterprises shall
be disclosed in the notes:-
(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
(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.


5   Inserted pursuant to MCA Notification G.S.R. 679(E) dated 4th September, 2015

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 Guidance Note on Division I ­ Non Ind AS Schedule III to the Companies Act, 2013

G. Other current liabilities
The amounts shall be classified as:
(a)   Current maturities of long-term debt;
(b)   Current maturities of finance 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. Share application money includes
      advances towards allotment of share capital. The terms and conditions
      including the number of shares proposed to be issued, the amount of
      premium, if any, and the period before which shares shall be allotted
      shall be disclosed. It shall also be disclosed whether the company has
      sufficient authorized capital to cover the share capital amount resulting
      from allotment of 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'
(h)   Unpaid matured deposits and interest accrued thereon
(i)   Unpaid matured debentures and interest accrued thereon
(j)   Other payables (specify nature);
H. Short-term provisions
The amounts shall be classified as:
(a)   Provision for employee benefits.
(b)   Others (specify nature).

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Guidance Note on Division I ­ Non Ind AS Schedule III to the Companies Act, 2013

I.      Tangible assets
(i)      Classification shall be given as:
         (a)   Land.
         (b)   Buildings.
         (c)   Plant and Equipment.
         (d)   Furniture and Fixtures.
         (e)   Vehicles.
         (f)   Office equipment.
         (g)   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/reversals shall be disclosed separately.
(iv)     Where sums have been written off 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.
J. Intangible assets
(i)      Classification shall be given as:
         (a)   Goodwill.
         (b)   Brands /trademarks.
         (c)   Computer software.
         (d)   Mastheads and publishing titles.
         (e)   Mining rights.


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 Guidance Note on Division I ­ Non Ind AS Schedule III to the Companies Act, 2013

        (f)   Copyrights, and patents and other intellectual property rights,
              services and operating rights.
        (g)   Recipes, formulae, models, designs and prototypes.
        (h)   Licenses and franchise.
        (i)   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/reversals shall be disclosed separately.
(iii)   Where sums have been written off 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.
K. Non-current investments
(i)     Non-current investments shall be classified as trade investments and
        other investments and further classified as:
        (a)   Investment property;
        (b)   Investments in Equity Instruments;
        (c)   Investments in preference shares
        (d)   Investments in Government or trust securities;
        (e)   Investments in debentures or bonds;
        (f)   Investments in Mutual Funds;
        (g)   Investments in partnership firms
        (h)   Other non-current investments (specify nature)
        Under each classification, details shall be given of names of the
        bodies corporate (indicating separately whether such bodies are (i)
        subsidiaries, (ii) associates, (iii) joint ventures, or (iv) controlled


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Guidance Note on Division I ­ Non Ind AS Schedule III to the Companies Act, 2013

        special purpose entities) in whom investments have been made and
        the nature and extent of the investment so made in each such body
        corporate (showing separately investments which are partly-paid). In
        regard to investments in the capital of partnership firms, the names of
        the firms (with the names of all their partners, total capital and the
        shares of each partner) shall be given.
(ii)    Investments carried at other than at cost should be separately stated
        specifying the basis for valuation thereof.
(iii)   The following shall also be disclosed:
        (a)   Aggregate amount of quoted investments and market value
              thereof;
        (b)   Aggregate amount of unquoted investments;
        (c)   Aggregate provision for diminution in value of investments
L. Long-term loans and advances
(i)     Long-term loans and advances shall be classified as:
        (a)   Capital Advances;
        (b)   Security Deposits;
        (c)   Loans and advances to related parties (giving details thereof);
        (d)   Other loans and advances (specify nature).
(ii)    The above shall also be separately sub-classified as:
        (a)   Secured, considered good;
        (b)   Unsecured, considered good;
        (c)   Doubtful.
(iii)   Allowance for bad and doubtful loans and advances shall be disclosed
        under the relevant heads separately.
(iv)    Loans and advances due by directors or other officers of the company
        or any of them either 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.


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 Guidance Note on Division I ­ Non Ind AS Schedule III to the Companies Act, 2013

M. Other non-current assets
Other non-current assets shall be classified as:
(i)     Long Term Trade Receivables (including trade 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
(ii)    Allowance for bad and doubtful debts shall be disclosed under the
        relevant heads separately.
(iii)   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.
N. Current Investments
(i)     Current investments shall be classified as:
        (a)   Investments in Equity Instruments;
        (b)   Investment in Preference Shares
        (c)   Investments in government or trust securities;
        (d)   Investments in debentures or bonds;
        (e)   Investments in Mutual Funds;
        (f)   Investments in partnership firms
        (g)   Other investments (specify nature).
        Under each classification, details shall be given of names of the
        bodies corporate (indicating separately whether such bodies are (i)
        subsidiaries, (ii) associates, (iii) joint ventures, or (iv) controlled
        special purpose entities) in whom investments have been made and
        the nature and extent of the investment so made in each such body
        corporate (showing separately investments which are partly-paid). In

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Guidance Note on Division I ­ Non Ind AS Schedule III to the Companies Act, 2013

        regard to investments in the capital of partnership firms, the names of
        the firms (with the names of all their partners, total capital and the
        shares of each partner) shall be given.
(ii)    The following shall also be disclosed:
        (a)   The basis of valuation of individual investments
        (b)   Aggregate amount of quoted investments and market value
              thereof;
        (c)   Aggregate amount of unquoted investments;
        (d)   Aggregate provision made for diminution in value of
              investments.
O. 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;
        (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.
P. Trade Receivables
(i)     Aggregate amount of Trade Receivables outstanding for a period
        exceeding six months from the date they are due for payment should
        be separately stated.
(ii)    Trade receivables shall be sub-classified as:
        (a)   Secured, considered good;
        (b)   Unsecured considered good;


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 Guidance Note on Division I ­ Non Ind AS Schedule III to the Companies Act, 2013

        (c)   Doubtful.
(iii)   Allowance for bad and doubtful debts shall be disclosed under the
        relevant heads separately.
(iv)    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.
Q. Cash and cash equivalents
(i)     Cash and cash equivalents shall be classified as:
        (a)   Balances with banks;
        (b)   Cheques, drafts on hand;
        (c)   Cash on hand;
        (d)   Others (specify nature).
(ii)    Earmarked balances with banks (for example, for unpaid dividend)
        shall be separately stated.
(iii)   Balances with banks to the extent held as margin money or security
        against the borrowings, guarantees, other commitments shall be
        disclosed separately.
(iv)    Repatriation restrictions, if any, in respect of cash and bank balances
        shall be separately stated.
(v)     Bank deposits with more than 12 months maturity shall be disclosed
        separately.
R. Short-term loans and advances
(i)     Short-term loans and advances shall be classified as:
        (a)   Loans and advances to related parties (giving details thereof);
        (b)   Others (specify nature).
(ii)    The above shall also be sub-classified as:
        (a)   Secured, considered good;
        (b)   Unsecured, considered good;
        (c)   Doubtful.



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(iii)   Allowance for bad and doubtful loans and advances shall be disclosed
        under the relevant heads separately.
(iv)    Loans and advances due by directors or other officers of the company
        or any of them either severally or jointly with any other person or
        amounts due by firms or private companies respectively in which any
        director is a partner or a director or a member shall be separately
        stated.
S. Other current assets (specify nature).
This is an all-inclusive heading, which incorporates current assets that do not
fit into any other asset categories.
T. 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;
        (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).
U.      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 preference shares shall also be disclosed separately.
V.      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.
W.      If, in the opinion of the Board, any of the assets other than Property,




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    Guidance Note on Division I ­ Non Ind AS Schedule III to the Companies Act, 2013

          Plant and Equipment 6 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
X. Every company shall disclose the details of Specified Bank Notes
          (`SBN') held and transacted during the period 8th November, 2016 to
          30th December, 2016 as provided in the following table:

                                               SBNs       Other denomination Total
                                                          notes
Closing cash in hand as on
08.11.2016
(+) Permitted receipts
(-) Permitted payments
(-) Amounts deposited in Banks
Closing cash in hand as on
30.12.2016

Explanation: For the purposes of this clause, the term `Specified Bank Notes'
shall have the same meaning provided in the notification of the Government
of India, in the Ministry of Finance, Department of Economic Affairs number
S.O. 3407(E), dated 8th November, 2016.




6   Amended pursuant to MCA Notification G.S.R 1022(E), dated 11th October, 2018

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Guidance Note on Division I ­ Non Ind AS Schedule III to the Companies Act, 2013

           PART II ­ Form of STATEMENT OF PROFIT AND LOSS
Name of the Company.........................
Profit and loss statement for the year ended ...........................
(Rupees in............)

       Particulars                 Note      Figures for the     Figures for the
                                             current             previous
                                             reporting           reporting period
                                             period (in)         (in)
                                             From ________       From__________
                                             (DD/MM/YYYY)        (DD/MM/YYYY)
                                             To __________       To____________
                                             (DD/MM/YYYY)        (DD/MM/YYYY)
       1                           2         3                   4
I.     Revenue             from                       xxx                  xxx
       operations
II.    Other income                                   xxx                  xxx
III.   Total Revenue (I + II)                         xxx                  xxx
IV.    Expenses
            Cost of materials
            consumed
            Purchases      of
            Stock-in-Trade
            Changes        in                         xxx                  xxx
            inventories    of
            finished goods
            Work-in-progress                          xxx                  xxx
            and      Stock-in-
            Trade
            Employee                                  xxx                  xxx
            benefits expense
            Depreciation and                          xxx                  xxx
            amortization
            expense

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 Guidance Note on Division I ­ Non Ind AS Schedule III to the Companies Act, 2013

           Other expenses                         xxx                 xxx
           Total expenses                         xxx                 xxx
V    Profit           before                      xxx                 xxx
     exceptional          and
     extraordinary     items
     and tax (III-IV)
VI   Exceptional items                            xxx                 xxx
VII Profit            before                      xxx                 xxx
     extraordinary     items
     and tax (V - VI)
VIII Extraordinary Items                          xxx                 xxx
IX   Profit before tax (VII-                      xxx                 xxx
     VIII)
X    Tax expense:
     (1) Current tax                              xxx                 xxx
     (2) Deferred tax                             xxx                 xxx
XI   Profit (Loss) for the                        xxx                 xxx
     period from continuing
     operations (VII-VIII)
XII Profit/(loss)        from                     xxx                 xxx
     discontinuing
     operations
XIII Tax      expense       of                    xxx                 xxx
     discontinuing
     operations
XIV Profit/(loss)        from                     xxx                 xxx
     Discontinuing
     operations (after tax)
     (XII-XIII)
XV Profit/ (Loss) (XI +                           xxx                 xxx
     XIV)
XVI Earnings per equity                           xxx                 xxx
     share
     (1) Basic                                    xxx                 xxx
      (2) Diluted                                 xxx                 xxx

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Guidance Note on Division I ­ Non Ind AS Schedule III to the Companies Act, 2013

See accompanying notes to the financial statements
GENERAL INSTRUCTIONS FOR PREPARATION OF STATEMENT OF
PROFIT AND LOSS
1.    The provisions of this Part shall apply to the income and expenditure
      account referred to in sub-clause (ii) of clause (40) section 2, in like
      manner as they apply to a statement of profit and loss.
2. (A) In respect of a company other than a finance company revenue from
       operations shall disclose separately in the notes revenue from
      (a)     sale of products;
      (b)     sale of services;
      (c)     other operating revenues;
      Less:
      (d)     Excise duty.
(B)   In respect of a finance company, revenue from operations shall include
      revenue from
      (a)     Interest; and
      (b)     Other financial services
      Revenue under each of the above heads shall be disclosed separately
      by way of Notes to Accounts to the extent applicable.
3.    Finance Costs
      Finance costs shall be classified as:
      (a)     Interest expense;
      (b      Other borrowing costs;
      (c)     Applicable net gain/loss on foreign currency transactions and
              translation.
4.     Other income
      Other income shall be classified as:
      (a)     Interest Income (in case of a company other than a finance
              company);
      (b)     Dividend Income;


                                    123
 Guidance Note on Division I ­ Non Ind AS Schedule III to the Companies Act, 2013

      (c)    Net gain/loss on sale of investments
      (d)    Other non-operating income (net of expenses directly
             attributable to such income).
5.    Additional Information
      A Company shall disclose by way of notes additional information
      regarding aggregate expenditure and income on the following items:-
(i) (a) Employee Benefits Expense [showing separately (i) salaries and
        wages, (ii) contribution to provident and other funds, (iii) expense on
        Employee Stock Option Scheme (ESOP) and Employee Stock
        Purchase Plan (ESPP), (iv) staff welfare expenses].
(b)   Depreciation and amortization expense;
(c)   Any item of income or expenditure which exceeds one per cent of the
      revenue from operations or Rs.1,00,000, whichever is higher;
(d)   Interest Income;
(e)   Interest Expense;
(f)   Dividend Income;
(g)   Net gain/ loss on sale of investments;
(h)   Adjustments to the carrying amount of investments;
(i)   Net gain or loss on foreign currency transaction and translation (other
      than considered as finance cost);
(j)   Payments to the auditor as (a) auditor,(b) for taxation matters, (c) for
      company law matters, (d) for management services, (e) for other
      services, (f) for reimbursement of expenses;
(k)   In case of Companies covered under Section 135, amount of
      expenditure incurred on corporate social responsibility activities;
(l)   Details of items of exceptional and extraordinary nature;
(m)   Prior period items;
(ii) (a) In the case of manufacturing companies,-
      (1)    Raw materials under broad heads.
      (2)    goods purchased under broad heads.


                                    124
Guidance Note on Division I ­ Non Ind AS Schedule III to the Companies Act, 2013

(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 form services rendered or supplied under broad heads.
(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.
(iii)   In the case of all concerns having works in progress, works-in-
        progress under broad heads.
(iv) (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 commitment 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.
(v) (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.
(vi)    Expenditure incurred on each of 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.


                                    125
 Guidance Note on Division I ­ Non Ind AS Schedule III to the Companies Act, 2013

(g)     Rates and taxes, excluding, taxes on income.
(h)     Miscellaneous expenses,
(vii)   (a)    Dividends from subsidiary companies.
        (b)    Provisions for losses of subsidiary companies.
(Viii) 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 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
Note: Broad heads shall be decided taking into account the concept of
materiality and presentation of true and fair view of Financial
Statements".

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Guidance Note on Division I ­ Non Ind AS Schedule III to the Companies Act, 2013

GENERAL   INSTRUCTIONS    FOR   THE                       PREPARATION             OF
CONSOLIDATED FINANCIAL STATEMENTS
1.    Where a company is required to prepare Consolidated Financial
      Statements, i.e., consolidated balance sheet and consolidated
      statement of profit and loss, the company shall mutatis mutandis follow
      the requirements of this Schedule as applicable to a company in the
      preparation of balance sheet and statement of profit and loss. In
      addition, the consolidated financial statements shall disclose the
      information as per the requirements specified in the applicable
      Accounting Standards including the following:
      (i)       Profit or loss attributable to "minority interest" and to owners of
                the parent in the statement of profit and loss shall be presented
                as allocation for the period.
      (ii)      "Minority interests" in the balance sheet within equity shall be
                presented separately from the equity of the owners of the
                parent.
2.    In Consolidated Financial Statements, the following shall be disclosed
      by way of additional information:

Name of the Net Assets i.e.,                total            Share in profit or
entity in   assets      minus               total            loss
            liabilities
                   As % of           Amount          As % of Amount
                   Consolidated                      Consolidated
                   net assets                        profit or loss
            1               2               3                4                5
Parent
Subsidiaries
Indian
1.
2.
3.
...
...


                                      127
 Guidance Note on Division I ­ Non Ind AS Schedule III to the Companies Act, 2013

Foreign
1.
2.
3.
...
...
Minority
interest in all
subsidiaries
Associates
(Investment
as per equity
method)
Indian
1.
2.
3.
...
...
Foreign
1
2.
3.
...
...
Joint
Ventures (as
per
proportionate
consolidation/
Investment
as per equity
method)


                                    128
Guidance Note on Division I ­ Non Ind AS Schedule III to the Companies Act, 2013

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.




                                     129
                                                      Annexure B
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 Statement
(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 statement 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
            statement 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 statement or report shall
      not be prepared or filed more than once in a financial year:
Guidance Note on Division I ­ Non Ind AS Schedule III to the Companies Act, 2013

      Provided also that the detailed reasons for revision of such financial
      statement 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 any amount
      or amounts contributed by it to any political party during the financial
      year to which that account relates, giving particulars of the total
      amount contributed and the name of the party to which such amount
      has been contributed.
6.    Section 183 - Power of Board and other persons to make
      contributions to national defence fund, etc.
(2)   Every company shall disclose in its profit 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
      statement 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:

                                    131
Guidance Note on Division I ­ Non Ind AS Schedule III to the Companies Act, 2013

     Provided further that the Registrar shall obtain the previous sanction of
     the Central Government to the presentation of a petition:
     Provided also that the Central Government shall not accord its
     sanction unless the company has been given a reasonable opportunity
     of making representations.




                                   132
                                                   Annexure C
List of Accounting Standards notified as on date:
AS 1    Disclosure of accounting policies:
AS 2    Valuation of Inventories
AS 3    Cash Flow Statements
AS 4    Contingencies and Events Occurring After the Balance sheet Date
AS 5    Net Profit or Loss for the period, Prior Period items and Changes in
        Accounting Policies.
AS 7    Construction Contracts.
AS 9    Revenue Recognition.
AS 10 Property, Plant and Equipment.
AS 11 The Effects of Changes In Foreign Exchange Rates.
AS 12 Accounting for Government Grants.
AS 13 Accounting for Investments.
AS 14 Accounting for Amalgamation.
AS 15 Employee Benefits.
AS 16 Borrowing Costs.
AS 17 Segment Reporting.
AS 18 Related Party Disclosures.
AS 19 Accounting for Leases.
AS 20 Earnings Per Share.
AS 21 Consolidated Financial Statements.
AS 22 Accounting for Taxes on Income.
AS 23 Accounting for Investments in Associates in Consolidated Financial
      Statements.
AS 24 Discontinuing Operations.
AS 25 Interim Financial Reporting.
AS 26 Intangible Assets.
 Guidance Note on Division I ­ Non Ind AS Schedule III to the Companies Act, 2013

AS 27 Financial Reporting of Interests in Joint Ventures.
AS 28 Impairment of Assets.
AS 29 Provisions, Contingent liabilities and Contingent assets.




                                    134
                                                     Annexure D
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
Statement.
Sir,
Government has received representations from stakeholders seeking
clarifications on the manner of presentation of notes in Consolidated
Financial Statement (CFS) to be prepared under Schedule III to the
Companies Act, 2013(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.

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