GUIDANCE NOTE
ON
DIVISION II - 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. : 978-81-8441-868-2
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 Government is bringing out several changes in the Companies Act, 2013
from time to time to enhance transparency by way of mandating additional
disclosures. Towards the same, the Ministry for Corporate Affairs has issued
a Notification dated 11.10.2018 wherein amendments have been brought in
to the Schedule III to the Companies Act, 2013. The amendments are related
to additional disclosures for trade receivables, loan receivables, trade
payables and to comply with the disclosure requirements under the Micro,
Small and Medium Enterprises Development Act, 2006.
Keeping this in mind, a need was felt by ICAI for providing appropriate
guidance to the members in view of the amendments that have been brought
in by the Government so that the requirements of Schedule III can be
complied with by the companies that are required to prepare their financial
statements as per Ind AS in letter and spirit.
I am happy to note that Corporate Laws & Corporate Governance Committee
has undertaken the task of revision of Guidance Note on the Division II Ind
AS Schedule III to the Companies Act 2013. The Guidance Note was initially
issued by same the Committee in July, 2017 for guidance to the companies
that are required to comply with Ind AS. In revised guidance note, detailed
guidance has been provided on the various items of Schedule III and various
issues and intricacies involved therein.
I wish to compliment CA. (Dr.) Debashis Mitra, Chairman, Corporate Laws &
Corporate Governance Committee, CA. Chandrashekhar V. Chitale, Vice-
Chairman and all the members of the Corporate Laws & Corporate
Governance Committee who have made invaluable contribution in the
revision of this Guidance Note.
I am sure that the members and other stakeholders at large would find the
Guidance Note immensely useful.
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 July,
2017 after considering the newly introduced Division II to 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.
Major revisions have been made in the existing Division II of Schedule III. In
the case of Trade Receivables and Loan Receivables, it has been provided
that the total amount needs to be segregated into categories and disclosed
viz., considered good, having significant increase in credit risk and credit
impaired. Guidance has been provided regarding the disclosure of
impairment on trade receivables in cases where significant financing
component exists and in cases where it does not exist.
Trade payables are now required to be segregated into dues of micro
enterprises and small enterprises and other than micro enterprises and small
enterprises, w.r.t. MSME. Specific details mandated as per the MSMED Act,
2006 require disclosure. Changes required as per Ind AS 109 have been
incorporated. Further, disclosure requirements as per Ind AS 115 and Ind AS
116 have been incorporated in relevant parts.
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 Corporate Laws & Corporate
Governance Committee Governance Committee
17.06.2019
Foreword to the First Edition
The Companies Act, 2013 has been undergoing changes from time to time
through various amendments to the Act, Rules and through notifications and
circulars of the Ministry of Corporate Affairs which are issued to keep the law
at par with various developments in the economic environment, regulatory
requirement, policies of the country and globalization.
Further, the Government of India decided to converge Indian Accounting
Standards with certain carve outs from International Financial Reporting
Standards, in a phased manner to accomplish its commitment in G-20
summit with the objective of achieving high quality global accounting
standards.
At this backdrop, the Ministry of Corporate Affairs vide its notification dated
6th April, 2016 notified amendments to Schedule III of the Companies Act,
2013 thereby inserting Division II to Schedule III for preparation of financial
statements by those entities who have to comply with Indian Accounting
Standards (Ind AS).
In the light of the notification of Division II to Schedule III, the Corporate
Laws & Corporate Governance Committee (CL&CGC) of The Institute of
Chartered Accountants of India (ICAI) has taken an initiative of bringing out a
Guidance Note on Division II to Schedule III of the Companies Act, 2013 for
companies required to comply with Ind AS. In formalising the Guidance Note
on Division II-Ind AS Schedule III to the Companies Act, 2013, lot of efforts
has been made.
I commend the Corporate Laws & Corporate Governance Committee in
bringing out this useful publication. I place on record my appreciation to the
entire team of Committee under the Chairmanship of CA. Sanjay Kumar
Agarwal and Vice Chairmanship of CA. Debashis Mitra, Past Chairman, CA.
Dhinal A. Shah and Past Vice Chairperson CA K Sripriya.
I also put on record my appreciation to the Study Group comprising of CA
Dhinal A Shah, Convenor, CA. Himanshu Kishnadwala, CA. Vijay Maniar,
CA. Suresh Yadav, CA. Sandeep Shah, CA. Vignesh Poojari, CA. Shriraj
Bhandari, CA. Keyur Dave, CA. Pratik Haria, CA Ankita Nemani, CA Yash
Kaku, CA Somshekar Yaligar, CA Monil Gala, CA Neha Gohil, CA Harsh
Kapoor, CA. Amrish Darji, CA Ravi Karia, CA Gunjan Sharma, CA Ashwini
Salunke and CA Ravi Chauhan for their deliberations, comprehensive study
and efforts in bringing out this Guidance Note.
I am confident that this publication would be very useful to the members and
other stakeholders.
New Delhi CA. Nilesh S. Vikamsey
President, ICAI
Preface to the First Edition
The Council of the Institute has previously issued Guidance Note on
Schedule III to the Companies Act 2013. In February, 2015, the Ministry of
Corporate Affairs notified Indian Accounting Standards thereby laying down
the roadmap for companies for adoption of Ind AS. Further, MCA notified
amendments to Schedule III to the Companies Act, 2013 and the format of
Schedule III was termed as Division I to be complied with by Non Ind AS
companies and inserted Division II-Ind AS Schedule III, which is a format of
Financial Statements for companies that are required to comply with the
Companies (Indian Accounting Standards) Rules, 2015.
In view of this, the Corporate Laws & Corporate Governance Committee of
The Institute of Chartered Accountants of India decided to bring out the
Guidance Note on Division II- Ind AS Schedule III to the Companies Act
2013.
The Guidance Note provides guidance on each of the item of the Balance
Sheet, Statement of Profit and Loss, Major differences in Division I and
Division II of the Schedule III to the Companies Act, 2013 besides providing
Illustrative format for Standalone financial statements and Consolidated
Financial Statements etc. Few illustrations have also been included with a
view to provide guidance on application of the principles provided in the
Guidance Note.
The Ind AS in the first phase shall be applicable to all companies, listed or
unlisted, with a net worth of Rs 500 crore or more (along with their holding,
subsidiary, joint venture or associate companies) and which shall be required
to adopt Ind AS for accounting periods commencing on or after 1 April 2016.
To facilitate the exercise of preparation of financial statements by such
companies as per Ind AS Schedule III to the Companies Act, 2013, the ICAI
in its endeavour has brought this Guidance Note for the benefits of its
members.
I take this opportunity in thanking the President of ICAI, CA. Nilesh S.
Vikamsey and Vice President CA. Naveen N. D. Gupta for their support and
guidance in bringing out the publication.
I am also thankful to all my Central Council colleagues for their valuable
inputs in giving shape to this Guidance Note. I wish to place on record
special appreciation to CA. Debashis Mitra, Vice Chairman, CL&CGC, CA.
Dhinal A Shah, Central Council member and Convenor of the Study Group
and his team comprising of CA. Himanshu Kishnadwala, CA. Vijay Maniar,
CA. Suresh Yadav, CA. Sandeep Shah, CA. Vignesh Poojari, CA. Shriraj
Bhandari, CA. Keyur Dave and CA. Pratik Haria deserves special
compliments and mention for their substantial effort and time in having in-
depth technical study and discussion in numerous meetings to bring out this
Guidance Note.
I also express my thanks to CA Ankita Nemani, CA Yash Kaku, CA
Somshekar Yaligar, CA Monil Gala, CA Neha Gohil, CA Harsh Kapoor, CA.
Amrish Darji, CA Ravi Karia, CA Gunjan Sharma, CA Ashwini Salunke and
CA Ravi Chauhan for their contribution in giving shape to this Guidance Note
on the basis of discussions held.
I also thank all the Members and Special Invitees to the Committee for their
support in finalising this Guidance Note.
I would also like to thank CA. Sarika Singhal, Ms S. Rita, Ms. Seema Jangid,
CA. Ashita Jain and Ms Nidhi Bansal working in the Secretariat of the
Corporate Laws & Corporate Governance Committee for their back up
support in bringing out this application.
I trust that this Guidance Note would be very useful to the members of the
Institute and others interested in the subject.
New Delhi CA. Sanjay Kumar Agarwal
Chairman
Corporate Laws & Corporate Governance Committee
Index
Sr. Contents Page
No. No.
1. Introduction 1
2. Objective and Scope 2
3. Applicability 3
4. Main principles Summary of Ind AS Schedule III 5
5. Structure of Ind AS Schedule III 7
6. General Instructions for Preparation of Financial Statements: 7
Notes 1 to 9
7. Part I Notes: General Instructions for Preparation of Balance 10
Sheet: Notes 1 to 5
8. Part I Form of Balance Sheet and Notes General 16
Instructions for Preparation of Balance Sheet: Notes 6 to 11
9. Part II Statement of Profit and Loss and Notes General 78
Instructions for Preparation of Statement of Profit and Loss:
Notes 1 to 6
10. Other Comprehensive Income 96
11. Additional information to be disclosed by way of Notes to 98
Statement of Profit and Loss
12. Part III General Instructions for Preparation of Consolidated 101
Financial Statements
Annexures
Annexure A Division II to Schedule III (`Ind AS Schedule 109
III') to the Companies Act, 2013
Annexure B Changes between Division I and Division II to 141
Schedule III (Ind AS Schedule III)
Annexure C Illustrative List of Disclosures required under 164
the Companies Act, 2013
Annexure D List of Indian Accounting Standards notified as 166
on date
Annexure E General Circular No. 39 / 2014 dated 14th 168
October 2014
Annexure F Illustrative Standalone & Consolidated 169
Financial Statements
1. Introduction
1.1 Schedule III to the Companies Act, 2013 (`the Act') was notified along
with the Act itself on 29 August, 2013 thereby providing the manner in which
every company registered under the Act shall prepare its Financial
Statements. Financial Statements as defined under the Act include Balance
Sheet, Statement of Changes in Equity for the period as applicable, the
Statement of Profit and Loss for the period, Cash flow statement for the
financial year and Notes.
1.2 Ministry of Corporate Affairs (`MCA') notified Indian Accounting
Standards (`Ind AS') on February 16, 2015 thereby laying down the roadmap
for all companies, except insurance companies, banking companies and non-
banking finance companies, for adoption of Ind AS (`MCA roadmap'). Further,
MCA notified amendments to Schedule III to the Act on 6th April 2016
whereby:
1.2.1 The existing Schedule III was renamed as `Division I' to Schedule III
(`Non-Ind AS Schedule III') which gives a format of Financial Statements
for Non-Ind AS companies, that are required to comply with the Companies
(Accounting Standards) Rules, 2006. In other words, Non-Ind AS companies,
will be required to prepare Financial Statements as per Companies
(Accounting Standards) Rules, 2006, as per the format of Division I to
Schedule III to the Act;
1.2.2 `Division II' - `Ind AS Schedule III' (Refer Annexure A, Pg 109) was
inserted to give a format of Financial Statements for companies that are
required to comply with the Companies (Indian Accounting Standards) Rules,
2015, as amended from time to time (`Companies Ind AS Rules'). This is
newly inserted into Schedule III for companies that adopt Ind AS as per Rule
4(1)(i) or Rule 4(1)(ii) or Rule 4(1)(iii) of the Companies Ind AS Rules.
Accordingly, such Companies, while preparing its first and subsequent Ind
AS Financial Statements, would apply Division II to Ind AS Schedule III to the
Act.
1.3 The requirements of Ind AS 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. Moreover, the
GN on Division II - Ind AS Schedule III to the Companies Act 2013
requirements of Ind AS Schedule III do not apply to Non-Banking Finance
Companies (NBFCs) that adopt Ind AS as per Rule 4(1)(iv) of Companies
(Indian Accounting Standards) Rules, 2015 notified in Companies (Indian
Accounting Standards) (Amendment) Rules, 2016.
1.4 It may, however, be clarified that for companies engaged in the
generation and supply of electricity, neither the Electricity Act, 2003, nor the rules
framed thereunder, prescribe any specific format for presentation of Financial
Statements by an electricity company. Section 1(4) of the Act states that the Act
will apply to electricity companies, to the extent it is not inconsistent with the
provisions of the Electricity Act. Keeping this in view, Ind AS Schedule III as
applicable may be followed by such companies till the time any other format is
prescribed by the relevant statute.
2. Objective and Scope
2.1. The objective of this Guidance Note is to provide guidance in the
preparation and presentation of Financial Statements in accordance with
various aspects of Ind AS Schedule III, for companies adopting Ind AS. The
disclosure requirements under Ind AS, the Companies Act, 2013, other
pronouncements of the Institute of Chartered Accountants of India (ICAI),
other statutes, etc., would be in addition to the guidance provided in this
Guidance Note.
2.2. Guidance given in `Guidance Note on Schedule III to the Companies
Act, 2013' published in February 2016 and second edition published in July,
2019 as `Guidance Note on Division I- Non Ind AS schedule III to the
Companies Act, 2013' would continue to be applied by Non-Ind AS
companies which are required to prepare Financial Statements as per the
format of Non-Ind AS Schedule III.
2.3. In preparing this Guidance Note, reference has been made to Ind AS
notified under Section 133 of the Act read together with Paragraph 3 of the
Companies Ind AS Rules given in Annexure D (Pg 166) and various other
pronouncements of the ICAI. The primary focus of the Guidance Note is to
lay down broad guidelines to deal with practical issues that may arise in the
implementation of Ind AS Schedule III while preparing Financial Statements
as per Ind AS.
2.4. This Guidance Note includes changes to presentation and disclosure
requirements of Ind AS Schedule III pursuant to Ind AS notified up to May 31,
2019. Ind AS 116 Leases, is notified on March 30, 2019 and will be effective
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GN on Division II - Ind AS Schedule III to the Companies Act 2013
from 1st April 2019. It changes the current accounting requirements of
differentiating between lease arrangements as an `Operating Lease' and
`Finance Lease'. It requires recognition of a `Right-to-use' (ROU) and a
corresponding lease liability where the lessee, at the commencement date,
has a financial obligation to make lease payments to the lessor for its right to
use the underlying asset during the lease term. While the requirements
(including presentation and disclosures) for lessor remain substantially
unchanged from Ind AS 17, the requirements for lessee changes significantly
as compared to Ind AS 17. An entity shall present and disclose rights and
obligations arising from lease arrangements as per Ind AS 116, which shall
be in addition to the current requirements of Ind AS Schedule III. Ind AS
Schedule III requires finance lease obligations to be disclosed under
borrowings. Accordingly, whether lease obligations of lessee should be
presented as borrowings or as other financial liabilities becomes a pertinent
question and appropriate regulatory authorities may need to provide
guidance or clarification around those presentation and disclosure
requirements of Ind AS 116.
2.5. As per the clarification issued by ICAI regarding the authority attached
to the Documents issued by ICAI, `Guidance Notes' are primarily designed to
provide guidance to members on matters which may arise in the course of
their professional work and on which they may desire assistance in resolving
issues which may pose difficulty. Guidance Notes are recommendatory in
nature. A member should ordinarily follow recommendations in a guidance
note relating to an auditing matter except where he is satisfied that in the
circumstances of the case, it may not be necessary to do so. Similarly, while
discharging his attest function, a member should examine whether the
recommendations in a guidance note relating to an accounting matter have
been followed or not. If the same have not been followed, the member should
consider whether keeping in view the circumstances of the case, a disclosure
in his report is necessary."
3. Applicability
3.1. As per the Government Notification no. S.O. 902 (E) dated 26 th March,
2014, Schedule III is applicable for the Financial Statements prepared for the
financial year commencing on or after April 1, 2014. Further, as per the
Government Notification no. G.S.R. 404(E) dated 6th April, 2016, Schedule III
is amended to include a format of Financial Statements for a company
preparing Financial Statements in compliance with the Companies Ind AS
Rules. All companies that prepare, either voluntarily or mandatorily, Financial
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GN on Division II - Ind AS Schedule III to the Companies Act 2013
Statements in compliance with the Companies Ind AS Rules, should consider
Ind AS Schedule III as well as this Guidance Note.
3.2. Ind AS Schedule III requires that except in the case of the first
Financial Statements laid before the company after incorporation, the
corresponding amounts (i.e. comparatives) for the immediately preceding
period are to be disclosed in the Financial Statements including the Notes to
Accounts. Thus, for the Financial Statements prepared for the financial year
2016-17 (i.e. 1st April 2016 to 31st March 2017), corresponding amounts need
to be given for the financial year 2015-16. As per Ind AS 101, a company's
first Ind AS financial statements shall include at least three balance sheets,
two statements of profit and loss, two statements of cash flows and two
statements of changes in equity and related notes. This Guidance Note does
not deal with the presentation aspects of reconciliations that are required to
be provided as a part of a company's first Ind AS financial statements.
3.3. For applicability, in the first and subsequent years, of the Ind AS
Schedule III format by a company to its interim Financial Statements (other
than quarterly, half-yearly and annual financial results published as per SEBI
guidelines), relevant paragraphs of Ind AS 34 Interim Financial Reporting
are quoted below:
"9. If an entity publishes a complete set of Financial Statements in
its interim financial report, the form and content of those
statements shall conform to the requirements of Ind AS 1 for a
complete set of Financial Statements.
10. If an entity publishes a set of condensed Financial Statements
in its interim financial report, those condensed statements shall
include, at a minimum, each of the headings and subtotals that
were included in its most recent annual Financial Statements
and the selected explanatory notes as required by this
Standard. Additional line items or notes shall be included if their
omission would make the condensed interim Financial
Statements misleading."
In case, if a company is presenting condensed interim Financial Statements,
except in case of interim periods falling in the first Ind AS reporting period, its
format should also conform to that used in the company's most recent annual
Financial Statements, i.e., which would be as per Ind AS Schedule III.
3.4. Listed entities shall follow guidelines issued by SEBI by way of
circulars prescribing formats for publishing financial results (quarterly, half-
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GN on Division II - Ind AS Schedule III to the Companies Act 2013
yearly and annual) which are guided by the relevant provisions of the Ind AS
and Ind AS Schedule III and may make suitable modifications, as applicable.
4. Main principles Summary of Ind AS
Schedule III
4.1. Every company to which Ind AS is applicable, shall prepare its
Financial Statements in accordance with Ind AS Schedule III or with such
modification as may be required under certain circumstances.
4.2. Financial Statements include Balance Sheet, Statement of Changes in
Equity for the period, Statement of Profit and Loss for the period and Notes.
Cash Flow Statement shall be prepared in accordance with the requirements
of the relevant Ind AS.
4.3. The Ind AS Schedule III requires that if the compliance with the
requirements of the Act including Ind AS as applicable to the companies,
require any change in presentation or disclosure in the Financial Statements,
the requirements of Ind AS Schedule III will stand modified accordingly.
4.4. Ind AS 1, para 60, states that an entity shall present current and non-
current assets, and current and non-current liabilities, as separate
classifications in its balance sheet, except when a presentation based on
liquidity provides information that is reliable and more relevant. When that
exception applies, an entity shall present all assets and liabilities in the order
of liquidity. Further, Ind AS 1, para 64, states that a company is permitted to
present some of its assets and liabilities using a current / non-current
classification and others in order of liquidity when this provides information
that is reliable and more relevant. The need for a mixed basis of presentation
might arise when an entity has diverse operations. However, as per para 2 of
the General Instructions for Preparation of Financial Statements in Ind AS
Schedule III, the option of presenting assets and liabilities in the order of
liquidity as permitted by paras 60 and 64 of Ind AS 1 is not available to
Companies preparing its Financial Statements as per Ind AS Schedule III.
Accordingly, a Company may choose to present the assets and liabilities in
the order of liquidity only in the Notes, which shall be considered as
`Additional Information' and the same shall be stated so explicitly in the
Notes.
4.5. The Ind AS Schedule III clarifies that the requirements mentioned
therein for disclosure on the face of the Financial Statements or in the notes
are minimum requirements and are in addition to the disclosure requirements
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GN on Division II - Ind AS Schedule III to the Companies Act 2013
specified in the Ind AS. 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 or performance or to cater to industry or sector-
specific disclosure requirements or when required, for compliance with the
amendments to the Act or under any Ind AS. For e.g., line items required by
para 54 and para 82 of Ind AS 1 should be included, as an addition to or
substitution of the Ind AS Schedule III line items on the face of Balance
Sheet and Statement of Profit and Loss, respectively. Accordingly,
requirements of both Ind AS Schedule III as well as Ind AS 1 are to be
complied with. Illustrative Standalone & Consolidated Financial Statements
format is given in Annexure F (Pg 169).
4.6. Disclosure under Ind AS (for e.g., fair value measurement
reconciliation, fair value hierarchy, risk management and capital
management, disclosure of interests in other entities, components of other
comprehensive income, reconciliations on first-time adoption of Ind AS, etc.)
shall be made in the Notes or by way of additional statement(s) unless
required to be disclosed on the face of the Financial Statements.
4.7. Where any Act or Regulation requires specific disclosures to be made
in the Financial Statements of a company, the said disclosures shall be made
in addition to those required under Ind AS Schedule III.
4.8. Note 8 to General Instructions for Preparation of Financial Statements
in Ind AS Schedule III states that the terms used in the Ind AS Schedule III
will carry the same meaning as defined by the applicable Ind AS. For
example, the terms such as `associate', `related parties', etc. will have the
same meaning as defined in Ind AS notified under the Companies Ind AS
Rules.
For any terms which are not specifically defined in Ind AS, attention may also
be drawn to the Framework for the preparation and presentation of Financial
Statements in accordance with Indian Accounting Standards (`Ind AS
Framework') issued by ICAI. However, if any term is not defined in the Ind
AS Framework, the entity may give consideration to the principles described
in para 10 to para 12 of Ind AS 8 for the purpose of developing and applying
an accounting policy.
4.9. A General Instruction on `Materiality' has been included in Note 7 to
General Instructions for Preparation of Financial Statements requiring
Financial Statements to disclose items that could, individually or collectively,
influence the economic decisions that users make on the basis of the
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GN on Division II - Ind AS Schedule III to the Companies Act 2013
Financial Statements. Materiality depends on the size or nature of the item or
a combination of both, to be judged based on particular facts and in
particular circumstances.
4.10. Moreover, para 29 of Ind AS 1 states w.r.t. `materiality' that an entity
shall present separately each material class of similar items. An entity shall
present separately items of a dissimilar nature or function unless they are
immaterial except when required by law. Further, reference to para 29 to 31
of Ind AS 1 should be taken when determining materiality and aggregation.
5. Structure of the Ind AS Schedule III
The Structure of Ind AS Schedule III is as under:
A. General Instructions for Preparation of Financial Statements of a
Company required to comply with Ind AS (`General Instructions for
Preparation of Financial Statements')
B. Part I Form of Balance Sheet and Statement of Changes in Equity
C. Part I Notes General Instructions for Preparation of Balance Sheet
D. Part II Form of Statement of Profit and Loss
E. Part II Notes General Instructions for Preparation of Statement of
Profit and Loss
F. Part III General Instructions for the Preparation of Consolidated
Financial Statements
6. General Instructions for Preparation of
Financial Statements: Notes 1 to 9
6.1. The General Instructions lay down the broad principles and guidelines
for preparation and presentation of Financial Statements.
6.2. As laid down in Part A of the Annexure to Companies Ind AS Rules,
Ind AS, which are specified, are intended to be in conformity with the
provisions of applicable laws. However, if due to subsequent amendments in
the law, a particular Ind AS is found to be not in conformity with law, the
provisions of the said law will prevail and the Financial Statements should be
prepared in conformity with such law. In such a scenario, the statement of
compliance with Ind AS should be considered in the light of the principle of
overriding effect of law over Ind AS when applying the presentation or
disclosure requirements of the Ind AS Schedule III.
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GN on Division II - Ind AS Schedule III to the Companies Act 2013
6.3. The Ind AS Schedule III requires that if compliance with the
requirements of the Act including applicable Ind AS require any change in the
presentation or disclosure including addition, amendment, substitution or
deletion in the head/sub-head or any changes inter se, in the Financial
Statements or Notes to Accounts thereof, the same shall be made and the
requirements of Ind AS Schedule III shall stand modified accordingly.
6.4. Note 3 of the General Instructions for Preparation of Financial
Statements state that the disclosure requirements of the Ind AS Schedule III
are in addition to and not in substitution of the disclosure requirements
specified in Ind AS. They further clarify that the disclosures specified in Ind
AS shall be made in the Notes or by way of additional statement(s) unless
required to be disclosed on the face of the Financial Statements. Similarly, all
other disclosures as required by the Act shall be made in the Notes, in
addition to the requirements set out in this Schedule.
6.5. Examples to illustrate the above point are:
(a) Specific disclosure is required by para 33 of Ind AS-105 Non-
current Assets Held for Sale and Discontinued Operations which
has not been incorporated in Ind AS Schedule III.
(b) Ind AS-107 Financial Instruments: Disclosures , which requires
disclosure of information that enable users of the Financial
Statements to evaluate the significance of financial instruments
for its financial position and performance.
6.6. Disclosures required by Ind AS as well as by the Act will continue to
be made in the Financial Statements and in the Notes to Accounts. An
example of this is the separate disclosure required by Sub Section (3) of
Section 182 of the Act for donations made to political parties. Such
disclosures would be made in the Notes. An illustrative list of disclosures
required under the Act is enclosed as Annexure C (Pg 164).
6.7. The above principle would apply to disclosures to be made in
compliance with other legal requirements such as, disclosures required
under Regulation 34 (including Schedule V) and Regulation 53 of the SEBI
(Listing Obligations and Disclosure Requirements) Regulations, 2015. A
further extension of the above principle also means that specific disclosures
required by various pronouncements of regulatory bodies or disclosure
requirements prescribed by various ICAI Guidance Notes for e.g.,
Guidance Note on Accounting for Oil and Gas Producing Activities (for
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GN on Division II - Ind AS Schedule III to the Companies Act 2013
entities to whom Ind AS is applicable), etc. should be made in the Financial
Statements in addition to the disclosures specified by Ind AS Schedule III.
6.8. The Ind AS Schedule III requires all information relating to each item
on the face of the Balance Sheet and Statement of Profit and Loss to be
cross-referenced to the Notes. The manner of such cross-referencing to
various other information contained in the Financial Statements has been
retained as "Note No." in Ind AS Schedule III. The instructions state that the
Notes to Accounts should provide where required with narrative descriptions
or disaggregation of items recognized in those statements. Hence,
presentation of all narrative descriptions and disaggregation should
preferably be presented in the form of Notes rather than in the form of
Schedules. Such style of presentation is also in line with the manner of
presentation of Financial Statements followed by companies internationally
and would facilitate comparability of Financial Statements.
6.9. Note 4 of the General Instructions for Preparation of Financial
Statements also states that the Notes should also contain information about
items that do not qualify for recognition in Financial Statements. These
disclosures normally refer to items such as Contingent Liabilities and
Commitments which do not get recognised in the Financial Statements.
These have been dealt with in para 8.2.14. below (Pg 73).
6.10. The General Instructions for Preparation of Financial Statements also
lay down the principle that in preparing Financial Statements including Notes,
a balance shall be maintained between providing excessive detail that may
not assist users of Financial Statements and not providing important
information as a result of too much aggregation. Compliance with this
requirement is a matter of professional judgement and may vary on a case to
case basis based on facts and circumstances. However, it is necessary to
strike a balance between overburdening Financial Statements with excessive
detail that may not assist users of Financial Statements and obscuring
important information as a result of too much aggregation. For example, a
company should not obscure important information by including it among a
large amount of insignificant detail or in a way that it obscures important
differences between individual transactions or associated risks.
6.11. Ind AS Schedule III requires using the same unit of measurement
uniformly across the Financial Statements. Such requirement should be
taken to imply that all figures disclosed in the Financial Statements including
Notes should be of the same denomination, except where a different
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denomination may be required for ratios or metrics in order to increase its
understandability.
6.12. Ind AS Schedule III has specified the rounding off requirements as
Non-Ind AS Schedule III, as given below:
Ind AS Schedule III
· Turnover < Rs. 100 Crores - Round off to the nearest hundreds,
thousands, lakhs or millions or decimal thereof.
· Turnover >= Rs. 100 Crores - Round off to the nearest lakhs, millions or
crores, or decimal thereof
6.13. A Note below Note 9 of the General Instructions for Preparation of
Financial Statements clarifies that Ind AS Schedule III sets out the minimum
requirements for disclosure in the Financial Statements including notes. It
states that line items, sub-line items and sub-totals shall be presented as an
addition or substitution on the face of the Financial Statements when such
presentation is relevant to the understanding of the 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 Ind AS.
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.
7. Part I Notes: General Instructions for
Preparation of Balance Sheet Notes 1 to 5
7.1. Current/Non-current assets and liabilities:
The Ind AS Schedule III and Ind AS-1 Presentation of Financial Statements
require all items in the Balance Sheet to be classified as either Current or
Non-current and be reflected as such. Notes 1 to 3 in General Instructions for
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Preparation of Balance Sheet define Current Asset, Operating Cycle and
Current Liability, in line with Ind AS 1, as below:
A. Current Asset "An entity shall classify an asset as current when:
(a) it expects to realise the asset, or intends to sell or consume it, in
its normal operating cycle;
(b) it holds the asset primarily for the purpose of trading;
(c) it expects to realise the asset within twelve months after the
reporting period;
(d) the asset is cash or a cash equivalent unless the asset is
restricted from being exchanged or used to settle a liability for at
least twelve months after the reporting period.
An entity shall classify all other assets as non-current."
B. Operating Cycle "The operating cycle of an entity is the time
between the acquisition of assets for processing and their realization
in cash or cash equivalents. When the entity's normal operating cycle
is not clearly identifiable, it is assumed to be twelve months."
C. Current Liability "An entity shall classify a liability as current when:
(a) it expects to settle the liability in its normal operating cycle;
(b) it holds the liability primarily for the purpose of trading;
(c) the liability is due to be settled within twelve months after the
reporting period; or
(d) it does not have an unconditional right to defer settlement of the
liability for at least twelve months after the reporting period.
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.
An entity shall classify all other liabilities as non-current."
7.2. Ind AS Schedule III, in line with Ind AS 1, 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.
7.3. Based on the definition, current assets include assets such as raw
material and stores which are intended for consumption or sale in the course
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of the company's normal operating cycle. Items of inventory, or trade
receivables 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 (for e.g., some financial assets that meet the
definition of held for trading as per Ind AS 109) and the current portion of
non-current financial assets.
7.4. Similarly, current liabilities would include items such as trade
payables, employee salaries payable 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 in more than twelve
months after the end of the reporting date.
7.5. Further, any liability, where the company does not have an
unconditional right to defer its settlement for at least twelve months after the
Balance Sheet date / reporting date, will have to be classified as current.
7.6. 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:
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
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date of approval of the financial statements. 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 minor defaults
of debt covenants as the banks view it more as a protective right which is
exercised in exceptional situations. 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 a 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 financial statements on
breach of a loan covenant that occurred before the year-end, the loan will
have to be classified as current. 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, as per Ind AS 1, para 74, 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 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.
With a view to focus only on the substantive breaches (e.g., amongst other
covenants, those that are financial covenants) the expression used in Ind AS
1 is `breach of a material provision'. 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.
7.7. 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.
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7.8. 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.
7.9. For the purpose of Ind AS Schedule III, a company also needs to
classify its employee benefit obligations as current and non-current
categories. While Ind AS-19 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 Ind AS
Schedule III, which are consistent with Ind AS 1. 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 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 towards 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 an 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 Ind AS-19
Employee Benefits.
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 employer's
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 and presented accordingly.
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(c) Regarding funded post-employment benefit obligations, amount due
for payment to the fund created for this purpose within twelve months
may be 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.
Since, para 133 of Ind AS 19 states that it does not specify whether an
entity should distinguish current and non-current portions of assets
and liabilities arising from post-employment benefits, entities may
continue to follow the guidance in the above paragraph (c).
7.10. For the purpose of presentation of Investments into current and non-
current, a company should consider whether the investments are intended to
be sold within twelve months from the balance sheet date / realizable within
its operating cycle in order to classify such investments as current
investments. However for recognition and measurement perspective, Ind AS-
109 Financial Instruments requires classification of all financial assets
(including investments, except investments in equity instruments) as
subsequently measured at amortized cost, fair value through other
comprehensive income (FVOCI) or fair value through profit or loss (FVTPL)
on the basis of both viz., (a) the contractual cash flow characteristics of the
financial asset and (b) the company's business model for managing the
financial assets. Accordingly, the measurement of financial assets, i.e. at
amortized cost, or FVTPL or FVOCI would not decide presentation into
Current and Non-current. However, it may be one of the factors that a
company may consider in the current and non-current classification of
investments, based on its expected realization as at the reporting date. Ind
AS 1 para 68 also states that current assets include assets held primarily for
the purpose of trading (i.e., some financial assets that meet the definition of
held for trading as per Ind AS 109). Where a portion of a financial asset is
expected to be realized within 12 months of the balance sheet date, the
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GN on Division II - Ind AS Schedule III to the Companies Act 2013
portion should be presented as current asset; remainder of the financial
asset should be shown as non-current.
7.11. Settlement of a liability by issue of equity instruments
7.11.1 Both, Ind AS 1 and Ind AS 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, 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, as to how does the aforesaid requirement affect
the classification of items for say, a) convertible debt where the conversion
option lies with the issuer, or b) mandatorily convertible debt instrument.
7.11.2 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. Accordingly, the timing of such settlement also decides the
classification of such liability in terms of Current or Non-current as defined in
Ind AS Schedule III.
7.12. As per Ind AS-1 Presentation of Financial Statements para 56 "When
an entity presents current and non-current assets, and current and non-
current liabilities, as separate classifications in its balance sheet, it shall not
classify deferred tax asset (liabilities) as current assets (liabilities)."
Accordingly, deferred tax assets / liabilities will always be presented as `non-
current'. (Also, refer para 9.7.2 below (Pg 94) for presenting MAT Credit
Entitlement in the Balance Sheet).
8. Part I Form of Balance Sheet and Notes
General Instructions for Preparation of
Balance Sheet: Notes 6 to 11
As per the Ind AS Framework, asset, liability and equity are defined as
follows:
An asset is a resource controlled by the entity as a result of past events and
from which future economic benefits are expected to flow to the entity.
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A liability is a present obligation of the entity arising from past events, the
settlement of which is expected to result in an outflow from the entity of
resources embodying economic benefits.
Equity is the residual interest in the assets of the entity after deducting all its
liabilities.
8.1. Assets
On the face of the Balance Sheet, Ind AS Schedule III requires the following
items to be presented under non-current assets and current assets as below:
Non-current assets
(a) Property, plant and equipment
(b) Capital work in progress
(c) Investment property
(d) Goodwill
(e) Other Intangible assets
(f) Intangible assets under development
(g) Biological Assets other than bearer plants
(h) Financial assets
(i) Investments
(ii) Trade Receivables
(iii) Loans
(iv) Others (to be specified)
(i) Deferred tax assets (net)
(j) Other non-current assets
Current assets
(a) Inventories
(b) Financial Assets
(i) Investments
(ii) Trade receivables
(iii) Cash and cash equivalents
(iv) Bank balances other than (iii) above
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(v) Loans
(vi) Others (to be specified)
(c) Current Tax Assets (net)
(d) Other current assets
Non-current Assets
8.1.1. Property, Plant and Equipment: The company shall disclose the
following in the Notes as per 6(A)(I) of Part I of Ind AS 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;
(h) Bearer Plants;
(g) Others (specify nature).
(ii) Assets under lease shall be separately specified under each class of
asset.
For assets under lease, an entity shall apply the presentation and
disclosure requirements under Ind AS 116 in addition to the
requirements of Ind AS Schedule III.
(iii) A reconciliation of the gross and net carrying amounts of each class of
assets at the beginning and end of the reporting period showing
additions, disposals, acquisitions through business combinations and
other adjustments and the related depreciation and impairment
losses/reversals shall be disclosed separately.
8.1.1.1. Since reconciliation of gross and net carrying amounts of Property,
Plant and Equipment, Investment Property and Other Intangible assets is
required, the corresponding depreciation/amortization for each class of asset
should be disclosed in terms of Opening Accumulated Depreciation,
Depreciation / amortization for the year, Deductions / Other adjustments and
Closing Accumulated Depreciation / Amortization. Similar disclosures should
also be made for Impairment, if any, as applicable.
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8.1.1.2. As per Ind AS 101, para D5 and D6, an entity may elect to measure
an item of property, plant and equipment at the date of transition to Ind ASs
at its fair value or use a previous GAAP revaluation as deemed cost. Further,
as per para D7AA of Ind AS 101, an entity may also consider previous GAAP
carrying amount of all its property, plant and equipment as its deemed cost
on the date of transition. In case when a company applies para D5 or para
D7AA, the deemed cost considered on the date of transition shall become
the new `gross block' and accordingly presented in the reconciliation
statement as required by Ind AS Schedule III.
8.1.1.3. In case if the company wants to disclose information regarding gross
block of assets, accumulated depreciation and provision for impairment
under previous GAAP, the same may only be disclosed as an additional
information by way of a note forming part of the financial statements.
8.1.1.4. All acquisitions, whether by way of an asset acquisition or through a
business combination are to be disclosed as part of the reconciliation in the
note on Property, Plant and Equipment, Investment Property (refer para 8.1.3
below- Pg 20), Other Intangible assets (refer para 8.1.5 below- Pg 20) and
Biological Assets other than bearer plants (refer para 8.1.7 below- Pg 21).
Acquisitions through `Business Combinations' need to be disclosed
separately for each class of assets. Similarly, though not specifically
required, it is advisable that asset disposals through demergers, etc. may
also be disclosed separately for each class of assets.
8.1.1.5. Other adjustments may include items as required by disclosure
requirements of Ind AS 16 and such disclosure should be made in the
manner prescribed therein. It may also include, for example net exchange
gain / loss arising on the translation of the financial statements from the
functional currency into a presentation currency.
8.1.1.6. Under the Ind AS Schedule III, land and building are presented as
two separate classes of property, plant and equipment. In contrast,
paragraph 37 of Ind AS 16 gives an example of grouping land and building
under same class for revaluation purposes. The para states that a class of
property, plant and equipment is a grouping of assets of a similar nature and
use in an entity's operations. However, companies should continue to
present land and building separately as given in Ind AS Schedule III and
such presentation needs to be followed consistently.
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8.1.2. Capital work-in-progress
As per Ind AS Schedule III, capital advances should be included under other
non- current assets and hence, cannot be included under capital work-in-
progress.
8.1.3. Investment Property
Ind AS-40 Investment Property defines Investment Property as the property
(land or a building--or part of a building--or both) held (by the owner or by
the lessee under a finance lease) to earn rentals or for capital appreciation or
both, rather than for: (a) use in the production or supply of goods or services
or for administrative purposes; or (b) sale in the ordinary course of business.
Ind AS Schedule III requires a reconciliation of the gross and net carrying
amounts of each class of property at the beginning and end of the reporting
period showing additions, disposals, acquisitions through business combinations
and other adjustments and the related depreciation and impairment losses or
reversals shall be disclosed separately.
The guidance given above on Property, Plant and Equipment, to the extent
applicable, is also to be used for Investment Property.
8.1.4. Goodwill
Ind AS Schedule III requires a company to present Goodwill as a separate line
item on the face of the balance sheet apart from `Other Intangible Assets'.
Further, it requires a reconciliation of the gross and net carrying amount of
goodwill at the beginning and end of the reporting period showing additions,
impairments, disposals and other adjustments.
8.1.5. Other Intangible assets
The company shall disclose the following in the Notes to Accounts:
(i) Classification shall be given as:
(a) Brands / trademarks;
(b) Computer software;
(c) Mastheads and publishing titles;
(d) Mining rights;
(e) Copyrights, patents, other intellectual property rights, services
and operating rights;
(f) Recipes, formulae, models, designs and prototypes;
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GN on Division II - Ind AS Schedule III to the Companies Act 2013
(g) Licenses and franchise;
(h) Others (specify nature).
(ii) A reconciliation of the gross and net carrying amounts of each class of
assets at the beginning and end of the reporting period showing additions,
disposals, acquisitions through business combinations and other
adjustments and the related amortization and impairment losses or
reversals shall be disclosed separately.
The guidance given above on Property, Plant and Equipment, to the extent
applicable, is also to be used for Other Intangible Assets.
8.1.6. Intangible assets under development
Intangible Assets under development should be disclosed under this head
provided they can be recognized based on the criteria laid down in Ind AS-38
Intangible Assets.
8.1.7. Biological Assets other than bearer plants
As per Ind AS-41 Agriculture, a biological asset is a living animal or plant.
Examples of biological assets are sheep, Trees in a timber plantation, Dairy
Cattle, Cotton plants, Tea bushes, Oil palms, Fruit trees, etc. Some plants, for
example, cotton plants, tea bushes, oil palms, fruit trees, grape vines, usually
meet the definition of a bearer plant. However, the produce growing on bearer
plants, viz., cotton, tea leaves, oil palm fruit, fruits, grapes, are biological assets
other than bearer plants.
As per Ind AS 41, an entity shall present a reconciliation of changes in the
carrying amount of biological assets between the beginning and the end of the
current period. The reconciliation shall include:
(i) the gain or loss arising from changes in fair value less costs to sell;
(ii) increases due to purchases;
(iii) decreases attributable to sales and biological assets classified as held for
sale (or included in a disposal group that is classified as held for sale) in
accordance with Ind AS 105;
(iv) decreases due to harvest;
(v) increases resulting from business combinations;
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GN on Division II - Ind AS Schedule III to the Companies Act 2013
(vi) net exchange differences arising on the translation of financial statements
into a different presentation currency, and on the translation of a foreign
operation into the presentation currency of the reporting entity; and
(vii) other changes.
The guidance given above on Property, Plant and Equipment, to the extent
applicable, is also to be used for Biological Assets other than bearer plants.
Financial Assets
8.1.8. Non-Current Investments:
(i) 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; or
(g) Other investments (specify nature).
Under each classification, details shall be given of names of the bodies
corporate that are
(i) subsidiaries,
(ii) associates,
(iii) joint ventures, or
(iv) structured 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). Investments in partnership firms
alongwith names of the firms, their partners, total capital and the shares of
each partner shall be disclosed separately.
(ii) The following shall also be disclosed:
(a) Aggregate amount of quoted investments and market value thereof;
(b) Aggregate amount of unquoted investments; and
(c) Aggregate amount of impairment in value of investments.
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GN on Division II - Ind AS Schedule III to the Companies Act 2013
8.1.8.1. Details regarding names of bodies corporate and nature and
extent of the investment made
Non-Ind AS Schedule III requires companies to give the names of all the
bodies corporate in which the company holds any class of investments and
further, to indicate separately whether such bodies are (i) subsidiaries, (ii)
associates, (iii) joint ventures, or (iv) controlled special purpose entities.
Ind AS Schedule III, however, requires companies to give names of the
bodies corporate that are (i) subsidiaries, (ii) associates, (iii) joint ventures,
or (iv) structured entities. It has done away with the requirement to give
names of all other bodies corporates in which a company has made any form
of investment (i.e. equity shares, preference shares, debentures, mutual fund
units). This is however, subject to the requirements of Ind AS 107 discussed
below.
Ind AS 107 para 11A requires, among other things, entities to disclose which
investments in equity instruments have been designated to be measured at
FVOCI along with the fair value of each such investment at the end of the
reporting period. Accordingly, over and above the requirements of Ind AS
Schedule III, companies will be required to disclose the names, number of
equity instruments held and the face value of such instrument of all other
bodies corporate for which they have designated the investments in equity
instruments at FVOCI.
However, apart from investments in equity instruments designated at FVOCI
and investments in subsidiaries, associates, joint ventures and structured
entities, if a company intends to provide such additional disclosure, it may
choose to do so.
Under each sub-classification of Investments, there is a requirement to
disclose details of investments including names and the nature and extent of
the investment in each body corporate which is a subsidiary, associate, joint
venture and structured entity. The nature and extent would imply the number
of such instruments held and the face value of such instrument. There is also
a requirement to disclose separately, investments which are partly-paid. It is
advisable to clearly disclose whether investments are fully paid or partly paid.
8.1.8.2. Disclosure of aggregate amount of investments and market
value thereof
Ind AS Schedule III requires disclosure of the aggregate amount of quoted
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GN on Division II - Ind AS Schedule III to the Companies Act 2013
investments and market value thereof and the aggregate amount of unquoted
investments. The aggregate amount of such investments would include
aggregate amount of carrying value of these investments as at the reporting
date as included in the financial statements. This disclosure would need to
be made separately for non-current investments and current investments.
Also, refer para 8.1.14 below (Pg 40).
The market value of quoted investments would, generally, mean disclosure of
the `fair value' of quoted investments as at each reporting date. Ind AS 113
defines fair value and also states that the fair value of assets might be
affected when there has been a significant decrease in the volume or level of
activity for that asset in relation to normal market activity for that asset. A
decrease in the volume or level of activity on its own may not indicate that a
quoted price does not represent fair value. However, based on the
company's evaluation, if it determines that a quoted price does not represent
fair value, then the company shall disclose the market value of quoted
investments based on the quoted price which would be different from the
investment's fair value.
Where the investments are measured at either FVTPL or FVOCI, as per Ind
AS 109, the carrying amount and the market value of such investments are
expected to be same subject to considerations of fair value as per the above
paragraph, and should be disclosed accordingly.
The term "quoted investments" has not been defined in Ind AS Schedule III.
The expression "quoted investment", as defined in the erstwhile pre-Revised
Schedule VI under the Companies Act, 1956, means an investment in
respect of 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.
8.1.8.3. Aggregate amount for impairment in value of investments
As per Ind AS Schedule III, this amount should be disclosed separately. As
per Ind AS 109, the company is required to recognize a loss allowance (i.e.
impairment) for expected credit losses on investments measured at
amortized cost. Such loss allowance should be presented as an adjustment
to the amortized cost of the investment.
As per Ind AS 109, in case of debt investments measured at fair value
through other comprehensive income, the fair value changes will be
presented in other comprehensive income. A company shall estimate a
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GN on Division II - Ind AS Schedule III to the Companies Act 2013
portion of fair value change, if any, attributable to a change in credit risk of
such investment, by applying the impairment requirements of Ind AS 109 in
recognising and measuring the loss allowance, and disclose the same in the
profit and loss section of the statement of profit and loss with a
corresponding impact in other comprehensive income section. In other
words, the company shall not reduce the carrying amount (which is the fair
value) of such investment in the balance sheet as it already includes the
effect of credit risk. Hence, investment needs to be presented at fair value.
Ind AS 109 does not permit a separate calculation / evaluation of impairment
amount for all equity investments measured at fair value and all other
investments measured at fair value through profit or loss. Hence, in case of
such investments, this disclosure is not applicable.
For the purpose of disclosing aggregate provision for impairment in the value
of investments, an entity shall disclose an amount equal to the aggregate
amount of impairment recognized and measured in accordance with Ind AS
109, as stated in the paragraphs above.
The aggregate provision for impairment in the value of investments may be
either presented in totality for all the investments or separately for each class
of investments (e.g., `Investment at amortized cost', `Investment in debt
instruments at FVOCI') disclosed in the financial statements.
8.1.8.4. Investments in Subsidiaries / Associates / Joint Ventures
The terms `subsidiary', `associate' and `joint venture' shall be as defined in
the respective Ind AS. Ind AS 32, Ind AS 107 and Ind AS 109 scope out
those interests in subsidiaries, associates, joint ventures that are accounted
for in accordance with Ind AS 110 Consolidated Financial Statements , Ind AS
27 Separate Financial Statements or Ind AS 28 Investments in Associates
and Joint Ventures . However, such investments still meet the definition of
financial instruments and may be presented as a separate line item on the
face of a company's standalone balance sheet. In any case, the disclosure
requirements of Ind AS 107 would not apply to such investments.
In some cases, Ind AS 110, Ind AS 27 or Ind AS 28 require or permit an
entity to account for an interest in a subsidiary, associate or joint venture in
accordance with Ind AS 109. Accordingly, only in its Standalone Financial
Statements, the entity shall present such interests in a subsidiary, associate
or joint venture under the head `Investments' separately on the face of a
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GN on Division II - Ind AS Schedule III to the Companies Act 2013
company's standalone balance sheet or in the notes, grouped under
`Financial Assets'. Such presentation would be in line with the guidance
provided in para 8.1.8.6 (Pg 26) and disclosure requirements of Ind AS 107
would also apply.
For an entity's Consolidated Financial Statements, investments accounted
using the equity method (i.e. associates and joint ventures) need to be
shown as a separate line item outside `Financial Assets', as per the
requirements of Ind AS 1, para 54.
8.1.8.5. Structured Entities
In Ind AS Schedule III, in addition to investment in subsidiaries, associates,
joint ventures, there is also a requirement to disclose the names of bodies
corporate, including separate disclosure of investments in "structured
entities". Ind AS-112 Disclosure of Interests in Other Entities states that a
"structured entity" is an entity that has been designed so that voting or similar
rights are not the dominant factor in deciding who controls the entity, such as
when any voting rights are related to administrative tasks only and the
relevant activities are directed by means of contractual arrangements.
Non-Ind AS Schedule III requires similar details to be given for only
"controlled special purpose entities" whereas, under Ind AS Schedule III,
investments in all structured entities need to be given, irrespective of whether
controlled or not.
Ind AS Schedule III also requires disclosure of the `nature and extent' of the
investment so made. In a normal company, the nature and extent would
imply the number of such instruments held and the face value of such
instrument. However, in case of a Structured Entity, rights are mainly
established by way of contractual arrangements and therefore as a part of
`nature and extent', a brief description of the nature of contracts may be
provided along with the rights held in such entities as evidenced by such
contracts.
8.1.8.6. Classification of Investments
As per Ind AS 107, para 8, the carrying amounts of each investments under
the scope of Ind AS 109 shall be disclosed either in the Balance Sheet or in
the Notes under the following categories:
(a) Measured at amortized cost;
(b) Mandatorily measured at FVTPL;
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GN on Division II - Ind AS Schedule III to the Companies Act 2013
(c) Designated at FVTPL;
(d) Measured at FVOCI;
(e) Designated at FVOCI (e.g., investments in equity instruments).
Ind AS Schedule III does not specify whether the Investments should first be
categorized as above or should be first classified as per the nature (e.g.,
investment in equity instruments, investment in preference shares,
investment in debentures or bonds, etc.). Ind AS Schedule III allows addition
or substitution of line items on the face of the Financial Statements in order
to comply with the Act or with Ind AS. Accordingly, the companies may
disclose Investments by grouping them in the following manner:
(i) Broad Categories as per Ind AS 107 (see above (a) to (e));
(ii) Under each board categorization, nature-based classification as per
Ind AS Schedule III; (for e.g., Investment in Equity Instruments,
Investments in Preference Shares, etc.)
(iii) Under each nature-based classification, grouping based on the
relationship of bodies corporate (viz., subsidiaries, associates, joint
ventures, and structured entities) as required by Ind AS Schedule III;
and
(iv) Under each grouping of bodies corporate, details giving names of
bodies corporate and nature and extent of investments in bodies
corporate as required by Ind AS Schedule III. (for e.g., details are
required for investments at FVOCI, investment in subsidiary, etc.).
An example is given below only for illustrative purposes, wherein it is
assumed that each investment has such terms and conditions that qualify
them for being presented under respective categories of classification and
measurement as per Ind AS 109. Companies should carefully assess the
terms and conditions specific to each investment for presenting them under
the classification and measurement categories of Ind AS 109:
Investments
A) Investments at amortized cost
(a) Investments in Redeemable Preference Shares
(b) Investments in Redeemable Debentures
(c) Investments in Redeemable Bonds
(d) Investments in Government Securities
(e) ........
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GN on Division II - Ind AS Schedule III to the Companies Act 2013
B) Investments at fair value through other comprehensive income
(a) Investments in Equity Instruments
(b) Investments in Redeemable Preference Shares
(c) Investments in Redeemable Debentures
(d) Investments in Redeemable Bonds
(e) Investments in Government Securities
(f) .......
C) Investments at fair value through profit or loss
(a) Investments in Equity Instruments
(b) Investments in Redeemable Preference Shares
(c) Investments in Optionally Convertible Preference Shares
(d) Investments in Optionally Convertible Debentures
(e) Investments in Redeemable bonds
(f) Investments in Government Securities
(g) .......
Where an entity chooses not to provide investment details in the format given
above, it could present the information in other ways by changing the order
of grouping. For e.g., Investments may be classified first as per their nature
(investment in equity instruments, investment in preference shares, etc.) as
given in Ind AS Schedule III and then within each nature, sub-classified into
broad categories (investments at amortized cost, etc.).
8.1.8.7. Disclosure relating to partnership firms in which the company has
invested (under 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 "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 in which
the company is a partner, along with the names of their partners, total capital
and the shares of each partner.
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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 Ind AS 110 and Ind AS 28, 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 three months. In such cases, the
difference in reporting dates should be disclosed. This is relevant for
Consolidated Financial Statements.
(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 Investments Note in 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.
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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.
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 extend to 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.
8.1.8.8. Application money paid towards securities
Any application money paid towards securities, where security has not been
allotted on the date of the Balance Sheet, shall be disclosed as a separate line
item under `other non-current financial assets'. If the amount is material, details
about the date of allotment or when the allotment is expected to be completed
may also be disclosed.
In case the investment is of current investment in nature, such share application
money shall be accordingly, disclosed under other current financial assets.
8.1.9. Non-current Trade Receivables
Non-current Trade Receivables, shall be sub-classified as:
(i) (a) Considered good Secured;
(b) Considered good Unsecured;
(c) Trade Receivables which have significant increase in credit risk
(d) Trade Receivables credit impaired
(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.
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 and the company has a right to an amount of
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GN on Division II - Ind AS Schedule III to the Companies Act 2013
consideration that is unconditional (i.e. if only the passage of time is required
before payment of that consideration is due). Hence, amounts due under
contractual rights, other than arising out of sale of goods or rendering of
services, cannot be included within Trade Receivables. Such items may
include dues in respect of insurance claims, sale of Property, Plant and
Equipment, contractually reimbursable expenses, etc. Such receivables
should be classified as "other financial assets" and each such item should be
disclosed nature-wise.
Impairment on Trade Receivables
As per Ind AS 109, the company is required to recognize a loss allowance
(i.e. impairment) for expected credit losses on financial assets including trade
receivables.
The impairment requirements in Ind AS 109 are based on forward-looking
expected credit loss (ECL) model which requires an application of one of the
following approaches:
a) The general approach, where an entity recognises ECLs in the following
stages viz.,
· credit exposures for which there has not been a significant
increase in credit risk since initial recognition;
· credit exposures for which there has been a significant increase in
credit risk since initial recognition but not credit-impaired;
· credit exposures that are credit impaired;
b) The simplified approach where an entity does not separately track
changes in credit risk.
c) The purchased or originated credit-impaired approach.
For trade receivables and contract assets under Ind AS 115 that do not
contain a significant financing component, it is a requirement to apply a
simplified approach while for trade receivables and contract assets under Ind
AS 115 that contain a significant financing component, and for lease
receivables, a choice between a general approach or a simplified approach is
available.
Application Guidance to Ind AS 109 allows using practical expedients when
measuring expected credit losses if they are consistent with the
measurement principles reflecting a probability-weighted outcome, the time
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value of money and reasonable and supportable information that is available
without undue cost or effort at the reporting date about past events, current
conditions and forecasts of future economic conditions, for e.g., using a
provision matrix based calculation of expected credit loss on trade
receivables.
Disclosure if `Loss allowance' is as per the general approach
If the company choses to calculate impairment under the general approach
for trade receivables and contract assets containing significant financing
component, then the disclosure representing the following for different
categories of Trade Receivables would be provided:
Non-current Trade Receivables
Rs. Rs.
Considered good Secured --
Considered good Unsecured* 1,25,000
Trade Receivables which have significant 20,000
increase in credit risk
Trade Receivables credit impaired 5,000 1,50,000
Less: Loss allowance (27,000)
1,23,000
* It is assumed for simplicity that all the Trade Receivables considered good
are Unsecured.
Except in case of purchased or originated credit-impaired trade receivables
where a company only recognises cumulative changes in lifetime expected
credit losses since initial recognition, the impairment loss allowance does not
reduce the carrying amount of the trade receivables. Accordingly, the total
expected credit loss allowance is presented as a deduction in a single line
item from the total carrying amount of the trade receivables, as shown above.
In disclosing `Trade Receivables which have significant increase in credit
risk', the company shall disclose the amount of trade receivables that have
experienced significant increase in credit risk since initial recognition but are
not credit-impaired.
In disclosing `Trade Receivables credit impaired', the company shall
disclose the amount of trade receivables which are credit impaired as defined
in Ind AS 109.
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The balance amount of trade receivables which have neither experienced
significant increase in credit risk nor are credit impaired as defined in Ind AS
109, shall be disclosed as `good'.
The corresponding amount of loss allowance on all the three categories of
trade receivables viz., considered good, considered as significant increase in
credit risk and considered credit impaired would be aggregated and
presented as a separate line item.
For calculating the loss allowance, reference shall be drawn from Ind AS 109
which defines `credit loss' as `the difference between all contractual cash
flows that are due to an entity in accordance with the contract and all the
cash flows that the entity expects to receive (i.e. cash shortfalls), discounted
at the original effective interest rate (or credit-adjusted effective interest rate
for purchased or originated credit-impaired financial assets) and including
cash flows from the sale of collateral held or other credit enhancements that
are integral to the contractual terms'.
Disclosure if `Loss allowance' is as per the simplified approach
If the company choses to calculate impairment under the simplified approach
for trade receivables and contract assets containing significant financing
component and for the impairment calculated on trade receivables and
contract assets that do not contain significant financing component, then the
company is not required to separately track changes in credit risk of trade
receivables and contract assets as the impairment amount represents
"lifetime" expected credit loss.
Accordingly, based on a harmonious reading of Ind AS 109 and the break-up
requirements under Schedule III, the disclosure for all such trade receivables
would be made as below, irrespective of whether they contain a significant
financing component or not:
Non-current Trade Receivables
Rs. Rs.
Considered good Secured --
Considered good Unsecured* 1,50,000
Trade Receivables which have (Refer para below)
significant increase in credit risk
Trade Receivables credit impaired (Refer para below) 1,50,000
Less: Loss allowance (27,000)
1,23,000
* It is assumed for simplicity that all the Trade Receivables are Unsecured.
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GN on Division II - Ind AS Schedule III to the Companies Act 2013
Break-up of trade receivables into `significant increase in credit risk' and
`credit impaired'
Ind AS 109 neither prohibits nor mandates a company to perform individual
assessment of credit risk for some of its financial assets however, in practice,
companies do perform individual credit risk assessment on specific parties
despite the normal collective pool-based assessment for a group of parties
falling under a particular credit exposure bucket (e.g., ageing, rating, etc.).
Individual credit risk assessment may not always indicate that a trade
receivable has experienced a significant increase in credit risk or is credit
impaired. Basis such individual credit risk assessment, a company may or
may not provide for a loss allowance.
Accordingly, the disclosure of trade receivables in the manner as required by
Schedule III shall be made specifically where the company has a trade
receivable for which credit risk is assessed individually. However, the
disclosure of `trade receivables credit impaired' shall be made if such trade
receivables meet the definition of `credit impaired' as per Ind AS 109.
Further, when a company has assessed credit risk on an individual basis
irrespective of recognition of a loss allowance, it is recommended that a
company should disclose the following by way of a footnote just after the
illustrative table given above:
· The amount of trade receivables for which the company has assessed
credit risk on an individual basis; and
· The amount of loss allowance recognized for such trade receivables
Presentation of loss allowance
Except in case of purchased or originated credit-impaired trade receivables
where a company only recognises cumulative changes in lifetime expected
credit losses since initial recognition, the impairment loss allowance does not
reduce the carrying amount of the trade receivables. Accordingly, the total
expected credit loss allowance is presented as a deduction in a single line
item from the total carrying amount of the trade receivables, as shown above.
The above disclosure is consistent with the requirements of Ind AS 109 and
modification of the requirements under Ind AS Schedule III may be modified
in light of para 2 of `General Instructions for Preparation of Financial
Statements of a Company Required to comply with Ind AS' to Ind AS
Schedule III.
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GN on Division II - Ind AS Schedule III to the Companies Act 2013
8.1.10. Non-current Loans
(i) Loans shall be classified as:
(a) Security Deposits;
(b) Loans to related parties (giving details thereof);
(c) Other loans (specify nature).
(ii) The above shall also be separately sub-classified as:
(a) Loans Receivables considered good Secured;
(b) Loans Receivables considered good Unsecured;
(c) Loans Receivables which have significant increase in credit risk
and
(d) Loans Receivables credit impaired.
(iii) Allowance for bad and doubtful loans shall be disclosed under the
relevant heads separately.
(iv) Loans 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.
Security deposit under loans should include those deposits which meet the
definition of a financial asset.
Details of loans to related parties need to be disclosed. Since Ind AS
Schedule III states that the terms used therein shall have the same meanings
assigned to them in applicable Ind AS, the term "details" shall mean the
disclosure requirements contained in Ind AS-24 Related Parties Disclosures.
Other loans may include loans given to parties other than related parties, for
e.g., loans to employees, which are not expected to be realized within the
next twelve months from the Balance Sheet date.
Each item of loans should be further sub-classified as:
(a) Loans Receivables considered good Secured;
(b) Loans Receivables considered good Unsecured; and
(c) Loans Receivables which have significant increase in credit risk; and
(d) Loans Receivables credit impaired
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GN on Division II - Ind AS Schedule III to the Companies Act 2013
The corresponding amount of loss allowance on all the three categories of
loan receivables viz., considered good, considered as significant increase in
credit risk and considered credit impaired would be aggregated and
presented as a separate line item.
Disclosure if `Loss allowance' is as per the general approach
The company would disclose the following for different categories of Loan
Receivables:
Non-current Loan Receivables
Rs. Rs.
Considered good Secured --
Considered good Unsecured* 2,60,000
Loan Receivables which have significant 1,20,000
increase in credit risk
Loan Receivables credit impaired 5,000 3,85,000
Less: Loss allowance (127,000)
2,58,000
* It is assumed for simplicity that all the Loan Receivables considered good
are Unsecured.
Except in case of purchased or originated credit-impaired trade receivables
where a company only recognises cumulative changes in lifetime expected
credit losses since initial recognition, the impairment loss allowance does not
reduce the carrying amount of the loan receivables. Accordingly, the total
expected credit loss allowance is presented as a deduction in a single line
item from the total carrying amount of the loan receivables, as shown above.
In disclosing `Loan Receivables which have significant increase in credit risk',
the company shall disclose the amount of loan receivables that have
experienced significant increase in credit risk since initial recognition but are
not credit-impaired.
In disclosing `Loan Receivables credit impaired', the company shall
disclose the amount of loan receivables which are credit impaired as defined
in Ind AS 109.
The balance amount of loan receivables which have neither experienced
significant increase in credit risk nor are credit impaired as defined in Ind AS
109, shall be disclosed as `good'.
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GN on Division II - Ind AS Schedule III to the Companies Act 2013
The corresponding amount of loss allowance on all the three categories of
loans receivables viz., considered good, considered as significant increase in
credit risk and considered credit impaired would be aggregated and
presented as a separate line item.
For calculating the loss allowance, reference shall be drawn from Ind AS 109
which defines `credit loss' as `the difference between all contractual cash
flows that are due to an entity in accordance with the contract and all the
cash flows that the entity expects to receive (i.e. cash shortfalls), discounted
at the original effective interest rate (or credit-adjusted effective interest rate
for purchased or originated credit-impaired financial assets) and including
cash flows from the sale of collateral held or other credit enhancements that
are integral to the contractual terms'.
8.1.11. Other non-current financial assets
As per Ind AS Schedule III, Bank deposits with more than 12 months maturity
shall be disclosed under `Other financial assets'. The maturity should be
construed as remaining maturity of more than 12 months.
The following disclosures as per Note 6(C) of General Instructions for
Preparation of Balance Sheet should be provided for such bank deposits:
(a) Earmarked balances with banks (for e.g., for unpaid dividend) shall be
separately stated;
(b) Balances with banks to the extent held as margin money or security
against the borrowings, guarantees, other commitments shall be
disclosed separately;
(c) Repatriation restrictions, if any, in respect of cash and bank balances
shall be separately stated.
Ind AS Schedule III does not specify about the presentation of finance lease
receivables. The scope paragraph of Ind AS 32, Ind AS 109 and Ind AS 107
acknowledges that rights and obligations under leases, to which Ind AS 116
applies, are financial instruments but their measurement is excluded from the
scope of these standards. Accordingly, the non-current portion of a finance
lease receivable shall be presented here under `Other non-current financial
assets' while its current portion shall be presented under `Other current financial
assets'. The disclosure requirements of Ind AS 107 would apply to such
receivables.
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GN on Division II - Ind AS Schedule III to the Companies Act 2013
8.1.11.1 Contract assets and impairment thereof
Ind AS 115 requires in case of a contract with customer, when either party has
performed, to present a contract asset in the balance sheet as a line item
separate from trade receivables. Contract asset arises if an entity performs by
transferring goods or services to a customer before the customer pays
consideration or before payment is due. It excludes any amounts presented as a
receivable.
The presentation requirements of trade receivables (viz., secured and
unsecured, considered good, significant increase in credit risk and credit
impaired) may be applied to contract assets if a company has sufficient and
appropriate information.
Ind AS 115 also requires impairment of contract assets to be measured
presented and disclosed on the same basis as a financial asset that is within the
scope of Ind AS 109.
Accordingly, all the impairment related requirements as outlined above for trade
receivables (Section 8.1.9) shall be applied to contract assets as well.
Unless a company presents its balance sheet on a liquidity basis, it will need to
present contract assets arising from contracts within the scope of Ind AS 115 as
current or non-current in the balance sheet. Companies should consider the
requirements of current / non-current classification (Section 7) above.
8.1.12. Other non-current assets
Other non-current assets shall be classified as:
(i) Capital Advances; and
(ii) Advances other than capital advances
Advances other than capital advances shall be classified as:
(a) Security Deposits;
(b) Advances to related parties(giving details thereof);and
(c) Other advances (specify nature).
Advances to directors or other officers of the company or any of them either
severally or jointly with any other persons or advances to firms or private
companies respectively in which any director is a partner or a director or a
member should be separately stated. In case advances are of the nature of a
financial asset as per relevant Ind AS, these are to be disclosed under `other
financial assets' separately.
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GN on Division II - Ind AS Schedule III to the Companies Act 2013
(iii) Others (specify nature)
Under Ind AS Schedule III, Capital Advances are not to be classified under
Capital Work in Progress, since they are specifically to be disclosed under
other non-current assets.
Capital advances are advances given for procurement of Property, Plant and
Equipment including bearer plants, Investment Property, Other Intangible
assets or Biological Assets which are non-current assets. Typically,
companies do not expect to realize them in cash. Rather, over the period,
these get converted into Property, Plant and Equipment including bearer
plants, Investment Property, Other Intangible assets or Biological Assets,
respectively, which are non-current assets. Hence, capital advances should
be treated as other non-current assets irrespective of when the Property,
Plant and Equipment including bearer plants, Investment Property, Other
Intangible assets or Biological Assets are expected to be received.
Security Deposits under other non-current assets should include those
deposits which do not meet the definition of a financial asset. Classification
of deposits paid into current and non-current depends on the expectation of
its realisation, unless an entity expects to recover the same within 12 months
after the reporting date.
Advances to related parties under other non-current assets may include,
long-term advances given to group entities. Details of advances to related
parties need to be disclosed. Since Ind AS Schedule III states that the terms
used therein should be interpreted based on applicable Ind AS, the term
"details" should be interpreted to mean the disclosure requirements
contained in Ind AS 24.
Other advances include all other items in the nature of advances which do
not meet the definition of a financial asset viz., Prepaid expenses, CENVAT
credit receivable, VAT credit receivable, Service tax credit receivable, etc.,
which are not expected to be realized within the next twelve months from the
Balance Sheet date.
It may be noted that in case advances are of the nature of a financial asset
as per Ind AS 32, these are to be disclosed under `other financial assets'
separately.
Current assets
As per Ind AS 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 may not have a
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GN on Division II - Ind AS Schedule III to the Companies Act 2013
corresponding "current" head under the format given in Ind AS Schedule III.
Since Ind AS Schedule III permits the use of additional line items, in such cases
the current portion should be classified under the "Current" category of the
respective balance as a separate line item and other relevant disclosures should
be made.
8.1.13. 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 Ind AS 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 stock-in-trade acquired for trading purposes.
Financial Assets
8.1.14. Current Investments
(i) 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).
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Under each classification, details shall be given of names of the bodies
corporate that are
(i) subsidiaries,
(ii) associates,
(iii) joint ventures, or
(iv) structured 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).
(ii) The following shall also be disclosed:
(a) Aggregate amount of quoted investments and market value
thereof;
(b) Aggregate amount of unquoted investments; and
(c) Aggregate amount of impairment 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.
Current Investments would typically include investments which either have a
remaining maturity of less than twelve months or within the company's
operating cycle or are intended by the company to be sold within twelve
months or within the company's operating cycle. Thus, a non-current
investment will be classified as a current investment due to passage of time.
Even though Ind AS Schedule III does not explicitly state the requirement to
disclose, with regard to current investments in partnership firms presented
under current assets, the names of the firms (with the names of all their
partners, total capital and the shares of each partner), the same should be
made in line with the disclosure made for investments in partnership firms
presented under non- current assets.
8.1.15. Current Trade Receivables
(i) Trade receivables shall be sub-classified as:
(a) Trade receivables Considered Good Secured;
(b) Trade receivables Considered Good Unsecured;
(c) Trade receivables which have significant increase in credit risk
(d) Trade Receivables Credit impaired.
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GN on Division II - Ind AS Schedule III to the Companies Act 2013
(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.
A trade receivable will be treated as current, if it is likely to be realized within
twelve months from the date of Balance Sheet or within the operating cycle
of the business.
Unlike Non-Ind AS Schedule III, Ind AS Schedule III does not require
separate presentation of the aggregate amount of Current Trade Receivables
outstanding for a period exceeding six months from the date they are due for
payment.
Ind AS Schedule III requires separate disclosure of 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.
All other guidance given under Non-current Trade Receivables to the extent
applicable, are applicable here also.
8.1.16. Cash and Bank Balances
(i) Cash and cash equivalents shall be classified as:
(a) Balances with banks (of the nature of cash and cash equivalents);
(b) Cheques, drafts on hand;
(c) Cash on hand;
(d) Others (specify nature).
(ii) Bank balances other than cash and cash equivalents as above,
shall be disclosed below cash and cash equivalents on the face of the
Balance Sheet
Further, Note 6(C) of General Instructions for Preparation of Balance Sheet
requires the following disclosures with regard to cash and bank balances:
(a) Earmarked balances with banks (for e.g., for unpaid dividend) shall be
separately stated;
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GN on Division II - Ind AS Schedule III to the Companies Act 2013
(b) Balances with banks to the extent held as margin money or security
against the borrowings, guarantees, other commitments shall be
disclosed separately;
(c) Repatriation restrictions, if any, in respect of cash and bank balances
shall be separately stated.
Cash and cash equivalents is not defined in Ind AS Schedule III however,
according to Ind AS-7 Statement of Cash Flows, Cash is defined to include
cash on hand and demand deposits with banks. Cash Equivalents are
defined as short term, highly liquid investments that are readily convertible
into known amounts of cash and which are subject to an insignificant risk of
changes in value.
Ind AS 7 further explains that an investment normally qualifies as a cash
equivalent only when it has a short maturity of, say, three months or less
from the date of acquisition. This would include term deposits with banks that
have an original maturity of three months or less. However, bank balances
(including term deposits) held as margin money or security against
borrowings are neither in the nature of demand deposits, nor readily
available for use by the company, and accordingly, do not meet the aforesaid
definition of cash equivalents.
The disclosure regarding `bank balances other than cash and cash
equivalents' should include items such as Balances with banks held as
margin money or security against borrowings, guarantees, etc. and bank
deposits with original maturity of more than three months but less than 12
months.
Generally, there should not be a difference in the amount of cash and cash
equivalent as per Ind AS 1 and as per Ind AS 7. However, as per para 8 of
Ind AS 7 "where bank overdrafts which are repayable on demand form an
integral part of an entity's cash management, bank overdrafts are included as
a component of cash and cash equivalents. A characteristic of such banking
arrangements is that the bank balance often fluctuates from being positive to
overdrawn." Although Ind AS 7 permits bank overdrafts to be included as
cash and cash equivalent, however for the purpose of presentation in the
balance sheet, it is not appropriate to include bank overdraft as a component
of cash and cash equivalents unless the offset conditions as given in
paragraph 42 of Ind AS 32 are complied with. Bank overdraft, in the balance
sheet, should be included as `borrowings' under Financial Liabilities.
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GN on Division II - Ind AS Schedule III to the Companies Act 2013
8.1.17. Current Loans
(i) Current loans shall be classified as:
(a) Security Deposits;
(b) Loans to related parties (giving details thereof);
(b) Others (specify nature).
(ii) The above shall also be sub-classified as:
(a) Loans receivables Considered Good - Secured;
(b) Loans receivables Considered Good - Unsecured;
(c) Loans receivables which have significant increase in credit risk
(d) Loans receivables Credit Impaired.
(iii) Allowance for bad and doubtful loans shall be disclosed under the
relevant heads separately.
(iv) Loans 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 Non-current Loans.
8.1.18. Current Tax Assets (Net)
If amount of tax already paid in respect of current and prior periods exceeds
the amount of tax due for those periods (assessment year-wise and not
cumulative unless tax laws allow for e.g., say tax laws in the country of
overseas subsidiary permits), then such excess tax shall be recognised as
an asset. The excess tax paid (presented as current tax assets) may not be
expected to be recovered / realised within one year from the balance sheet
date and if so, the same shall be presented under non-current assets. An
entity should evaluate whether current tax assets meets the definition of
current assets or not and should accordingly present the same.
8.1.19. Other current assets (specify nature)
This is an all-inclusive heading, which incorporates current assets that do not
fit into any other asset categories mentioned above. Other current assets
shall be classified as:
(i) Advances other than capital advances:
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GN on Division II - Ind AS Schedule III to the Companies Act 2013
(1) Advances other than capital advances shall be classified as:
(a) Security Deposits;
(b) Advances to related parties (giving details thereof);
(c) Other advances (specify nature).
(2) Advances to directors or other officers of the company or any of
them either severally or jointly with any other persons or
advances to firms or private companies respectively in which
any director is a partner or a director or a member should be
separately stated.
(ii) Others (specify nature)
In case any amount classified under this category is doubtful, it is advisable
that such doubtful amount as well as any provision made against the same
should be separately disclosed.
Advances to related parties under other current assets may include,
advances given to group entities for group expenses, say for e.g., the
company's share in group employees' insurance policy premium whereby
such advance will be adjusted in future against the premium payment made
by the relevant group entity who holds the insurance policy.
The guidance for disclosures under this head should be drawn from guidance
given for Other Non-current Assets.
8.2. Equity and Liabilities
Equity
Under this head, following line items are to be disclosed on the face of the
Balance Sheet:
· Equity Share Capital;
· Other Equity;
Ind AS Schedule III, Part I Format of Balance Sheet includes not only the
format of Balance Sheet but also includes a `Statement of Changes in Equity'
comprising (A) Equity Share Capital and (B) Other Equity. Presentation and
Disclosures for both of these are included in Note 6(D) to General
Instructions for Preparation of Balance Sheet.
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In the Statement of Changes in Equity, the portion for `Equity Share Capital'
provides reconciliation:
(a) Balance at the beginning of the reporting period;
(b) Changes in equity share capital during the year;
(c) Balance at the end of the reporting period.
As a part of Statement of Changes in Equity, the portion for `Other Equity'
requires an entity to provide a reconciliation during a particular reporting
period, as a part of one single statement, of all items other than equity share
capital, that are attributable to the holders of equity instruments of an entity.
The items included in columnar form are listed below:
(a) Share application money pending allotment;
(b) Equity component of compound financial instruments;
(c) Reserves and Surplus:
(i) Capital Reserve;
(ii) Securities Premium;
(iii) Other Reserves (specify nature);
(iv) Retained Earnings;
(d) Debt instruments at fair value through other comprehensive income;
(e) Equity instruments at fair value through other comprehensive income;
(f) Effective portion of Cash Flow Hedges;
(g) Revaluation Surplus;
(h) Exchange differences on translating the financial statements of a
foreign operation;
(i) Other items of other comprehensive income (specify nature);
(j) Money received against share warrants;
(k) Non-controlling interests (for Statement of Changes in Equity of
Consolidated Financial Statements)
The reconciliation of above line items needs to be provided by way of the
following line items:
(i) Balance at the beginning of the reporting period;
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GN on Division II - Ind AS Schedule III to the Companies Act 2013
(ii) Changes in accounting policy or prior period errors;
(iii) Restated balance at the beginning of the reporting period;
(iv) Total comprehensive income for the year;
(v) Dividends;
(vi) Transfer to retained earnings;
(vii) Any other change (to be specified);
(viii) Balance at the end of the reporting period.
Reconciliation as described in para 109 of Ind AS 1 states that, "changes in
an entity's equity between the beginning and the end of the reporting period
reflect the increase or decrease in its net assets during the period. Except for
changes resulting from transactions with owners acting in their capacity as
owners (such as equity contributions, reacquisitions of the entity's own equity
instruments and dividends) and transaction costs directly related to such
transactions, the overall change in equity during a period represents the total
amount of income and expenses, including gains and losses, generated by
the entity's activities during that period."
8.2.1. Equity Share Capital
8.2.1.1. Notes to the General Instructions for Preparation of Balance Sheet
require a company to disclose in the Notes items referred to in Note 6(D).
Note 6(D)(I) deals with disclosures for Equity Share Capital and such
disclosures are required for each class of equity share capital. The
disclosure requirements for share capital are common under Non-Ind AS
Schedule III as well as Ind AS Schedule III. However, Division II restricts the
disclosures to `Equity' while Division I makes it applicable for all kinds of
`Share Capital' but states an exception that different classes of preference
shares are to be treated separately.
8.2.1.2. 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."
8.2.1.3. The said Guidance Note defines `Share Capital' as the "aggregate
amount of money paid or credited as paid on the shares and/or stocks of a
corporate enterprise."
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GN on Division II - Ind AS Schedule III to the Companies Act 2013
8.2.1.4. Ind AS Framework talks about `Concepts of Capital', wherein, it
states that "a financial concept of capital is adopted by most entities in
preparing their financial statements. Under a financial concept of capital,
such as invested money or invested purchasing power, capital is
synonymous with the net assets or equity of the entity."
8.2.1.5. Section 2(84) of the Act defines "share" as "a share in the share
capital of a company and includes stock". While, section 2(30) of the Act
defines "debenture" to "include debenture stock, bonds or any other
instrument of a company evidencing a debt, whether constituting a charge on
the assets of the company or not". Further, section 43 of the Act gives two
kinds of share capital of a company limited by shares viz.,
(a) Equity share capital;
(b) Preference share capital.
8.2.1.6. On the other hand, Ind AS 32 defines an equity instrument as " any
contract that evidences a residual interest in the assets of an entity after
deducting all of its liabilities". The accounting definition of `Equity' is principle
based as compared to the legal definition of `Equity' or `Share', such that any
contract that evidences residual interest in an entity's net asset is termed as
`Equity' irrespective of whether it is legally recognized as a `Share' or not.
Accordingly, all instruments (including convertible preference shares and
convertible debentures) that meet the definition of `Equity' as per Ind AS 32
in its entirety and when they do not have any component of liability, should
be considered as having the nature of `Equity' for the purpose of Ind AS
Schedule III. Such instruments shall be termed as `Instruments entirely equity
in nature'.
8.2.1.7. Instruments entirely equity in nature, may be presented as a
separate line item on the face of the Balance Sheet under `Equity' after
`Equity Share Capital' but before `Other Equity', as shown below:
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GN on Division II - Ind AS Schedule III to the Companies Act 2013
Name of the Company..........
Balance Sheet as at...............
(Rupees in.............)
Particulars Note Figures as Figures
No. at the end as at the
of current end of
reporting previous
period reporting
period
EQUITY AND LIABILITIES
Equity
(a) Equity Share Capital
(b) Instruments entirely equity in
nature
(c) Other Equity
In the Statement of Changes in Equity, the reconciliation for instruments
entirely equity in nature should be presented as below:
STATEMENT OF CHANGES IN EQUITY
Name of the Company.......................
Statement of Changes in Equity for the period ended....................
(Rupees in...............)
A. Equity Share Capital
Balance at the Changes in equity Balance at the end of
beginning of the share capital during the the reporting period
reporting period period
B. Instruments entirely equity in nature *
(a) Compulsorily Convertible Preference Shares
Balance at the Changes in Balance at the end of
beginning of the compulsorily the reporting period
reporting period convertible preference
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GN on Division II - Ind AS Schedule III to the Companies Act 2013
shares during the
period
(b) Compulsorily Convertible Debentures
Balance at the Changes in Balance at the end of
beginning of the compulsorily the reporting period
reporting period convertible debentures
during the period
(c) [Instrument] (Any other instrument entirely equity in nature)
Balance at the Changes in [Instrument] Balance at the end of
beginning of the during the period the reporting period
reporting period
C. Other Equity
[Table providing reconciliation of Other Equity]
* It may be emphasized that whether an instrument qualifies in its entirety for
classification as `equity' depends on the terms and conditions associated
with it, evaluated based on the criteria given in para 16 of Ind AS 32. It is
assumed that Compulsorily Convertible Preference Shares and Compulsorily
Convertible Debentures in the above illustrative disclosure qualify for
classification as entirely equity however, companies should assess terms
and conditions specific to their instruments for deciding whether they are
entirely equity in nature.
All the disclosures as required by Note 6(D)(I) to General Instructions in
Preparation of Balance Sheet shall be provided for all instruments entirely
equity in nature, to the extent applicable.
8.2.1.8. Premium received on Compulsorily Convertible Preference Shares
which are entirely equity in nature shall be classified and presented as a part
of `Other Equity' under `Securities Premium'.
8.2.1.9. All those compound financial instruments which have both `Equity'
and `Liability' components, shall be split in accordance with Ind AS 32 and
their `Equity component' shall be presented under `Other Equity' portion of
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Statement of Changes in Equity while their `Liability component' shall be
presented as a separate line item under `Borrowings'.
8.2.1.10. Ind AS Schedule III, Notes 9 and 10 of General Instructions for
Preparation of Balance Sheet highlight that the disclosure and presentation
requirements as applicable to the relevant class of `Equity' or `Liability' shall
be applicable mutatis mutandis to the instruments (including, their
components) classified and presented under the relevant heads in `Equity'
and `Liabilities'. Accordingly, companies should provide all the relevant
disclosures for `Equity component of a compound financial instrument' as
applicable to `Equity Share Capital' (given in Note 6(D)(I) of General
Instructions for Preparation of Balance Sheet), to the extent applicable. An
example could be to disclose, for equity component of compound financial
instrument, terms as per Clause (j) i.e. terms of any securities convertible
into equity shares issued along with the earliest date of conversion in
descending order starting from the farthest such date, etc. For the liability
component of compound financial instruments, all the disclosures applicable
to `Borrowings' (refer para 8.2.3 to para 8.2.3.14 below) shall be made, to the
extent applicable. An example could be to disclose the rate of interest,
particulars of redemption or conversion stated in descending order of
maturity or conversion, etc. However, for those instruments which are entirely
liability in nature, all disclosures applicable to `Borrowings' should be made.
8.2.1.11. Clause(a) of Note 6(D)(I) - 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."
This disclosure is to be provided for instruments entirely equity in nature as
well as for compound instruments that have an equity component, to the
extent applicable.
8.2.1.12. Clause (b) of Note 6(D)(I) - 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.
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GN on Division II - Ind AS Schedule III to the Companies Act 2013
Though the disclosure is only for the number of shares under each of the
above three categories, to make the disclosure relevant to understanding the
company's share capital, even the amount for each category above should
be disclosed. Issued shares are those which are offered for subscription
within the authorised limit. It is possible that all shares offered are not
subscribed to and to the extent of unsubscribed portion, there will be
difference between shares issued and subscribed. As per the Guidance Note
on Terms Used in Financial Statements, the expression `Subscribed Share
Capital' is "that portion of the issued share capital which has actually been
subscribed and allotted. This includes any bonus shares issued to the
shareholders."
Though there is no requirement to disclose the amount per share called, if
shares are not fully called, it should be appropriate to state the amount per
share called.
As per the definition contained in the Guidance Note on Terms Used in
Financial Statements, the expression ` Paid-up Share Capital' is "that part of
the subscribed share capital for which consideration in cash or otherwise has
been received. This includes bonus shares allotted by the corporate
enterprise."
This disclosure is to be provided for instruments entirely equity in nature as
well as for compound instruments that have an equity component, to the
extent applicable.
8.2.1.13. Clause (c) of Note 6(D)(I) par value per share:
Par value per share is the face value of a share as indicated in the Capital
Clause of the Memorandum of Association of a company. It is also referred
to as `face value' per share. In the case of a company having share capital,
(unless the company is an unlimited company), the Memorandum shall also
state the amount of share capital with which the company is registered and
their division thereof into shares of fixed amount as required under clause
(e)(i) to the sub-section (1) of section 4 of the Act. In the case of a company
limited by guarantee, Memorandum shall state that each member undertakes
to contribute to the assets of the company in the event of winding-up while
he is a member or within one year after he ceases to be a member, for
payment of debts and liabilities of the company, as the case may be. There is
no specific mention for the disclosure by companies limited by guarantee and
having share capital, and companies limited by guarantee and not having
share capital. Such companies need to consider the requirement so as to
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GN on Division II - Ind AS Schedule III to the Companies Act 2013
disclose the amount each member undertakes to contribute as per their
Memorandum of Association.
This disclosure is to be provided for instruments entirely equity in nature as
well as for compound instruments that have an equity component, to the
extent applicable.
8.2.1.14. Clause (d) of Note 6(D)(I) a reconciliation of the number of
shares outstanding at the beginning and at the end of the reporting
period:
As per Ind AS Schedule III, opening number of shares outstanding, shares
issued, shares bought back, other movements, etc. during the year and
closing number of outstanding shares should be shown. Though the
requirement is only for a reconciliation of the number of shares, as given for
the disclosure of issued, subscribed capital, etc. [Clause (b) of Note 6(D)(I)]
above, to make the disclosure relevant for understanding the company's
share capital, the reconciliation is to be given even for the amount of share
capital. Reconciliation for the comparative previous period is also to be
given. Further, the above reconciliation should be disclosed separately for
each class of Equity Shares issued.
This disclosure is to be provided for instruments entirely equity in nature.
Also, for compound instruments having both equity and liability components,
the reconciliation should be given for total number of shares / debentures
outstanding, which will facilitate understanding the movement of compound
instrument upon either redemption or conversion or when both occur partly.
8.2.1.15. Clause (e) of Note 6(D)(I) the rights, preferences and
restrictions attaching to each class of shares including restrictions on
the distribution of dividends and the repayment of capital:
As per the Guidance Note on Terms Used in Financial Statements, the
expression `Preference Share Capital' means "that part of the share capital of
a corporate enterprise which enjoys preferential rights in respect of payments
of fixed dividend and repayment of capital. Preference shares may also have
full or partial participating rights in surplus profits or surplus capital." The
rights, preferences and restrictions attached to shares are based on the
classes of shares, terms of issue, etc., whether equity or preference. In
respect of Equity Share Capital, it may be with voting rights or with
differential voting rights as to dividend, voting or otherwise in accordance
with such rules and subject to such conditions as may be prescribed under
Companies (Share Capital and Debentures) Rules, 2014. In respect of
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GN on Division II - Ind AS Schedule III to the Companies Act 2013
Preference Shares, the rights include (a) with respect to dividend, a
preferential right to be paid a fixed amount or at a fixed rate and, (b) with
respect to capital, a preferential right of repayment of amount of capital on
winding up. For Compulsorily Convertible Debentures, the rights could be
with the holder to convert (for e.g., right to decide timing of conversion) into
Equity Shares.
This disclosure is to be provided for instruments entirely equity in nature as
well as for compound instruments that have an equity component, to the
extent applicable.
8.2.1.16. Clause (f) of Note 6(D)(I) shares in respect of each class in
the company held by its holding company or its ultimate holding
company including shares held by or by subsidiaries or associates of
the holding company or the ultimate holding company in aggregate:
The requirement is to disclose shares of the company held by -
· Its holding company;
· Its ultimate holding company;
· Subsidiaries of its holding company;
· Subsidiaries of its ultimate holding company;
· Associates of its holding company; and
· Associates of its ultimate holding company.
Aggregation should be done for each of the above categories.
The terms `subsidiary' and `associate' should be understood as defined
under Ind AS 110 and Ind AS 28. The term `holding company' is not defined
in Ind AS, therefore, it may be referred from the definition as per Section 2
(46) of the Act. However, the equivalent term `parent' is defined in Ind AS
110. 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 going right up to the ultimate holding
company would have to be disclosed.
In case of a joint arrangement viz., a joint venture or a joint operation
conducted through a separate legal entity, disclosure may be made for
shares of such joint arrangement held by its venturers.
This disclosure is to be provided for instruments entirely equity in nature, to
the extent applicable.
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8.2.1.17. Clause (g) of Note 6(D)(I)shares in the company held by each
shareholder holding more than 5 percent shares specifying the number
of shares held:
In the absence of any specific indication of the date of holding, the date for
computing such percentage should be taken as the Balance Sheet date. For
example, if during the year, any shareholder held more than 5% Equity
shares but does not hold as much at the Balance Sheet date, disclosure is
not required. Though it is not specified as to whether the disclosure is
required for each class of shares or not, companies should disclose the
shareholding for each type of Equity Instruments. Accordingly, such
percentage should be computed separately for each class of shares
outstanding within Equity Shares. This information should also be given for
the comparative previous period.
This disclosure is to be provided for instruments entirely equity in nature, to
the extent applicable.
8.2.1.18. Clause (h) of Note 6(D)(I) shares reserved for issue under
options and contracts or commitments for the sale of shares or
disinvestment, including the terms and amounts:
Shares under options generally arise under promoters or collaboration
agreements, loan agreements or debenture deeds (including convertible
debentures), agreement to convert preference shares into equity shares,
ESOPs or contracts for supply of capital goods, etc. The disclosure would be
required for the number of shares, amounts and other terms for shares so
reserved. Such options are in respect of unissued portion of share capital.
This disclosure is to be provided for instruments entirely equity in nature as
well as for compound instruments that has an equity component and liability
component, to the extent applicable.
8.2.1.19. Clause (i) of Note 6(D)(I) 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.
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GN on Division II - Ind AS Schedule III to the Companies Act 2013
The following illustrate the allotments which are considered as shares
allotted for payment being received in cash and not as without
payment being received in cash and accordingly, the same are not to
be disclosed under this Clause:
(i) If the subscription amount is adjusted against a bona fide debt
payable in money at once by the company;
(ii) Conversion of loan into shares in the event of default in
repayment.
(b) Aggregate number and class of shares allotted as fully paid up by way
of bonus shares.
As per the Guidance Note on Terms Used in Financial Statements
`Bonus shares' are defined as shares allotted by capitalisation of the
reserves or surplus of a corporate enterprise. The requirement of
disclosing the source of bonus shares is omitted in the Schedule III.
(c) Aggregate number and class of shares bought back.
The total number of shares bought back for each class of shares
needs to be disclosed.
All the above details pertaining to aggregate number and class of shares
allotted for consideration other than cash, bonus shares and shares bought
back need to be disclosed only if such event has occurred during a period of
five years immediately preceding the Balance Sheet date. Since disclosure is
for the aggregate number of shares, it is not necessary to give the year-wise
break-up of the shares allotted or bought back, but the aggregate number for
the last five financial years needs to be disclosed.
This disclosure is to be provided for instruments entirely equity in nature, to
the extent applicable.
8.2.1.20. Clause (j) of Note 6(D)(I) Terms of any securities convertible
into equity/preference shares issued along with the earliest date of
conversion in descending order starting from the farthest such date:
Under this Clause, disclosure is required for any security, when it is either
convertible into equity or preference shares. In this case, terms of such
securities and the earliest date of conversion are required to be disclosed. If
there is 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 earliest date in that period is to be considered. In case of
compulsorily convertible securities, where conversion is done in fixed
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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 Non-current borrowings where these are required to be classified in
the Balance Sheet, rather than disclosing the same again under this clause.
This disclosure is to be provided for instruments entirely equity in nature and
compound instruments that have an equity component and a liability
component. In other words, this disclosure is not required for instruments
entirely liability in nature (for e.g., those instruments which entirely meet the
definition of a financial liability as per para 11 of Ind AS 32) since similar
disclosure needs to be provided as a part of `Borrowings'. Accordingly,
duplication of disclosures is not intended.
8.2.1.21. Clause (k) of Note 6(D)(I) - 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.
However, the unpaid amount towards shares subscribed by the subscribers
of the Memorandum of Association should be considered as 'subscribed and
paid-up capital' in the Balance Sheet and the debts due from the subscriber
should be appropriately disclosed as an asset in the balance sheet.
This disclosure is to be provided for instruments entirely equity in nature, to
the extent applicable.
8.2.2. Other Equity
Note 6(D)(II) of the General Instructions for Preparation of Balance Sheet
deals with the disclosures of "Other Equity" in the Notes. Disclosure should
be made for the nature and amount of each item, along with the description
of the purpose of each reserve within equity.
Disclosures in Other Equity are required to be made for the following:
(i) Share application money pending allotment
Share Application money pending allotment is to be disclosed as a
separate line item under Other Equity. Note 8 of General Instructions
for Preparation of Balance Sheet states that share application money
pending allotment shall be classified into equity or liability in
accordance with relevant Ind AS. Share application money to the
extent not refundable shall be shown in this line item and share
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application money to the extent refundable shall be separately shown
under `other financial liabilities'.
(ii) Equity component of compound financial instruments
For compound financial instruments that have both equity as well as
liability component, Ind AS 32 requires splitting the two components
and separately recognizing `equity component of compound financial
instrument'. Such equity component is required to be presented as a
part of `Other Equity' under this head. On the other hand, the `liability
component of compound financial instrument' is required to be
presented as a part of `Borrowings' (refer para 8.2.3. below).For
recommended disclosures for equity component of compound financial
instrument, refer guidance given in para 8.2.1.10. to para 8.2.1.21.
(iii) Reserves and Surplus these shall be further disclosed as (discussed
in para 8.2.2.1. below- Pg 60 ):
(a) Capital Reserve;
(b) Securities Premium;
(c) Other Reserves (specify nature);
(d) Retained Earnings;
(iv) Debt Instruments through Other Comprehensive Income
As per Ind AS 109, investments are subsequently measured at FVOCI
based on the company's business model for managing the portfolio of
debt instruments as well as the debt instruments' contractual cash flow
characteristics. Any fair value gain or loss on debt instruments
measured at FVOCI is presented as a part of Other Equity under this
heading until the debt instrument is derecognized;
(v) Equity Instruments through Other Comprehensive Income
As per Ind AS 109, companies have an option to designate
investments in equity instruments to be measured at FVOCI. For such
instruments, the cumulative fair value gain or loss is presented as a
part of Other Equity under this heading;
(vi) Effective portion of Cash Flow Hedges
For all qualifying cash flow hedges, this component of Other Equity
associated with the hedged item (i.e. cash flow hedge reserve) is
adjusted to the lower of the cumulative change in the fair value of the
hedging instrument and the cumulative change in the fair value of the
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hedged item attributable to the hedged risk. The portion of the gain or
loss on the hedging instrument that is determined to be an effective
hedge (i.e. the portion that is offset by the change in the cash flow
hedge reserve) is recognized in Other Comprehensive Income. Also,
Ind AS 109 requires that exchange differences on monetary items that
qualify as hedging instruments in a cash flow hedge are recognized
initially in other comprehensive income to the extent that the hedge is
effective;
(vii) Revaluation Surplus
As per Ind AS 16, if an asset's carrying amount is increased as a
result of revaluation, the increase shall be recognized in other
comprehensive income and accumulated in equity under the heading
of revaluation surplus. However, such increase shall be recognized in
profit or loss to the extent that it reverses a revaluation decrease of the
same asset previously recognized in profit or loss.
Correspondingly, decreases as a result of revaluation are recognized
in other comprehensive income thereby reducing the amount
accumulated under this heading of revaluation surplus, to the extent of
any credit balance existing in the revaluation surplus in respect of that
asset.
(viii) Exchange differences on translating the Financial Statements of a
foreign operation
In accordance with Ind AS 21 The Effects of Changes in Foreign
Exchange Rates, the exchange differences arising on translation of the
financial statements of foreign operation from functional currency to
presentation currency needs to be included in this head of OCI.
(ix) Other items of Other Comprehensive Income (specific nature)
Any other items that need to be presented in Other Comprehensive
Income as per the relevant Ind AS shall be included under this head of
OCI.
Refer para 8.2.2.3. below Pg 63 for guidance on presentation of `re-
measurement of defined benefit plans'.
(x) Money received against share warrants
Generally, in case of listed companies, share warrants are issued to
promoters and others in terms of the Guidelines for preferential issues
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viz., SEBI (Issue of Capital and Disclosure Requirements), Guidelines,
2009. Ind AS 33 Earnings per Share defines `warrants' as "financial
instruments which give the holder the right to acquire equity shares".
Thus, effectively, warrants are nothing but the amount which would
ultimately form part of the Shareholders' funds. Since shares are yet to
be allotted against the same, these are not reflected as part of Share
Capital but as a separate line item `Money received against share
warrants.'
8.2.2.1. Reserves & Surplus:
Ind AS 103, Appendix C on Business Combinations under Common Control
defines the term `Reserve' as "the portion of earnings, receipts or other
surplus of an entity (whether capital or revenue) appropriated by the
management for a general or a specific purpose other than a provision for
depreciation." `Reserves' should be distinguished from `provisions'. For this
purpose, reference may be made to the definition of the expression
`provision' in Ind AS 37 Provisions, Contingent Liabilities and Contingent
Assets.
As per Ind AS 37, a `provision' is "a liability of uncertain timing or amount". A
`liability' is "a present obligation of the entity arising from past events, the
settlement of which is expected to result in an outflow from the entity of
resources embodying economic benefits." `Present obligation' "an
obligation is a present obligation if, taking account of all available evidence, it
is more likely than not that a present obligation exists at the end of the
reporting period".
(a) Capital Reserves :
It is necessary to make a distinction between capital reserves and revenue
reserves in the accounts. A revenue reserve is a reserve which is available
for distribution. The term "Capital Reserve" has not been defined under Ind
AS 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 Ind AS 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.
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A gain on bargain purchase arising in a business combination where clear
evidence of the underlying reasons does not exist, shall be recognized
directly in equity as Capital Reserves as per Ind AS 103.
(b) Securities Premium :
The Guidance Note on Terms Used in Financial Statements defines `Share
Premium' as "the excess of the issue price of shares over their face value."
Though the terminology used in Ind AS Schedule III is `Securities Premium
Reserve", the nomenclature as per the Act is "Securities Premium Account".
MCA in its notification dated 11th October, 2018 has substituted the term
"Securities Premium Reserve" with the term "Securities Premium". This is a
clarificatory change to align with the terminology used in the Companies, Act
2013.
(c) Other Reserves (specify the nature and purpose of reserve and
the amount in respect thereof) :
Every other reserve which is not covered in above paragraphs is to be
reflected as `Other Reserves'. However, since the nature, purpose and the
amount are to be shown, each reserve under `Other Reserves' is to be
shown separately in Notes to Accounts. This would include, for e.g., reserves
to be created under other statutes like Tonnage Tax Reserve to be created
under the Income Tax Act, 1961.
(i) Capital Redemption Reserve:
Under the Act, Capital Redemption Reserve is required to be created
in the following two situations:
(a) Under the provisions of Section 55 of the Act, where the
redemption of preference shares is out of profits, an amount
equal to nominal value of shares redeemed is to be transferred
to a reserve called `capital redemption reserve'.
(b) Under Section 69 of the Act, if the buy-back of shares is out of
free reserves, the nominal value of the shares so purchased is
required to be transferred to capital redemption reserve from
distributable profit.
(ii) Debenture Redemption Reserve :
According to Section 71 of the Act where a company issues
debentures, it is required to create a debenture redemption reserve for
the redemption of such debentures. The company is required to credit
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adequate amounts, out of its profits every year to debenture
redemption reserve, until such debentures are redeemed.
On redemption of the debentures for which the reserve is created, the
amounts no longer necessary to be retained in this account need to be
transferred to the General Reserve.
(iii) Share Options Outstanding Account :
Ind AS Schedule III requires Share Options Outstanding Account to be
shown as a part of `Reserve and Surplus' under `Other Reserves'.
(d) Additions and deductions since the last Balance Sheet to be
shown under each of the specified heads:
This requires the company to disclose the movement in each of the reserves
and surplus since the last Balance Sheet.
Further, as per Ind AS Schedule III, a reserve specifically represented by
earmarked investments shall disclose the fact that it so represented.
(e) Debit balance of Statement of Profit and Loss and in Other Equity:
Debit balance of Statement of Profit and Loss which would arise in case of
accumulated losses, is to be shown as a negative figure under the head
`Retained Earnings'. The aggregate amount of the balance of `Other Equity',
is to be shown after adjusting negative balance of retained earnings, if any. If
the net result is negative, the negative figure is to be shown under the head
`Other Equity'.
8.2.2.2. Gain / Loss on changes in the proportion held by non-
controlling interests
Ind AS 110, para B96 requires that an entity shall recognize directly in
`Equity' any difference between the amount by which the non-controlling
interests are adjusted and the fair value of the consideration paid or
received, and attribute it to the owners of the parent.
Ind AS 1, para 106(d)(iii) requires for each component of equity, a
reconciliation between the carrying amount at the beginning and the end of
the period, separately disclosing changes resulting from changes in
ownership interests in subsidiaries that do not result in a loss of control.
For such difference, which is the gain / loss on changes in the proportion
held by non-controlling interests, Ind AS does not specify whether such gain /
loss should be presented separately under `Capital Reserve' or under `Other
Reserves'. Ind AS Schedule III also does not specify anything in this regard.
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An entity may present such gain / loss separately as `Gain/Loss on change in
proportion held by NCI' shown under `Other Reserves' by specifying the
nature.
8.2.2.3. Reconciliation of items in Other Equity
Reconciliations for each component of other equity are required to be made
in the following manner (to the extent applicable):
(i) Balance at the beginning of the reporting period
(ii) Changes in accounting policy or prior period error
(iii) Restated balance at the beginning of the reporting period
(iv) Total Comprehensive Income for the year
(v) Dividends
(vi) Transfer to retained earnings
(vii) Any other change (to be specified)
(viii) Balance at the end of reporting period
Apart from the above items, Ind AS Schedule III states that:
· Re-measurement of defined benefit plans; and
· Fair value changes relating to own credit risk of financial liabilities
designated at fair value through profit or loss, shall be recognised as a
part of retained earnings with separate disclosure of such items along
with the relevant amounts in the Notes.
Ind AS 19 states that re-measurements of the net defined benefit liability
(asset) recognized in other comprehensive income shall not be reclassified to
profit or loss in a subsequent period. However, the entity may transfer those
amounts recognized in other comprehensive income within equity.
Ind AS Schedule III requires `re-measurements of defined benefit plans'
during the reporting period to be shown as a separate line item in other
comprehensive income. (Refer para 10.2. below Pg 96)
As per Ind AS Schedule III requirement mentioned above, such re-
measurements of defined benefit plans, when accumulated at the end of
every reporting period, shall be recognized as a part of retained earnings
with separate disclosure of such item along with the relevant amounts in the
Notes to Accounts.
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Accordingly, a company shall present the accumulated re-measurements of
defined benefit plans at the end of each reporting period as a part of retained
earnings.
Liabilities
On the face of the Balance Sheet, Ind AS Schedule III requires the following
items to be presented under non-current liabilities as well as current liabilities
as below:
Non-current Liabilities
(a) Financial Liabilities
(i) Borrowings
(ii) Trade payables
(A) Total outstanding dues of micro enterprise and small
enterprises
(B) Total outstanding dues of creditors other than micro
enterprises and small enterprises
(iii) Other financial liabilities (other than those specified in item (b),
to be specified)
(b) Provisions
(c) Deferred tax liabilities (Net)
(d) Other non-current liabilities
Current Liabilities
(a) Financial Liabilities
(i) Borrowings
(ii) Trade payables
(A) Total outstanding dues of micro enterprise and small
enterprises
(B) Total outstanding dues of creditors other than micro
enterprises and small enterprises
(iii) Other financial liabilities (other than those specified in item (c))
(b) Other current liabilities
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(c) Provisions
(d) Current Tax Liabilities (Net)
8.2.3. Non-current Borrowings
Non-current borrowings shall be classified as:
(a) Bonds or debentures;
(b) Term loans;
(i) from banks;
(ii) from other parties;
(c) Deferred payment liabilities;
(d) Deposits;
(e) Loans from related parties;
(f) Long term maturities of finance lease obligations;
(g) Liability component of compound financial instruments;
(h) Other loans (specify nature).
8.2.3.1. Borrowings shall further be sub-classified as secured and
unsecured. Nature of security shall be specified separately in each case.
8.2.3.2. 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.
8.2.3.3. 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.
8.2.3.4. Particulars of any redeemed bonds/ debentures which the company
has power to reissue shall be disclosed.
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8.2.3.5. Terms of repayment of term loans and other loans is also required to
be stated.
8.2.3.6. Period and amount of default as on the Balance Sheet date in
repayment of borrowings and interest shall be specified separately in each
case.
8.2.3.7. The phrase "long-term" used in `long-term maturities of finance lease
obligations' 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. Moreover, whether lease obligations of lessee should be
presented and disclosed as borrowings or as other financial liabilities is a
pertinent question and appropriate regulatory authorities may need to provide
guidance or clarification around suchpresentation and disclosure
requirements.
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.
8.2.3.8. As referred to in para 45 (i) of the ICAI Guidance Note on the
Companies (Auditor's Report) Order, 2016 (CARO) in the banking industry,
for example, loans with repayment period beyond thirty six months are
usually known as "term loans". Cash credit, overdraft and call money
accounts/ deposit are, therefore, not covered by the expression "terms
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.
8.2.3.9. Deferred payment liabilities would include any liability for which
payment is to be made on deferred credit terms. E.g. deferred payment for
acquisition of Property, Plant and Equipment, etc.
8.2.3.10. Guidance on liability component of compound financial instrument,
to the extent applicable, should be drawn from guidance given in paragraphs
for Equity Share Capital (refer para 8.2.1.10. to para 8.2.1.21.). Moreover,
disclosure requirements as applicable to `Borrowings' should be given for
compound instruments with liability component and instruments entirely
liability in nature (for e.g., those instruments which entirely meet the
definition of a financial liability as per para 11 of Ind AS 32).
8.2.3.11. Ind AS Schedule III also stipulates that the nature of security shall
be specified separately in each case. A blanket disclosure of different
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securities covering all loans classified under the same head such as `All
Term loans from banks' will not suffice. However, where one security is given
for multiple loans, the same may be clubbed together for disclosure purposes
with adequate details or cross referencing.
8.2.3.12. Disclosure about the nature of security should also cover the type
of asset given as security e.g. inventories, plant and machinery, land and
building, etc. This is because the extent to which loan is secured may vary
with the nature of asset against which it is secured.
8.2.3.13. 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.
8.2.3.14. Ind AS Schedule III requires that under the head "Borrowings,"
period and amount of default as on the Balance Sheet date in repayment of
borrowings and interest shall be specified separately in each case. Even one
default by a company would create an obligation to disclose the period and
amount of default. Further, in line with para 18 of Ind AS 107, if there was a
default during the reporting period, an entity shall provide a disclosure even if
the default was remedied before the financial statements were approved for
issue.
8.2.3.15. 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
payment liabilities, finance lease obligations, etc. and not only to items
classified as "loans" such as term loans, etc.
8.2.3.16. Ind AS Schedule III requires separate disclosure for default, as on
the balance sheet date, in repayment of borrowings and interest but does not
require any disclosure of breaches. However, para 18 of Ind AS 107 would
require an entity to disclose only those breaches made during the reporting
period, which permitted the lender to demand accelerated repayment and,
were not remedied on or before the end of the reporting period.
8.2.3.17. 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 `Non Current
borrowings' as per Ind AS Schedule III. Disclosure of terms of repayment
should be made preferably for each loan unless the repayment terms of
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individual loans within a category are similar, in which case, they may be
aggregated.
8.2.3.18. 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.
8.2.3.19. Deposits classified under Borrowings would include deposits
accepted from public and inter corporate deposits which are in the nature of
borrowings.
8.2.3.20. Loans from related parties are required to be disclosed. All the
disclosure requirements of Non-current borrowings would be applicable to
such loans from related parties.
8.2.4. Non-current Trade Payables
8.2.4.1. Ind AS Schedule III requires presenting `Trade Payables' as a
separate line item on the face of the Balance Sheet under `Financial
Liabilities'. The same should be further categorized into total outstanding
dues to micro enterprises and small enterprises and total outstanding dues to
creditors other than small enterprises and micro enterprises.
8.2.4.2. A payable shall be classified as 'trade payable' if it is in respect of
the amount due on account of goods purchased or services received in the
normal course of business. Hence, amounts due under contractual
obligations or which are statutory payables can no longer be included within
Trade Payables. Such items may include dues payable in respect of statutory
obligations like contribution to provident fund or contractual obligations like
contractually reimbursable expenses, amounts due towards purchase of
capital goods, etc.
8.2.4.3. The Micro, Small and Medium Enterprises Development (MSMED)
Act, 2006 however, requires specific disclosures to be made in the annual
Financial Statements of the buyer wherever such Financial Statements are
required to be audited under any law. Ind AS Schedule III has been amended
to include such disclosures to be made in the annual Financial Statements.
The trade payables should present separately the portion representing
outstanding dues of micro and small enterprises from the portion
representing other trade payables.
8.2.4.4. The following disclosures are required under Sec 22 of MSMED Act,
2006 under the Chapter on Delayed Payments to Micro, Small and Medium
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Enterprises which are also required as per amended Ind AS Schedule III:
(a) the principal amount and the interest due thereon (to be shown
separately) remaining unpaid to any supplier as at the end of each
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 of delay in
making payment (which has been paid but beyond the appointed day
during the year) but without adding the interest specified under the
MSMED Act, 2006);
(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.
8.2.4.5. The terms `appointed day', `buyer', `enterprise', `micro enterprise',
`small enterprise' and `supplier', shall have the same meaning as assigned to
them under clauses (b), (d), (e), (h), (m) and (n) respectively of section 2 of
the Micro, Small and Medium Enterprises Development Act, 2006. Such
statutory disclosures should be made by an entity in its Notes to Accounts.
8.2.5. Non-current other financial liabilities
8.2.5.1. Ind AS Schedule III requires presenting `Other Financial Liabilities'
as a separate line item on the face of the Balance Sheet under `Financial
Liabilities'. Items which meet the definition of financial liabilities as per Ind
AS 32, like contingent consideration, derivative contracts, financial guarantee
contracts issued, contractually reimbursable expenses etc., should be
presented under other financial liabilities.
8.2.5.2. Contract liability
Ind AS 115 requires in case of a contract with customer, when either party has
performed, to present a contract liability in the balance sheet. Contract liability
arises if a customer pays consideration, or an entity has a right to an amount
of consideration that is unconditional (i.e. a receivable), before the entity
transfers a good or service to the customer, the entity shall present the
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contract as a contract liability when the payment is made or the payment is
due (whichever is earlier).
A company shall apply the requirements of Ind AS 1 and Ind AS 32 to
determine whether it is appropriate to offset contract assets and liabilities
against other balance sheet items (e.g., receivables).
Unless a company presents its balance sheet on a liquidity basis, it will need
to present contract assets arising from contracts within the scope of Ind AS
115 as current or non-current in the balance sheet. Companies should
consider the requirements of current / non-current classification (Section 7)
above.
8.2.6. Non-current Provisions
8.2.6.1. This should be classified into `provision for employee benefits' and
`others' specifying the nature. Provision for employee benefits, mainly
unfunded defined post-employment benefits, are bifurcated into non-current
and current of which the non-current portion shall be disclosed under this
para. All non-current provisions, other than those related to employee
benefits should be disclosed separately based on their nature. Such items
would include provision for warranties, etc.
8.2.7. Other non-current liabilities
8.2.7.1. These should be classified as `advances' and `others', specifying the
nature. All advances that are not financial liabilities as defined in Ind AS 32
should be classified under `Other non-current liabilities'. For e.g., amount
received in advance against goods to be sold or services to be provided.
`Others' should include other non-current liabilities for e.g., statutory dues
payable, legal claims outstanding, interest payable on unpaid amount to
supplier as per MSMED Act, 2006, if such interest payable is not a
contractual obligation as per the MSMED Act, 2006.
Current Liabilities
As per Ind AS 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 may not have a
corresponding "current" head. Since Ind AS Schedule III permits the use of
additional line items, in such cases the current portion should be classified under
the "Current" category of the respective balance as a separate line item and
other relevant disclosures should be made.
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8.2.8. Current Borrowings
(i) Current Borrowings shall be classified as:
(a) Loans repayable on demand
· from banks;
· from other parties.
(b) Loans from related parties;
(c) Deposits;
(d) Other loans (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.
(iv) Period and amount of default as on the Balance Sheet date in
repayment of borrowings and interest shall be specified separately in
each case.
Loans payable on demand should be treated as part of current borrowings.
Current borrowings will include all loans payable within a period of 12 months
from the date of the loan. In the case of current borrowings, the period and
amount of defaults existing as at the date of the Balance Sheet should be
disclosed (item-wise).
Guidance on disclosure on various matters under this para should also be
drawn, to the extent possible, from the guidance given under Non-current
Borrowings.
8.2.9. Current Trade Payables
Guidance on disclosure under this clause should be drawn from the guidance
given under Non-Current Trade Payables, to the extent applicable.
8.2.10. Other Current Financial Liabilities
The amounts shall be classified as:
(a) Current maturities of long-term debt;
(b) Current maturities of finance lease obligations;
(c) Interest accrued;
(d) Unpaid dividends;
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(e) Application money received for allotment of securities to the extent
refundable and interest accrued thereon;
(g) Unpaid matured deposits and interest accrued thereon;
(h) Unpaid matured debentures and interest accrued thereon;
(i) Others (specify nature).
The portion of non-current borrowings / lease obligations, which is due for
payments within twelve months of the reporting date is required to be
classified under "Other current financial liabilities" while the balance amount
should be classified under non-current borrowings. Moreover, whether lease
obligation of lessee should be presented and disclosed as borrowings or as
other financial liabilities is a pertinent question and appropriate regulatory
authorities may need to provide guidance or clarification around such
presentation and disclosure requirements.
Current maturities of long-term debt
Ind AS Schedule III requires presenting `current maturities of long-term debt'
under `Other Financial Liabilities' grouped under `Current Liabilities'. Long-
term debt is specified in Ind AS Schedule III as a borrowing having a period
of more than twelve months at the time of origination. However, current
maturities of long-term debt are of the nature of a `Borrowings' but since Ind
AS Schedule III specifically provides a separate line item for presenting
current maturities of long-term debt under Other Financial Liabilities, it is
recommended that companies follow the presentation requirements of Ind AS
Schedule III.
Interest Accrued
Interest accrued on financial liabilities shall form part of its carrying amount
whether it is at amortized cost (i.e. as per effective interest method), or at fair
value. Accordingly, an entity may not present `Interest Accrued' separately
from the related financial liability.
8.2.11. Other Current Liabilities
The amounts shall be classified as:
(a) revenue received in advance;
(b) other advances (specify nature);
(c) others (specify nature);
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Other advances, that satisfy the requirements for being classified as current
and that are not financial liabilities as defined in Ind AS 32, should be
classified under `Other current liabilities'. For e.g., amount received in
advance. Others should include items under other current liabilities for e.g.,
statutory dues payable, legal claims outstanding.
Trade Deposits and Security Deposits, which do not meet the definition of
financial instruments, should be classified as `Others' grouped under this
head. Others may also include liabilities in the nature of statutory dues such
as Withholding taxes, Service Tax, VAT, Excise Duty, Goods and Services
Tax (GST), etc.
Guidance on disclosure under this clause should be drawn from the guidance
given under Other Non-Current Liabilities, to the extent applicable.
8.2.12. Current 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 warranties, provision for decommissioning
liabilities, etc. These amounts should be disclosed separately specifying
nature thereof.
8.2.13. Liabilities for non-current assets held for sale
The presentation of liabilities associated with group of assets classified as
held for sale and non-current assets classified as held for sale shall be in
accordance with Ind AS 105. (Refer Annexure F for Illustrative Standalone &
Consolidated Financial Statements Pg 169)
8.2.14. Contingent liabilities and commitments
(i) Contingent liabilities shall be classified as:
(a) Claims against the company not acknowledged as debt;
(b) Guarantees excluding financial guarantees; and
(c) Other money for which the company is contingently liable
(ii) Commitments shall be classified as:
(a) Estimated amount of contracts remaining to be executed on
capital account and not provided for;
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(b) Uncalled liability on shares and other investments partly paid
(c) Other commitments (specify nature).
The provisions of Ind AS-37 Provisions, Contingent Liabilities and Contingent
Assets, will be applied for determining contingent liabilities.
8.2.14.1. 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.
8.2.14.2. Ind AS Schedule III requires guarantees other than financial
guarantees to be disclosed as a part of contingent liabilities, since financial
guarantees are recognized on the balance sheet in accordance with Ind AS
109. Ind AS 107 specifies certain disclosure in respect of the exposure to
credit risk on financial guarantee contracts as a part of the disclosures on
`credit risk exposures', which an entity should provide in its Notes to
Accounts.
8.2.14.3. The Ind AS Schedule III also requires disclosures pertaining to
various commitments such as Capital commitments not provided for and
Uncalled liability on shares. It also requires disclosures pertaining to `Other
commitments', with specification of nature thereof.
8.2.14.4. 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
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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, employee
contracts, etc. However, the disclosure of all contractual commitments should
be made bearing in mind the overarching principle under Note 4(ii) in
General Instructions for Preparation of Financial Statements that "a balance
shall be maintained between providing excessive detail that may not assist
users of Financial Statements and not providing important information as a
result of too much aggregation."
8.2.14.5. Disclosures relating to lease commitments for non-cancellable
leases are required to be disclosed by Ind AS 116 Leases.
8.2.14.6. 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.
8.2.14.7. The Ind AS Schedule III requires disclosure of the amount of
dividends proposed to be distributed to equity and preference shareholders
for the period and the related amount per share to be disclosed separately.
Though, the Act prohibits issue of irredeemable preference shares, Ind AS
Schedule III requires separate disclosure of the arrears of fixed cumulative
dividends on irredeemable preference shares. Term `irredeemable' is used in
the context of compulsorily convertible preference share rather than in the
context of perpetual preference share which are neither convertible nor
redeemable. Ind AS-10 Events after the Reporting Period requires that
dividends in respect of the period covered by the Financial Statements,
which are proposed or declared by the enterprise after the Balance Sheet
date but before approval of the Financial Statements, should not be adjusted
but should be disclosed in accordance with Ind AS-1 Presentation of
Financial Statements.
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8.2.14.8. The Ind AS Schedule III requires that where, in respect of an issue
of securities made for a specific purpose, the whole or part of the amount
has not been used for the specific purpose at the Balance Sheet date, then
the company shall indicate by way of note, how such unutilized amounts
have been used or invested.
8.3. Regulatory Deferral Account Balances
Regulatory Deferral Account Balances are defined in Ind AS 114 as that
arising when an entity provides goods or services to customers at a price or
rate that is subject to rate regulation.
Note 11 of General Instruction for Preparation of Balance Sheet requires
Regulatory Deferral Account Balances to be presented in the Balance Sheet
in accordance with the relevant Ind AS.
Accordingly, as per Ind AS 114, the entity shall not classify the totals of
regulatory deferral account balances as current or non-current. Instead, the
separate line items for the totals of all regulatory deferral account debit
balances and the totals of all regulatory deferral account credit balances
shall be distinguished from the assets and liabilities that are presented in
accordance with other Standards by the use of sub-totals, which are drawn
before the regulatory deferral account balances are presented.
8.4. Presentation of earlier comparative period
Note 7 to General Instructions for Preparation of Balance Sheet states that
when a company applies an accounting policy retrospectively or makes a
restatement of items in the financial statements or when it reclassifies items
in its financial statements, the company shall attach to the Balance Sheet, a
Balance Sheet as at the beginning of the earliest comparative period
presented.
Similar requirement is also in para 40A of Ind AS 1, which requires an entity
to present a third balance sheet as at the beginning of the preceding period
in addition to the minimum comparative financial statements required if:
(a) An entity applies an accounting policy retrospectively, makes a
retrospective restatement of items in its financial statements or
reclassifies items in its financial statements; and
(b) The retrospective application, retrospective restatement or the
reclassification has a material effect on the information in the balance
sheet at the beginning of the preceding period.
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8.5 Specified Bank Notes
As per the amendments notified on 30 th March, 2017 to Ind AS Schedule III,
Clause K is inserted in Note 6 to General Instructions for Preparation of
Balance Sheet stating that 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
It is further stated that 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.
The companies may disclose separately, the details about SBNs as required
above, in Notes to Accounts.
As per clarification issued by dated 01.09.2018 by the Corporate Laws and
Corporate Governance Committee (CL&CGC) stating that "Since this
disclosure requirement was event specific, and hence was relevant for
Financial Year 2016-17 only and required disclosure is also for period falling
under that financial year. Therefore, in Notes to Account as well as Audit
Report, the disclosure requirement relating to SBNs are not applicable for the
Financial Year 2017- 18 & subsequent years. Consequent disclosures may
be made in the Financial Statements/Audit Reports."
Basis the clarification issued as above, no disclosure for SBNs shall be
required as the required disclosure was event driven and relevant only for a
specific financial year.
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9. Part II Statement of Profit and Loss and
Notes General Instructions for Preparation
of Statement of Profit and Loss: Notes 1 to 6
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 has been given in various line items. Part II contains items I to
XVIII which lists items of Revenue, Expenses, Profit / (Loss) and Other
Comprehensive Income. "General Instructions for Preparation of Statement
of Profit and Loss" govern the other disclosures and presentation aspects
related to the Statement of Profit and Loss.
As per Note 1 of "General Instructions for Preparation of Statement of Profit
and Loss", the provisions of this part also apply to the income and
expenditure account referred to in sub clause (ii) of clause (40) of section 2
of the Act in the same manner as they apply to a Statement of Profit and
Loss.
As per Note 2 of "General Instructions for Preparation of Statement of Profit
and Loss", the Statement of Profit and Loss shall include:
(1) Profit or loss for the period;
(2) Other Comprehensive Income for the period.
The sum of (1) and (2) above is `Total Comprehensive Income'.
`Profit or loss' is defined in Ind AS 1 as `the total of income less expenses,
excluding the components of other comprehensive income.
`Other comprehensive income' is defined in Ind AS 1 as `comprising items of
income and expense (including reclassification adjustments) that are not
recognised in profit or loss as required or permitted by other Ind ASs .
Other comprehensive income shall be presented as:
(a) Items that will not be reclassified to profit or loss and its related
income tax effects;
(b) Items that will be reclassified to profit or loss and its related income
tax effects.
`Reclassification adjustments' are defined in Ind AS 1 as amounts
reclassified to profit or loss in the current period that were recognised in
other comprehensive income in the current or previous periods.
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As per Ind AS 1 `Total Comprehensive Income' comprises all components of
`profit or loss' and of `other comprehensive income'.
The Statement of Profit and Loss is a single statement of profit and loss, with
profit or loss and other comprehensive income presented in two sections, as
per Part II of Ind AS Schedule III. The sections are presented together, with
the profit or loss section presented first followed directly by the other
comprehensive income section. This is in sync with para 10A of Ind AS 1.
Ind AS 1 prohibits an entity from presenting any items of income or expense
as extraordinary items, in the statement of profit and loss or in the notes.
Accordingly, there are no line items like `Extraordinary items' and `Profit
before extraordinary items and tax' in this Schedule.
The specific format laid down for presentation of various items of Income and
Expenses in the Statement of Profit and Loss indicate that expenses should
be aggregated based on their nature, which is in sync with Ind AS 1 para 99.
Accordingly, functional classification of expenses is prohibited.
As per the Ind AS Framework for the Preparation and Presentation of
Financial Statements, Income and expenses are defined as follows:
(a) Income encompasses both revenue and gains. Revenue arises in the
course of the ordinary activities of an entity. Gains represent other
items that meet the definition of income and may or may not, arise in
the course of the ordinary activities of an entity. Gains represent
increases in economic benefits and as such are no different in nature
from revenue.
(b) Expenses encompasse losses as well as those expenses that arise in
the course of the ordinary activities of the entity. Losses represent
other items that meet the definition of expenses and may or may not,
arise in the course of the ordinary activities of the entity. Losses
represent decreases in economic benefits and as such they are no
different in nature from other expenses.
Further, separate line items should be included in the profit or loss section of
the Statement of Profit and Loss to present the following items in line with
para 82 of Ind AS 1:
(a) Revenue, presenting separately interest revenue calculated using the
effective interest method;
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(b) Gains and losses arising from the de-recognition of financial assets
measured at amortized cost;
(c) Finance costs
(d) Impairment losses (including impairment gains or reversals of
impairment losses) determined as per Ind AS 109, Section 5.5;
(e) Share of profit or loss of associates and joint ventures accounted for
using the equity method;
(f) Any gain or loss arising from a difference between the previous
amortized cost of the financial asset and its fair value at the date when
the financial asset is reclassified from amortized cost to fair value
through profit or loss;
(g) Any cumulative gain or loss previously recognized in other
comprehensive income that is reclassified to profit or loss, when the
financial asset is reclassified from fair value through other
comprehensive to fair value through profit or loss;
(h) A single amount for the total of discontinued operations, as per Ind AS
105.
In separately disclosing the above, consideration should be given to Note
7(c) of General Instructions for Preparation of Statement of Profit and Loss,
that requires disclosure of any item of income or expenditure exceeding one
percent of the revenue from operations or Rs. 10,00,000, whichever is
higher, in addition to the consideration of `materiality'. An entity should
consider these requirements as mutually exclusive.
9.1. Revenue from operations
The aggregate of Revenue from operations needs to be disclosed on the
face of the Statement of Profit and Loss as per Schedule III.
9.1.1. Note 3 of General Instructions for the Preparation of Statement of
Profit and Loss require that revenue from operations is to be separately
disclosed in the notes, showing revenue from:
(a) Sale of products (including Excise Duty);
(b) Sale of services; and
(c) Other operating revenues
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9.1.2. As per the definition of Revenue in Ind AS 115, "revenue is income
arising in the course of an entity's ordinary activities" and as per the
definition of Income in Ind AS 115, "Increase in economic benefits during the
accounting period in the form of inflows or enhancements of assets or
decreases of liabilities that result in an increase in equity, other than those
relating to contributions from equity participants." Further, as per Ind AS 115,
revenue includes only the gross increase in economic benefits occurring to
the entity on its own account. Amounts collected, in capacity of an agent, on
behalf of third parties such as sales taxes, goods and services taxes and
value added taxes are not economic benefits which flow to the entity and do
not result in increases in equity. Therefore, they are excluded from revenue.
Similarly, in an agency relationship, the gross increase in economic benefits
include amounts collected on behalf of the principal and which do not result
in increases in equity for the entity. The amounts collected on behalf of the
principal are not revenue.
9.1.3. Indirect taxes such as Sales tax, Goods and Services 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, is 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. If the entity is the principal, then 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 such
taxes only as an agent, revenue should be presented net of taxes.
9.1.4. On the other hand, recovery of excise duty is an inflow that the entity
receives on its own account. For the manufacturer it is a part of the cost of
production, irrespective of whether the goods are sold or not. The
manufacturer acts as a principal in collecting excise duty and therefore,
revenue should be grossed up to include excise duty. Excise duty paid
should be presented as a separate line item under the `Expenses' head on
the face of Statement of Profit and Loss. (Refer Annexure F (Pg 169))
9.1.5. Moreover, SEBI issued clarification, regarding its format for publishing
financial information by listed entities, that `Income from Operations' may be
disclosed inclusive of excise duty.
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9.1.6. Under the GST regime, the collection of GST by an entity would not be
an inflow on the entity's own account but it shall be made on behalf of the
government authorities. Accordingly, the revenue should be presented net of
GST.
9.1.7. 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 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.
9.1.9. 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 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".
9.1.10. 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 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.
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9.2. Other income
The aggregate of `Other income' is to be disclosed on face of the Statement
of Profit and Loss. As per Note 5 of General Instructions for the Preparation
of Statement of Profit and Loss `Other Income' shall be classified as:
(a) Interest Income;
(b) Dividend Income;
(c) Other non-operating income (net of expenses directly attributable to
such income).
Ind AS 107, para 20(b) requires total interest revenue calculated using the
effective interest method for financial assets that are measured at amortized
cost and that are measured at FVOCI, to be shown separately.
Accordingly, `Interest Income' for financial assets measured at amortized
cost and for financial assets measured at FVOCI, calculated using effective
interest method, should be presented in separate line items under `Other
Income'.
Further, Ind AS 107 para B5(e) requires a company to disclose whether
interest income on financial assets measured at FVTPL is included as a part
of fair value changes. Accordingly, a company shall disclose as its
accounting policy, whether it presents interest income on financial assets at
FVTPL as a part of fair value changes or presents separately.
Presentation and disclosure of `net gains (losses) on fair value changes'
should be made as below:
Net gains (losses) on fair value changes
As per Ind AS 107 para 20(a), the fair value gains or losses (net) on financial
assets which are measured at FVTPL should be presented under `Other non-
operating income' with the following line items:
Net gains (losses) on fair value changes
Figures at Figures at
current previous
reporting reporting
period period end
end
Investments classified at FVTPL
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Investments designated at FVTPL
Derivatives at FVTPL
Other Financial Instruments classified as FVTPL
Other Financial Instruments designated at FVTPL
Reclassification adjustments
Realised gain on debt investments classified as
FVOCI
Others (to be specified)
Total Net gains (losses) on fair value
changes*
* Total Net gains (losses) on fair value changes include Rs. xxxx (previous
year: Rs. xxxxx) as `Net gain or loss on sale of investments'.
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 firms
9.3.1. Though, there is no specific requirement in the Ind AS Schedule III to
disclose profit or losses on investments in a partnership firm, the same
should be disclosed as discussed hereunder.
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, except
where the investment in partnership firm is identified as a joint operation
(Refer para 9.3.6. below - Pg 85).
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
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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
Ind AS 110 Consolidated Financial Statements and Ind AS 111 Joint
Arrangements, 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 any case, the difference between reporting
dates should not be more than three months. 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.
9.3.6. If however, a partnership firm happens to be in the nature of a Joint
Operation as defined in Ind AS 111, the share of incomes, expenses, assets
or liabilities will have to be accounted by the company in its Standalone
Financial Statements as prescribed in Ind AS 111.
9.3.7. In case the partnership firm is a Subsidiary under Ind AS 110,
Associate under Ind AS 28 or Joint Venture under Ind AS 111, in the
Consolidated Financial Statements, the share of profit/loss from the firm
should be accounted for in terms of the applicable Ind AS as stated above. In
case the partnership firm is Join Operation under Ind AS 111, there shall be
no impact in the Consolidated Financial Statements as the share of income,
expenses would have already been recognized in stand-alone financial
statements.
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.
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9.4.2. Depending upon the terms of agreement between the Partners, the
LLP may be a Subsidiary under Ind AS 110, Associate under Ind AS 28 or
Joint Arrangement under Ind AS 111. Hence, accounting in respect of the
same in the Consolidated Financial Statements would be governed by the
applicable Ind AS. However, in case of Standalone Financial Statements an
adjustment of profit share from LLP to the carrying amount of the investment
in LLP is not permitted as Ind AS 27 requires accounting for investments in
subsidiaries, joint ventures and associates either at cost or in accordance
with Ind AS 109.
9.4.3. Additionally, principles of para 9.3.4 and para 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
· Depreciation and amortization expense
· Other expenses
9.5.1. Cost of materials consumed
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:
9.5.1.1. For purpose of classification of inventories, internally manufactured
components may be disclosed as below:
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(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'.
9.5.1.2. 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".
9.5.1.3. The requirement is silent with regard to containers and packaging
materials. It is, therefore, open to question whether such materials constitute
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".
9.5.1.4. 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
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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.
9.5.1.5. 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 do not require any specific disclosures.
9.5.1.6. 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. The consumption
of raw materials for production of such intermediates would have to be
accounted as raw materials consumed and so, 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.
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9.5.4. Employee benefits expense [Note 7(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.
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 Superannuation fund,
ESI, Labour Welfare Fund, etc., are to be disclosed here. This is true for
defined contribution plans since the expense recognized for a defined benefit
plan is not necessarily the amount of the contribution due for the period.
Contributions for such funds for contract labour may also be separately
disclosed here. However, penalties and other similar amounts paid to the
statutory authorities are not strictly in the nature of `contribution' and should
not be disclosed here.
9.5.4.3. Share based payment to employees
The amount of expense under this head should be determined in accordance
with Ind AS 102 Share-based Payments and/or the SEBI (Employee Stock
Option Scheme and Employee Stock Purchase Scheme) Guidelines, 1999,
as applicable. Companies should also consider all disclosures required by
the Ind AS 102.
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9.5.4.4. Staff welfare expense
The total expenditure on staff welfare is to be disclosed herein.
9.5.5. Finance Costs
As per Note 4 of 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;
(B) Dividend on redeemable preference shares
(C) Exchange differences regarded as an adjustment to borrowing costs;
(D) Other borrowing costs (specify nature).
(A) Interest expense
This would present the following types of finance charges incurred by the
Company:
(a) Interest cost on financial liabilities measured at amortized cost such as
borrowings from banks and others, on debentures, bonds or similar
instruments etc. calculated as per the effective interest method;
(b) Unwinding of the discount that results in an increase in financial
liabilities such as security deposits for assets taken on lease;
(c) Increases in the carrying amount of provisions / decommissioning
liabilities where such increase reflects the passage of time;
(d) Finance charges on finance leases that are in the nature of interest
expense;
(e) Net interest on net defined benefit liability which reflects the change in
net defined benefit liability that arises from the passage of time.
Accordingly, all of the above should also be classified as interest expense,
except that an entity shall have a choice in presenting, as employee benefits
costs, the net interest on net defined benefit liability which reflects the
change in net defined benefit liability that arises from the passage of time.
Further, Ind AS 107 para 20(b) requires total interest expense calculated
using the effective interest method for financial liabilities that are not
measured at FVTPL to be shown separately. Accordingly, the same shall be
presented as a separate line item under `Finance Costs'.
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(B) Dividend on redeemable preference shares
Dividend on preferences shares, whether redeemable or convertible, is of the
nature of `Interest expense', only where there is no discretion of the issuer
over the payment of such dividends. In such case, the portion of dividend as
determined by applying the effective interest method should be presented as
`Interest expense' under `Finance cost'. Accordingly, the corresponding
Dividend Distribution Tax on such portion of non-discretionary dividends
should also be presented in the Statement of Profit and Loss under `Interest
expense'.
On the other hand, where there is a discretion of issuer over the payments of
dividend on preference shares, whether redeemable or convertible, the entire
dividend is in the nature of distribution of profit and accordingly, shall be
presented in Statement of Changes in Equity. Accordingly, the corresponding
Dividend Distribution Tax should also be presented in Statement of Changes
in Equity.
(C) Exchange differences regarded as an adjustment to borrowing
costs
Ind AS 21 and Ind AS 23 deal with foreign exchange differences arising on
foreign currency transactions included in the financial statements of an entity.
All exchange differences within the purview of Ind AS 21 are recognized as
exchange differences and presented accordingly. However, all exchange
differences arising from foreign currency borrowings are within the purview of
Ind AS 23 and are regarded as a cost of borrowing irrespective of whether
they are capitalized or not as a part of the cost of the asset.
In accordance with Ind AS 23 `Borrowing Costs' 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 6(e) and 6A of Ind AS 23.
Accordingly, in case a company has utilized its foreign currency borrowings
for the purpose of acquisition or construction of a qualifying asset, it would
capitalize certain portion of foreign exchange difference in accordance with
the para 6(e) and 6A of Ind AS 23. All other borrowing costs are recognized
as an expense.
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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 6(e) and 6A of Ind AS 23 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 Ind AS 23 can be presented under the head `finance costs'.
(D) 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. Such finance costs that do not meet the
definition of transaction costs directly attributable to issue of a financial
liability and are therefore not included as a part of EIR, shall be presented
under `Other borrowing costs'.
9.5.6. Depreciation and amortization expense
A company has to disclose depreciation provided on Property, Plant and
Equipment, Investment Property 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.
Net losses on fair value changes should be classified under `Other
Expenses'. (Refer para 9.2. for the line items to be presented as a part of Net
gains (losses) on fair value changes)
9.6. Exceptional items
The term `Exceptional items' is neither defined in Ind AS Schedule III nor in
Ind AS. However, Ind AS 1 has reference to such items in paras 85, 86, 97
and 98.
Para 85 states that additional line items, headings and subtotals in the
statement of profit and loss shall be presented, when such presentation is
relevant to an understanding of the entity's financial performance.
Further, para 86 states that disclosing the components of financial
performance assists users in understanding the financial performance
achieved and in making projections of future financial performance. An entity
considers factors including materiality and the nature and function of the
items of income and expense.
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Para 97 states that when items of income or expense are material, an entity
shall disclose their nature and amount separately. Para 98 gives
circumstances that would give rise to the separate disclosure of items of
income and expense and includes:
(a) Write-downs of inventories to net realisable value or of property, plant
and equipment to recoverable amount, as well as reversals of such
write-downs;
(b) restructurings of the activities of an entity and reversals of any
provisions for the costs of restructuring;
(c) disposals of items of property, plant and equipment;
(d) disposals of investments;
(e) discontinued operations;
(f) litigation settlements; and
(g) other reversals of provisions.
In case the company has more than one such item of income / expense of
the above nature which is exceptional, then such items should be disclosed
on the face of the Statement of Profit and Loss. Details of the all individual
items should be disclosed in the Notes.
9.7. 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
9.7.1. Current tax
The term `Current tax' has been defined under Ind AS-12 "Income Taxes" as
the amount of income taxes payable (recoverable) in respect of the taxable
profit (tax loss) for a period. Hence, details of all taxes on income payable
under the applicable taxation laws should be disclosed here.
Any interest on shortfall in payment of advance income-tax is in the nature of
finance cost and hence should not be clubbed with the Current tax. The
same should be classified as Interest expense under finance costs. However,
such amount should be separately disclosed.
Any penalties levied under Income tax laws should not be classified as
Current tax. Penalties which are compensatory in nature should be treated
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as interest and disclosed in the manner explained above. Other tax penalties
should be classified under `Other Expenses'.
Excess/Short provision of tax relating to earlier years should be separately
disclosed.
9.7.2. Deferred tax
Any charge/credit for deferred taxes needs to be disclosed separately on the
face of the Statement of Profit and Loss.
Ind AS 12 defines `deferred tax liabilities', `deferred tax assets', `temporary
differences' as:
`Deferred tax liabilities' are the amounts of income taxes payable in future
periods in respect of taxable temporary differences;
`Deferred tax assets' are the amounts of income taxes recoverable in future
periods in respect of:
(a) deductible temporary differences;
(b) the carry forward of unused tax losses; and
(c) the carry forward of unused tax credits.
`Temporary differences' are differences between the carrying amount of an
asset or liability in the balance sheet and its tax base
Ind AS 12 has the concept of temporary differences as against AS 22 which
had a concept of timing differences. Moreover, deferred tax asset is defined
in Ind AS 12 to include amounts of income taxes recoverable in future
periods in respect of the carry forward of unused tax credits. MAT Credits are
in the form of unused tax credits that are carried forward by the company for
a specified period of time. Accordingly, MAT Credit Entitlement should be
grouped with Deferred Tax Asset (net) in the Balance Sheet of an entity and
a separate note should be provided specifying the nature and amount of MAT
Credit included as a part of deferred tax. However, the company should
review at each balance sheet date the reasonable certainty to recover
deferred tax asset including MAT Credit Entitlement. (Also, refer para 7.12
above for classification of MAT Credit Entitlement)
Correspondingly, MAT Credit Entitlement should be grouped with deferred
tax in the Statement of Profit and Loss and a separate note should be
provided specifying the amount of MAT Credit.
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9.8. Profit / (loss) from discontinued operations
The term 'discontinued operations' is defined in Ind AS 105 "Non-current
Assets Held for Sale and Discontinued Operations" as a component of an
entity that either has been disposed of or is classified as held for sale and:
(a) represents a separate major line of business or geographical area of
operations,
(b) is part of a single co-ordinated plan to dispose of a separate major line
of business or geographical area of operations; or
(c) is a subsidiary acquired exclusively with a view to resale.
Profit or loss from Discontinued Operations needs to be separately disclosed
on the face of Statement of Profit and Loss. This disclosure is in line with the
disclosure requirement of Ind AS 105 para 33(a) which requires a single
amount in the statement of profit and loss comprising the total of: (i) post-tax
profit or loss of discontinued operations; and (ii) post-tax gain or loss
recognized on the measurement to fair value less costs to sell or on the
disposal of the assets or disposal group(s) constituting the discontinued
operation.
Further, Ind AS-105 para 33(b) requires an entity to present an analysis of a
single amount either in Notes or on the face of the Statement of Profit and
Loss:
(i) the revenue, expenses and pre-tax profit or loss of discontinued
operations;
(ii) the gain or loss recognised on the measurement to fair value less costs to
sell or on the disposal of the assets or disposal group(s) constituting the
discontinued operation.
(iii) the related income tax expense as required by paragraph 81(h) of Ind AS
12.
If the above analysis is presented in the Statement of Profit and Loss, then it
shall be presented in a section identified as relating to discontinued
operations, i.e. separately from continuing operations.
9.9. Tax expense of discontinued operations
In case there are any taxes payable / tax credits available on profits / losses
of discontinued operations, the same needs to be disclosed as a separate
line item on the Statement of Profit and Loss, when presenting a separate
analysis as per para 33(b) of Ind AS 105, as stated above in para 9.8.
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9.10. Earnings per equity share
Computation of Basic and Diluted Earnings per Share should be made in
accordance with Ind AS 33 Earnings per Share. It is pertinent to note that the
nominal value of equity shares should be disclosed along with the Earnings
per Share figures as required by Ind AS 33.
10. Other Comprehensive Income
10.1 `Other comprehensive income' (OCI) is defined in Ind AS 1 as
`comprising items of income and expense (including reclassification
adjustments) that are not recognised in profit or loss as required or permitted
by other Ind ASs.
10.2 Note 6A of General Instructions for Preparation of Statement of Profit
and Loss state that `Other Comprehensive Income' shall be classified into:
(a) Items that will not be reclassified to profit or loss and their related
income tax effects:
(1) Changes in revaluation surplus;
(2) Re-measurements of the defined benefit plans;
(3) Fair value changes on Equity Instruments through other
comprehensive income;
(4) Fair value changes relating to own credit risk of financial
liabilities designated at fair value through profit or loss;
(5) Share of Other Comprehensive Income in Associates and Joint
Ventures, to the extent not to be classified into profit or loss;
and
(6) Others (specify nature);
(b) Items that will be reclassified to profit or loss and its related income
tax effects:
(1) Exchange differences in translating the financial statements of a
foreign operation;
(2) Fair value changes in Debt Instruments through other
comprehensive income;
(3) The effective portion of gain and loss on hedging instruments in
a cash flow hedge;
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(4) Share of Other Comprehensive Income in Associates and Joint
Ventures, to the extent to be classified into profit or loss; and
(5) Others (specify nature).
10.3 As a part of the definition of OCI given in Ind AS 1, the components of
OCI, which are in addition to above, are stated to include:
Items that will not be reclassified to profit or loss and its related income tax
effects:
(a) Gains and losses on hedging instruments that hedge investments in
equity instruments measured through Other Comprehensive Income;
Items that will be reclassified to profit or loss and its related income tax
effects:
(b) Changes in time value of options when separating the intrinsic value
and time value of an option contract and designating only intrinsic
value changes as the hedging instrument;
(c) Changes in the value of the forward elements of forward contracts
when separating the forward element and spot element of a forward
contract and designating only spot element changes as hedging
instrument;
(d) Changes in the value of the foreign currency basis spread of a
financial instrument when excluding it from the designation of that
financial instrument as the hedging instrument.
10.4 Ind AS 1, para 91 gives a choice of presentation for tax effects of
items presented in other comprehensive income. An entity may present items
of OCI either:
(a) Net of related tax effects, or
(b) Before related tax effects with one amount shown for the aggregate
amount of income tax relating to those items.
10.5 If an entity elects alternative (b) above, then it shall allocate the tax
between the items that might be reclassified subsequently to the profit or loss
section and those that will not be reclassified subsequently to the profit or
loss section.
10.6 Further, an entity shall present for each component of equity, an
analysis of other comprehensive income by item as required by Ind AS 1,
para 106A (including, reclassification adjustments as required by Ind AS 1,
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para 92). Such presentation may be made either in the Statement of
Changes in Equity or in the Notes to Accounts.
10.7 Ind AS Schedule III does not highlight about the presentation of
bargain purchase gains arising in a business combination. Para 34 of Ind AS
103, requires an acquirer to recognize a bargain purchase gain in other
comprehensive income on the acquisition date, after meeting the
requirements of para 36 of Ind AS 103. Such gain shall be attributed to the
acquirer (i.e. parent and not non-controlling interest) and may be presented
under `Other Items of other comprehensive income' in statement of changes
in equity. The above would also hold true in case of an acquisition of a
business which is accounted for in Standalone Financial Statements.
However, if para 36 requirements are not met then, the acquirer shall recognize
and disclose such gain directly in capital reserve as per para 36A of Ind AS 103.
11. Additional information to be disclosed by way
of Notes to Statement of Profit and Loss
Besides the above disclosures, Note 7 of the General instructions for
Preparation of Statement of Profit and Loss also require disclosure by way of
notes, additional information regarding aggregate expenditure and income on
the following items:
11.1. Employee Benefits expense [Clause (a) of Note 7]
Employee benefits should be disclosed showing separately (i) salaries and
wages, (ii) contribution to provident and other funds, (iii) share-based
payments to employees, (iv) staff welfare expenses.
11.2. Net gain or loss on sale of investments [Clause (g)
of Note 7]
Ind AS Schedule III does not provide a distinction in presenting realized and
unrealized gains or losses on fair value changes. However, para 9.2 above
provides an illustrative format for presenting items as a part of Net gains
(losses) on fair value changes. Accordingly, an entity shall present "net gain
or loss on sale of investments" separately by way of a note below the table
on `Net gains (losses) on fair value changes'.
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11.3. Net gain or loss on foreign currency translation
(other than considered as finance cost) [Clause (h)
of Note 7]
Any gains / losses on account of foreign exchange fluctuations are to be
disclosed separately as per Ind AS 21. Thus, net exchange loss should be
classified under other expenses and the amount so included should be
separately disclosed. Under this head, net gain or loss on foreign currency
transaction and translation to the extent considered as finance costs should
not be disclosed.
11.4. Payments to the auditor [Clause (i) of Note 7]
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:
(a) Auditor,
(b) For taxation matters,
(c) For company law matters,
(d) For other services,
(e) For reimbursement of expenses;
11.5. Expenditure incurred on corporate social
responsibility activities [Clause (j) of Note 7]
This new requirement introduced by the Act is that the companies which are
covered under Section 135 are required to disclose the amount of
expenditure incurred on corporate social responsibility activities. The
Guidance Note on Accounting for Expenditure on Corporate Social
Responsibility Activities issued 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'.
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(b) The notes to accounts relating to CSR expenditure should also contain
the following:
(1) Gross amount required to be spent by the company during the
year.
(2) Amount spent during the year on:
(i) Construction/acquisition of any asset
(ii) On purposes other than (i) above
The above disclosure, to the extent relevant, may also be made in the
notes to the cash flow statement, where applicable.
(c) Details of related party transactions, e.g., contribution to a trust
controlled by the company in relation to CSR expenditure as per Ind
AS 24, Related Party Disclosures.
(d) Where a provision is made in accordance with paragraph above
the same should be presented as per the requirements of Schedule III
to the Act. Further, movements in the provision during the year should
be shown separately.
11.6. Disclosures in addition to consideration of
`materiality' [Clause (c) of Note 7]
Any item of income or expenditure which exceeds one per cent of revenue
from operations or Rs. 10,00,000, whichever is higher, in addition to the
consideration of `materiality' as specified in Note 7 of the General
Instructions for Preparation of Financial Statements of a Company.
Ind AS 1 defines materiality as depending on the size and nature of the
omission or misstatement judged in the surrounding circumstances. The size
or nature of the item, or a combination of both, could be the determining
factor. Further, the Ind AS Framework states in para 30 that `Information is
material if its omission or misstatement could influence the economic
decisions of users taken on the basis of the financial statements.' Therefore,
the assessment needs to take into account how users with such attributes
could reasonably be expected to be influenced in making economic
decisions.
11.7. Changes in Regulatory Deferral Account Balances
Ind AS Schedule III (Note 8 of General Instructions to Statement of Profit and
Loss) requires changes in Regulatory Deferral Account Balances for the
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reporting period to be presented in the Statement of Profit and Loss in
accordance with the relevant Ind AS.
Accordingly, as per Ind AS 114, the net movement in all Regulatory Deferral
Account Balances relating to items recognised in other comprehensive
income, shall be presented as separate line items in OCI for the net
movement related to items that :
(a) Will not be reclassified subsequently to profit or loss; and
(b) Will be reclassified subsequently to profit or loss when specific
conditions are met.
The remaining net movement in all Regulatory Deferral Account Balances for
the reporting period shall be presented as a separate line item in the profit or
loss section of the Statement Profit or Loss. This separate line item shall be
distinguished from the income and expenses that are presented in
accordance with other Ind ASs.
12. Part III General Instructions for Preparation
of Consolidated Financial Statements
The Act defines a `subsidiary company' and an `associate company' which is
different from the definition of a `subsidiary', an `associate' and a `joint
venture' under Ind AS. An amendment to Companies (Accounts) Rules, 2014
on 4 September 2015, newly inserted Rule 4A which state that "financial
statements shall be in the form specified in Schedule III to the Act and
comply with Accounting Standards or Indian Accounting Standards as
applicable, provided that the items contained in financial statements shall be
prepared in accordance with the definitions and other requirements specified
in the Accounting Standards or the Indian Accounting Standards, as the case
may be."
The Act mandates that the companies which have one or more subsidiaries
or associates (which as per the Act includes joint ventures) are required to
prepare Consolidated Financial Statements (CFS), except under certain
circumstances exempted under the Act and Rules.
Accordingly, Ind AS definitions of subsidiary, associate and joint venture
shall be considered for assessment of control, joint control and significant
influence even though the requirement of preparation of CFS will be
governed by the Act.
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The companies are expected to prepare the Standalone Financial
Statements in addition to Consolidated Financial Statements.
Part III of Ind AS Schedule III provides for General Instructions for
Preparation of Consolidated Financial Statements. This is a new addition
brought in under the Act.
12.1 General requirements
Where the company is required to prepare Consolidated Financial
Statements, i.e. consolidated balance sheet, consolidated statement of
changes in equity and consolidated statement of profit and loss, the company
shall mutatis mutandis follow the requirements of this Schedule as applicable
to a company in preparation of the 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.
In addition, the Consolidated Financial Statements shall disclose the
information as per the requirements specified in the applicable Ind AS
notified under the Companies Ind AS Rules, including the following, namely:
(1) Profit or loss attributable to `non-controlling interest' and to `owners of
the parent' in the statement of profit and loss shall be presented as
allocation for the period. Further, `total comprehensive income' for the
period attributable to `non-controlling interest' and to `owners of the
parent' shall be presented in the statement of profit and loss as
allocation for the period. The aforesaid disclosures for `total
comprehensive income' shall also be made in the statement of
changes in equity. In addition to the disclosure requirements in the
Indian Accounting Standards, the aforesaid disclosures shall also be
made in respect of `other comprehensive income'. This requirement is
in line with para 81B of Ind AS 1.
(2) `Non-controlling interests' in the Balance Sheet and in the Statement
of Changes in Equity, within equity, shall be presented separately from
the equity of the `owners of the parent'.
(3) Investments accounted for using the equity method.
(4) Ind AS 110 para B96 deals with Changes in proportion held by non-
controlling interest. When the proportion of the equity held by non-
controlling interests changes, an entity shall adjust the carrying
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amounts of the controlling and non-controlling interests to reflect the
changes in their relative interests in the subsidiary. The entity shall
recognise directly in equity any difference between the amount by
which the non-controlling interests are adjusted and the fair value of
the consideration paid or received, and attribute it to the owners of the
parent. An entity may present such gain / loss separately as `Non-
controlling Interest Reserve' shown under `Other Reserves' by
specifying the nature.
All of these would also indicate the need to obtain such information for all the
subsidiaries / associates for preparing the Consolidated Financial
Statements, including where such subsidiaries / associates are not audited
under the Act.
However, due note has to be taken of the fact that the Schedule III itself
states that the provisions of the schedule are to be followed mutatis mutandis
for a Consolidated Financial Statements. MCA has also clarified vide General
Circular No. 39 / 2014 dated 14th October 2014 that Schedule III to the Act
[Refer Annexure E (Pg 168)] 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 Ind AS Schedule III shall apply to a CFS,
subject to the following exemptions / modifications based on the relevance to
the CFS:
Ind AS Schedule III Requirements 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.
Source from which bonus shares Not relevant at CFS level and
are issued, e.g., capitalisation of hence, may be dispensed with.
profits or Reserves or from
Securities Premium Account.
Disclosure of all unutilized monies Not relevant at CFS level and
103
GN on Division II - Ind AS Schedule III to the Companies Act 2013
out of the issue indicating the form hence, may be dispensed with.
in which such unutilized funds have
been invested.
(a) Period and amount of On all these items, disclosure can
continuing default as on the be limited to those which are
Balance Sheet date in material to the CFS; materiality
repayment of borrowings and could be considered at 10% of the
interest, shall be specified respective balance sheet item
separately in each case.
(b) Loans and advances due by
directors or other officers of the
company or any of them either
severally or jointly with any
other persons or amounts due
by firms or private companies
respectively in which any
director is a partner or a
director or a member should be
separately stated
(c) Debts due by directors or other
officers of the company or any
of them either severally or
jointly with any other person or
debts due by firms or private
companies respectively in which
any director is a partner or a
director or a member should be
separately stated
(d) Where in respect of an issue of
securities made for a specific
purpose, the whole or part of
the amount has not been used
for the specific purpose at the
Balance Sheet date, there shall
be indicated by way of note how
such unutilized amounts have
been used or invested.
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GN on Division II - Ind AS Schedule III to the Companies Act 2013
Share application money pending Separate disclosure should be given
allotment shall be classified into for such monies due outside the
equity or liability in accordance with group in respect of entities which are
relevant Ind AS. Share application consolidated.
money to the extent not refundable
shall be shown under the head
`Equity' and share application
money to the extent refundable shall
be separately shown under `Other
financial liabilities'.
Additional Information for Not relevant at CFS level and
disclosure: hence, may be dispensed with.
(i) Payments to the auditor as (a)
auditor,(b) for taxation matters,
(c) for company law matters,
(d) for other services, (e) for
reimbursement of expenses;
(ii) In case of Companies covered
under section 135, amount of
expenditure incurred on
corporate social responsibility
activities
(iii) Disclosures required as per the
MSMED Act, 2006
12.2 Indian Accounting Standards
The Consolidated Financial Statements shall also disclose the information as
required under the various Indian Accounting Standards applicable.
12.3 Additional information on the entities included in
the Consolidated Financial Statements
Ind AS Schedule III also requires specific disclosure of additional information
on the entities which are included in the Consolidated Financial Statements
in the following format:
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GN on Division II - Ind AS Schedule III to the Companies Act 2013
Name of Net Assets Share in profit Share in other Share in total
the entity i.e., total or loss comprehensive comprehensive
in the assets minus income income
Group total
liabilities
As % of Amou As % of Amou As % of Amou As % of Amoun
Consolid nt Consolid nt consolidat nt total t
ated ated ed other comprehe
profit or comprehen nsive
net
loss sive income
assets
income
Parent
Subsidiari
es
Indian
1
2
3
...
.....
Foreign
1
2
3
...
.....
Non-
controlling
interest in
all
subsidiarie
s
Associates
(Investmen
t as per
equity
106
GN on Division II - Ind AS Schedule III to the Companies Act 2013
method)
Indian
1
2
3
...
...
Foreign
1
2
3
...
.....
Joint
Ventures
(Investmen
t as per
equity
method)
Indian
1
2
3
...
.....
Foreign
1
2
3
...
.....
TOTAL
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GN on Division II - Ind AS Schedule III to the Companies Act 2013
Certain joint arrangements which are of the nature of joint operations will be
consolidated to the extent of the share of joint operator based on the
principles laid down in Ind AS 111. Even though the above table does not
specify a disclosure about joint operations' net assets, profit or loss, other
comprehensive income and total comprehensive income, it should be
disclosed in similar manner as disclosed for joint ventures. This requirement
would apply only if a joint operation is conducted through a separate legal
entity.
Moreover, as regards consolidation adjustments (including elimination of
intra-group transactions), it should be ensured that these are either disclosed
as a single line item separately or adjusted in the information (e.g., net
assets) disclosed for the parent and its each component.
These are necessary in order to match the respective amounts reported in
Consolidated Financial Statements with the respective Total amounts in the
above table.
12.4 Entities not consolidated
Entities which are not covered in the Consolidated Financial Statements,
whether subsidiaries, associates or joint ventures are to be listed in the
Consolidated Financial Statements along with the reasons for not
consolidating such entities. Additional disclosure requirements as set out in
Ind AS 112 should also be complied with in this regard.
12.5 Definition of terms relevant for consolidation
The terms "Control", "Subsidiary" and "Associate" are defined very differently
in the Act as compared to definition in Ind AS. Rule 6 of the Companies
(Accounts) Rules, 2015 however states that Consolidated Financial
Statements shall be prepared in accordance with the provisions of Ind AS
Schedule III of the Act and the applicable Ind AS. Further, Rule 4A of the
Companies (Accounts) Rules, 2015 provides that the items contained in the
financial statements shall be prepared in accordance with the definitions and
other requirements specified in Ind AS.
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Annexure A
SCHEDULE III
(See Section 129)
"Division II
Financial Statements for a company whose financial statements are drawn
up in compliance of the Companies (Indian Accounting Standards) Rules,
2015.
GENERAL INSTURCTIONS FOR PREPARATION OF FINANCIAL
STATEMENTS OF A COMPANY REQUIRED TO COMPLY WITH Ind AS
1. Every company to which Indian Accounting Standards apply, shall
prepare its financial statements in accordance with this Schedule or with
such modification as may be required under certain circumstances.
2. Where compliance with the requirements of the Act including Indian
Accounting Standards (except the option of presenting assets and liabilities
in the order of liquidity as provided by the relevant Ind AS) 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 under this Schedule
shall stand modified accordingly.
3. The disclosure requirements specified in this Schedule are in addition
to and not in substitution of the disclosure requirements specified in the
Indian Accounting Standards. Additional disclosures specified in the Indian
Accounting Standards shall be made in the Notes or by way of additional
statement or statements unless required to be disclosed on the face of the
Financial Statements. Similarly, all other disclosures as required by the
Companies Act, 2013 shall be made in the Notes in addition to the
requirements set out in this Schedule.
4. (i) Notes shall contain information in addition to that presented in the
Financial Statements and shall provide where required-
(a) narrative descriptions or disaggregations of items recognised in those
statements; and
(b) information about items that do not qualify for recognition in those
statements.
GN on Division II - Ind AS Schedule III to the Companies Act 2013
(ii) Each item on the face of the Balance Sheet, Statement of Changes in
Equity and Statement of Profit and Loss shall be cross-referenced to any
related information in the Notes. In preparing the Financial Statements
including the Notes, a balance shall be maintained between providing
excessive detail that may not assist users of Financial Statements and not
providing important information as a result of too much aggregation.
5. Depending upon the turnover of the company, the figures appearing in
the Financial Statements shall be rounded off as 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.
Once a unit of measurement is used, it should be used uniformly in the
Financial Statements.
6. Financial Statements shall contain the corresponding amounts
(comparatives) for the immediately preceding reporting period for all items
shown in the Financial Statements including Notes except in the case of first
Financial Statements laid before the company after incorporation.
7. Financial Statements shall disclose all `material' items, i.e., the items if
they could, individually or collectively, influence the economic decisions that
users make on the basis of the financial statements. Materiality depends on
the size or nature of the item or a combination of both, to be judged in the
particular circumstances.
8. For the purpose of this Schedule, the terms used herein shall have the
same meanings assigned to them in Indian Accounting Standards.
9. Where any Act or Regulation requires specific disclosures to be made
in the standalone financial statements of a company, the said disclosures
shall be made in addition to those required under this Schedule.
Note: This Schedule sets out the minimum requirements for disclosure on
the face of the Financial Statements, i.e., Balance Sheet, Statement of
Changes in Equity for the period, the Statement of Profit and Loss for the
period (The term `Statement of Profit and Loss' has the same meaning as
`Profit and Loss Account') and Notes. Cash flow statement shall be prepared,
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GN on Division II - Ind AS Schedule III to the Companies Act 2013
where applicable, in accordance with the requirements of the relevant Indian
Accounting Standard.
Line items, sub-line items and sub-totals shall be presented as an addition or
substitution on the face of the Financial Statements when such presentation
is relevant to an understanding of the company's financial position or
performance or to cater to industry or sector-specific disclosure requirements
or when required for compliance with the amendments to the Companies Act,
2013 or under the Indian Accounting Standards.
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GN on Division II - Ind AS Schedule III to the Companies Act 2013
PART I 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 the previous
reporting reporting
period period
1 2 3 4
(1) ASSETS
Non-current assets
(a) Property, Plant and
Equipment
(b) Capital work-in-
progress
(c) Investment Property
(d) Goodwill
(e) Other Intangible
assets
(f) Intangible assets under
development
(g) Biological Assets other
than bearer plants
(h) Financial Assets
(i) Investments
(ii) Trade receivables
(iii) Loans
(iv) Others (to be
specified)
(2)
(i) Deferred tax assets
(net)
(j) Other non-current
assets
Current assets
(a) Inventories
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GN on Division II - Ind AS Schedule III to the Companies Act 2013
(b) Financial Assets
(i) Investments
(ii) Trade receivables
(iii) Cash and cash
equivalents
(iv) Bank balances other
than (iii) above
(v) Loans
(vi) Others (to be
specified)
(c) Current Tax Assets
(Net)
(d) Other current assets
Total Assets
EQUITY AND
LIABILITIES
Equity
(a) Equity Share capital
(b) Other Equity
(1) LIABILITIES
Non-current liabilities
(a) Financial Liabilities
(i) Borrowings
(ii) Trade payables
(A) Total outstanding
dues of Small
Enterprises and Micro
enterprises
(B) Total outstanding
dues of creditors other
than small enterprises
and micro enterprises.
(iii) Other financial
liabilities (other than those
specified in item (b), to be
specified)
(2) (b) Provisions
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GN on Division II - Ind AS Schedule III to the Companies Act 2013
(c) Deferred tax liabilities
(Net)
(d) Other non-current
liabilities
Current liabilities
(a) Financial Liabilities
(i) Borrowings
(ii) Trade payables
(A) Total outstanding
dues of Micro
enterprises and
Small Enterprises
(B) Total outstanding
dues of creditors
other than micro
enterprises and small
enterprises.
(iii) Other financial
liabilities (other than those
specified in item (c)
(b) Other current liabilities
(c) Provisions
(d) Current Tax Liabilities
(Net)
Total Equity and
Liabilities
See accompanying notes to the financial statements
STATEMENT OF CHANGES IN EQUITY
Name of the Company.........................
Statement of Changes in Equity for the period ended ........................
(Rupees in..................)
A. Equity Share Capital
Balance at the Changes in equity Balance at the end of
beginning of the share capital during the the reporting period
reporting period year
114
B. Other Equity
Share Equity Reserves and Surplus Debt Equity Effect Revalua Exchan Other Mone Tot
GN on Division II - Ind AS Schedule III to the Companies Act 2013
applica compon instrument instrument ive tion ge items of y al
tion ent of s through s through portio Surplus differen Other receiv
money compou Other Other n of ces on Comprehe ed
pendin nd Comprehe Comprehe Cash translat nsive again
g financia nsive nsive Flow ing the Income st
allotme l Income Income Hedg financia (specify share
nt instrum es l nature) warra
ents statem nt
ents of
115
a
foreign
operati
on
Capit Securit Other Retai
al ies Reser ned
Reser Premi ves Earni
ve um (specif ngs
y
nature
)
Balance at
the
GN on Division II - Ind AS Schedule III to the Companies Act 2013
beginning
of the
reporting
period
Changes
in
accounting
policy or
prior
period
116
errors
Restated
balance at
the
beginning
of the
reporting
period
Total
Comprehe
nsive
Income for
the year
Dividends
Transfer to
retained
GN on Division II - Ind AS Schedule III to the Companies Act 2013
earnings
Any other
change (to
be
specified)
Balance at
the end of
the
117
reporting
period
Note: (i) Re-measurement of defined benefit plans and fair value changes relating to own credit risk of financial liabilities designated at
fair value through profit or loss shall be recognised as a part of retained earnings with separate disclosure of such items along with the
relevant amounts in the Notes.
(ii) A description of the purposes of each reserve within equity shall be disclosed in the Notes.
GN on Division II - Ind AS Schedule III to the Companies Act 2013
Notes:
GENERAL INSTRUCTIONS FOR PREPARATION OF BALANCE SHEET
1. An entity shall classify an asset as current when-
(a) it expects to realise the asset, or intends to sell or consume it, in its
normal operating cycle;
(b) it holds the asset primarily for the purpose of trading;
(c) it expects to realise the asset within twelve months after the reporting
period; or
(d) the asset is cash or a cash equivalent unless the asset is restricted
from being exchanged or used to settle a liability for at least twelve
months after the reporting period.
An entity shall classify all other assets as non-current.
2. The operating cycle of an entity is the time between the acquisition of
assets for processing and their realisation in cash or cash equivalents.
When the entity's normal operating cycle is not clearly identifiable, it is
assumed to be twelve months.
3. An entity shall classify a liability as current when-
(a) it expects to settle the liability in its normal operating cycle;
(b) it holds the liability primarily for the purpose of trading;
(c) the liability is due to be settled within twelve months after the reporting
period; or
(d) it does not have an unconditional right to defer settlement of the
liability for at least twelve months after the reporting period. 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.
An entity shall classify all other liabilities 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.
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GN on Division II - Ind AS Schedule III to the Companies Act 2013
6. A company shall disclose the following in the Notes:
A. Non-Current Assets
I. Property, Plant and Equipment:
(i) Classification shall be given as:
(a) Land
(b) Buildings
(c) Plant and Equipment
(d) Furniture and Fixtures
(e) Vehicles
(f) Office equipment
(g) Bearer Plants
(h) Others (specify nature)
(ii) Assets under lease shall be separately specified under each class of
assets.
(iii) A reconciliation of the gross and net carrying amounts of each class of
assets at the beginning and end of the reporting period showing
additions, disposals, acquisitions through business combinations and
other adjustments and the related depreciation and impairment losses
or reversals shall be disclosed separately.
II. Investment Property:
A reconciliation of the gross and net carrying amounts of each class of
property at the beginning and end of the reporting period showing
additions, disposals, acquisitions through business combinations and
other adjustments and the related depreciation and impairment losses
or reversals shall be disclosed separately.
III. Goodwill:
A reconciliation of the gross and net carrying amount of goodwill at the
beginning and end of the reporting period showing additions,
impairments, disposals and other adjustments.
IV. Other Intangible assets:
(i) Classification shall be given as:
(a) Brands or trademarks
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GN on Division II - Ind AS Schedule III to the Companies Act 2013
(b) Computer software
(c) Mastheads and publishing titles
(d) Mining rights
(e) Copyrights, patents, other intellectual property rights, services
and operating rights
(f) Recipes, formulae, models, designs and prototypes
(g) Licenses and franchises
(h) Others (specify nature)
(ii) A reconciliation of the gross and net carrying amounts of each class of
assets at the beginning and end of the reporting period showing
additions, disposals, acquisitions through business combinations and
other adjustments and the related amortization and impairment losses
or reversals shall be disclosed separately.
V. Biological Assets other than bearer plants:
A reconciliation of the carrying amounts of each class of assets at the
beginning and end of the reporting period showing additions,
disposals, acquisitions through business combinations and other
adjustments shall be disclosed separately.
VI. Investments:
(i) Investments shall be classified as:
(a) Investments in Equity Instruments;
(b) Investments 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; or
(g) Other investments (specify nature).
Under each classification, details shall be given of names of the
bodies corporate that are-
(i) subsidiaries,
(ii) associates,
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GN on Division II - Ind AS Schedule III to the Companies Act 2013
(iii) joint ventures, or
(iv) structured 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). Investments in
partnership firms alongwith names of the firms, their partners, total
capital and the shares of each partner shall be disclosed separately.
(ii) The following shall also be disclosed:
(a) Aggregate amount of quoted investments and market value
thereof;
(b) Aggregate amount of unquoted investments; and
(c) Aggregate amount of impairment in value of investments.
VII. Trade Receivables:
(i) Trade receivables shall be sub-classified as:
(a) Trade Receivables - Considered Good Secured;
(b) Trade Receivables - Considered Good Unsecured; and
(c) Trade Receivables which have significant increase in credit risk
(d) Trade receivables credit impaired.
(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.
VIII. Loans:
(i) Loans shall be classified as-
(a) Security Deposits;
(b) Loans to related parties (giving details thereof); and
(c) Other loans (specify nature).
(ii) Loans Receivables shall be sub-classified as-
(a) Loans Receivables - Considered Good -Secured;
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GN on Division II - Ind AS Schedule III to the Companies Act 2013
(b) Loans Receivables - Considered Good - Unsecured; and
(c) Loans receivables which have significant increase in credit risk
(d) Loans receivables credit impaired.
(iii) Allowance for bad and doubtful loans shall be disclosed under the
relevant heads separately.
(iv) Loans 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.
IX. Bank deposits with more than 12 months maturity shall be disclosed
under `Other financial assets';
X. Other non-current assets: Other non-current assets shall be classified
as-
(i) Capital Advances; and
(ii) Advances other than capital advances;
(1) Advances other than capital advances shall be classified as:
(a) Security Deposits;
(b) Advances to related parties (giving details thereof); and
(c) Other advances (specify nature).
(2) Advances to directors or other officers of the company or any of
them either severally or jointly with any other persons or
advances to firms or private companies respectively in which
any director is a partner or a director or a member should be
separately stated. In case advances are of the nature of a
financial asset as per relevant Ind AS, these are to be disclosed
under `other financial assets' separately.
(iii) Others (specify nature).
B. Current Assets
I. Inventories:
(i) Inventories shall be classified as-
(a) Raw materials;
(b) Work-in-progress;
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GN on Division II - Ind AS Schedule III to the Companies Act 2013
(c) Finished goods;
(d) Stock-in-trade (in respect of goods acquired for trading);
(e) Stores and spares;
(f) Loose tools; and
(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.
II. Investments:
(i) 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; and
(g) Other investments (specify nature).
Under each classification, details shall be given of names of the
bodies corporate that are-
(i) subsidiaries,
(ii) associates,
(iii) joint ventures, or
(iv) structured 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).
(ii) The following shall also be disclosed-
(a) Aggregate amount of quoted investments and market value
thereof;
(b) Aggregate amount of unquoted investments;
(c) Aggregate amount of impairment in value of investments.
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GN on Division II - Ind AS Schedule III to the Companies Act 2013
III. Trade Receivables:
(i) Trade receivables shall be sub-classified as:
(a) Trade Receivables - Considered Good - Secured;
(b) Trade Receivables - Considered Good - Unsecured; and
(c) Trade receivables which have significant increase in credit risk
(d) Trade receivables credit impaired.
(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.
IV. Cash and cash equivalents: Cash and cash equivalents shall be
classified as-
a. Balances with Banks (of the nature of cash and cash
equivalents);
b. Cheques, drafts on hand;
c. Cash on hand; and
d. Others (specify nature).
V. Loans:
(i) Loans shall be classified as:
(a) Security deposits;
(b) Loans to related parties (giving details thereof); and
(c) Others (specify nature).
(ii) Loans Receivables shall be sub-classified as-
(a) Loans Receivables Considered Good - Secured;
(b) Loans Receivables Considered Good - Unsecured; and
(c) Loans receivables which have significant increase in credit risk
(d) Loans receivable credit impaired.
(iii) Allowance for bad and doubtful loans shall be disclosed under the
relevant heads separately.
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GN on Division II - Ind AS Schedule III to the Companies Act 2013
(iv) Loans 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.
VI. Other current assets (specify nature): This is an all-inclusive heading,
which incorporates current assets that do not fit into any other asset
categories. Other current assets shall be classified as-
(i) Advances other than capital advances
(1) Advances other than capital advances shall be classified as:
(a) Security Deposits;
(b) Advances to related parties (giving details thereof);
(c) Other advances (specify nature).
(2) Advances to directors or other officers of the company or any of
them either severally or jointly with any other persons or
advances to firms or private companies respectively in which
any director is a partner or a director or a member should be
separately stated.
(ii) Others (specify nature)
C. Cash and Bank balances:
The following disclosures with regard to cash and bank balances shall be
made:
(a) Earmarked balances with banks (for example, for unpaid dividend)
shall be separately stated.
(b) Balances with banks to the extent held as margin money or security
against the borrowings, guarantees, other commitments shall be
disclosed separately.
(c) Repatriation restrictions, if any, in respect of cash and bank balances
shall be separately stated.
D. Equity
I. Equity Share Capital: For each class of equity share capital:
(a) the number and amount of shares authorised;
(b) the number of shares issued, subscribed and fully paid, and
subscribed but not fully paid;
(c) par value per share;
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GN on Division II - Ind AS Schedule III to the Companies Act 2013
(d) a reconciliation of the number of shares outstanding at the
beginning and at the end of the period;
(e) the rights, preferences and restrictions attaching to each class
of shares including restrictions on the distribution of dividends
and the repayment of capital;
(f) shares in respect of each class in the company held by its
holding company or its ultimate holding company including
shares held by subsidiaries or associates of the holding
company or the ultimate holding company in aggregate;
(g) shares in the company held by each shareholder holding more
than five per cent. shares specifying the number of shares held;
(h) shares reserved for issue under options and contracts or
commitments for the sale of shares or disinvestment, including
the terms and amounts;
(i) for the period of five years immediately preceding the date at
which the Balance Sheet is prepared-
· aggregate number and class of shares allotted as fully
paid up pursuant to contract without payment being
received in cash;
· aggregate number and class of shares allotted as fully
paid up by way of bonus shares; and
· aggregate number and class of shares bought back;
(j) terms of any securities convertible into equity shares issued
along with the earliest date of conversion in descending order
starting from the farthest such date;
(k) calls unpaid (showing aggregate value of calls unpaid by
directors and officers);
(l) forfeited shares (amount originally paid up).
II. Other Equity:
(i) `Other Reserves' shall be classified in the notes as-
(a) Capital Redemption Reserve;
(b) Debenture Redemption Reserve;
(c) Share Options Outstanding Account; and
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GN on Division II - Ind AS Schedule III to the Companies Act 2013
(d) Others (specify the nature and purpose of each reserve and
the amount in respect thereof);
(Additions and deductions since last balance sheet to be shown
under each of the specified heads)
(ii) Retained Earnings represents surplus i.e. balance of the relevant
column in the Statement of Changes in Equity;
(iii) A reserve specifically represented by earmarked investments shall
disclose the fact that it is so represented;
(iv) Debit balance of Statement of Profit and Loss shall be shown as a
negative figure under the head `retained earnings'. Similarly, the
balance of `Other Equity', after adjusting negative balance of retained
earnings, if any, shall be shown under the head `Other Equity' even if
the resulting figure is in the negative; and
(v) Under the sub-head `Other Equity', disclosure shall be made for the
nature and amount of each item.
E. Non-Current Liabilities
I. Borrowings:
(i) borrowings shall be classified as-
(a) Bonds or debentures
(b) Term loans
(I) from banks
(II) from other parties
(c) Deferred payment liabilities
(d) Deposits
(e) Loans from related parties
(f) Long term maturities of finance lease obligations
(g) Liability component of compound financial instruments
(h) Other loans (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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(iv) bonds or debentures (along with the rate of interest, and particulars of
redemption or conversion, as the case may be) shall be stated in
descending order of maturity or conversion, starting from 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 or debentures which the company
has power to reissue shall be disclosed;
(vi) terms of repayment of term loans and other loans shall be stated; and
(vii) period and amount of default as on the balance sheet date in
repayment of borrowings and interest shall be specified separately in
each case.
III. Provisions: The amounts shall be classified as-
(a) Provision for employee benefits; and
(b) Others (specify nature).
IV. Other non-current liabilities;
(a) Advances; and
(b) Others (specify nature).
F. Current Liabilities
I. Borrowings:
(i) Borrowings shall be classified as-
(a) Loans repayable on demand
(I) from banks
(II) from other parties
(b) Loans from related parties
(c) Deposits
(d) Other loans (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;
(iv) period and amount of default as on the balance sheet date in
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GN on Division II - Ind AS Schedule III to the Companies Act 2013
repayment of borrowings and interest, shall be specified separately in
each case.
II. Other Financial Liabilities: Other Financial liabilities shall be classified
as-
(a) Current maturities of long-term debt;
(b) Current maturities of finance lease obligations;
(c) Interest accrued;
(d) Unpaid dividends;
(e) Application money received for allotment of securities to the
extent refundable and interest accrued thereon;
(f) Unpaid matured deposits and interest accrued thereon;
(g) Unpaid matured debentures and interest accrued thereon; and
(h) Others (specify nature).
`Long term debt' is a borrowing having a period of more than
twelve months at the time of origination
III. Other current liabilities:
The amounts shall be classified as-
(a) revenue received in advance;
(b) other advances (specify nature); and
(c) others (specify nature);
IV. Provisions: The amounts shall be classified as-
(i) provision for employee benefits; and
(ii) others (specify nature).
FA. Trade Payables
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 as at the end of each
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;
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GN on Division II - Ind AS Schedule III to the Companies Act 2013
(c) the amount of interest due and payable for the period of delay in
making payment (which has been paid but beyond the appointed day
during the year) but without adding the interest specified under the
MSMED Act, 2006);
(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.
Explanation:- The terms `appointed day', `buyer', `enterprise', `micro
enterprise', `small enterprise' and `supplier', shall have the same meaning as
assigned to them under clauses (b), (d), (e), (h), (m) and (n) respectively of
section 2 of the Micro, Small and Medium Enterprises Development Act,
2006.
G. The presentation of liabilities associated with group of assets
classified as held for sale and non-current assets classified as held for
sale shall be in accordance with the relevant Indian Accounting
Standards (Ind ASs).
H. Contingent Liabilities and Commitments:
(to the extent not provided for)
(i) Contingent Liabilities shall be classified as-
(a) claims against the company not acknowledged as debt;
(b) guarantees excluding financial guarantees; and
(c) other money for which the company is contingently liable.
(ii) Commitments shall be classified as-
(a) estimated amount of contracts remaining to be executed on
capital account and not provided for;
(b) uncalled liability on shares and other investments partly paid;
and
(c) other commitments (specify nature).
I. The amount of dividends proposed to be distributed to equity and
preference shareholders for the period and the related amount per
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share shall be disclosed separately. Arrears of fixed cumulative
dividends on irredeemable preference shares shall also be disclosed
separately.
J. Where in respect of an issue of securities made for a specific purpose
the whole or part of amount has not been used for the specific purpose
at the Balance Sheet date, there shall be indicated by way of note how
such unutilised amounts have been used or invested.
K. 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.
7. When a company applies an accounting policy retrospectively or
makes a restatement of items in the financial statements or when it
reclassifies items in its financial statements, the company shall attach to the
Balance Sheet, a "Balance Sheet" as at the beginning of the earliest
comparative period presented.
8. Share application money pending allotment shall be classified into
equity or liability in accordance with relevant Indian Accounting Standards.
Share application money to the extent not refundable shall be shown under
the head Equity and share application money to the extent refundable shall
be separately shown under `Other financial liabilities'.
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9. Preference shares including premium received on issue, shall be
classified and presented as `Equity' or `Liability' in accordance with the
requirements of the relevant Indian Accounting Standards. Accordingly, the
disclosure and presentation requirements in this regard applicable to the
relevant class of equity or liability shall be applicable mutatis mutandis to the
preference shares. For instance, plain vanilla redeemable preference shares
shall be classified and presented under `non-current liabilities' as
`borrowings' and the disclosure requirements in this regard applicable to such
borrowings shall be applicable mutatis mutandis to redeemable preference
shares.
10. Compound financial instruments such as convertible debentures,
where split into equity and liability components, as per the requirements of
the relevant Indian Accounting Standards, shall be classified and presented
under the relevant heads in `Equity' and `Liabilities'
11. Regulatory Deferral Account Balances shall be presented in the
Balance Sheet in accordance with the relevant Indian Accounting Standards.
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PART II STATEMENT OF PROFIT AND LOSS
Name of the Company.........................
Statement of Profit and Loss for the period ended ...........................
(Rupees in............)
Particulars Note Figures Figures for
No. for the The
current previous
reporting reporting
period Period
I Revenue From Operations
II Other Income
III Total Income (I+II)
IV EXPENSES
Cost of materials consumed
Purchases of Stock-in-Trade
Changes in inventories of
finished goods,
Stock-in-Trade and work-in-
progress
Employee benefits expense
Finance costs
Depreciation and amortization
expense
Other expenses
Total expenses (IV)
V Profit/(loss) before exceptional
items and tax (I- IV)
VI Exceptional Items
VII Profit/(loss) before tax
(V-VI)
VIII Tax expense:
(1) Current tax
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(2) Deferred tax
IX Profit (Loss) for the period from
continuing operations (VII-VIII)
X Profit/(loss) from discontinued
operations
XI Tax expense of discontinued
operations
XII Profit/(loss) from Discontinued
operations (after tax) (X-XI)
XIII Profit/(loss) for the period
(IX+XII)
XIV Other Comprehensive Income
A (i) Items that will not be
reclassified to profit or loss
(ii) Income tax relating to items
that will not be reclassified to
profit or loss
B (i) Items that will be reclassified
to profit or loss
(ii) Income tax relating to items
that will be reclassified to profit or
loss
XV Total Comprehensive Income for
the period (XIII+XIV)(Comprising
Profit (Loss) and Other
Comprehensive Income for the
period)
XVI Earnings per equity share (for
continuing operation):
(1) Basic
(2) Diluted
XVII Earnings per equity share (for
discontinued operation):
(1) Basic
(2) Diluted
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XVIII Earnings per equity share (for
discontinued & continuing
operations)
(1) Basic
(2) Diluted
See accompanying notes to the financial statements
Notes:
GENERAL INSTRUCTIONS FOR PREPARATION OF STATEMENT OF
PROFIT AND LOSS
1. The provisions of this Part shall apply to the income and expenditure
account, in like manner as they apply to a Statement of Profit and
Loss.
2. The Statement of Profit and Loss shall include:
(1) Profit or loss for the period;
(2) Other Comprehensive Income for the period.
The sum of (1) and (2) above is `Total Comprehensive Income'.
3. Revenue from operations shall disclose separately in the notes
(a) sale of products (including Excise Duty);
(b) sale of services; and
(c) other operating revenues.
4. Finance Costs: Finance costs shall be classified as-
(a) interest;
(b) dividend on redeemable preference shares;
(c) exchange differences regarded as an adjustment to borrowing
costs; and
(d) other borrowing costs (specify nature).
5. Other income: Other income shall be classified as-
(a) interest Income ;
(b) dividend Income; and
(c) other non-operating income (net of expenses directly
attributable to such income).
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6. Other Comprehensive Income shall be classified into-
(A) Items that will not be reclassified to profit or loss
(i) Changes in revaluation surplus;
(ii) Re-measurements of the defined benefit plans;
(iii) Equity Instruments through Other Comprehensive Income;
(iv) Fair value changes relating to own credit risk of financial
liabilities designated at fair value through profit or loss;
(v) Share of Other Comprehensive Income in Associates and Joint
Ventures, to the extent not to be classified into profit or loss;
and
(vi) Others (specify nature).
(B) Items that will be reclassified to profit or loss;
(i) Exchange differences in translating the financial statements of a
foreign operation;
(ii) Debt Instruments through Other Comprehensive Income;
(iii) The effective portion of gains and loss on hedging instruments
in a cash flow hedge;
(iv) Share of Other Comprehensive Income in Associates and Joint
Ventures, to the extent to be classified into profit or loss; and
(v) Others (specify nature).
7. Additional Information: A Company shall disclose by way of notes,
additional information regarding aggregate expenditure and income on
the following items:
(a) employee Benefits expense [showing separately (i) salaries and
wages, (ii) contribution to provident and other funds, (iii) share
based payments to employees, (iv) staff welfare expenses].
(b) depreciation and amortisation expense;
(c) any item of income or expenditure which exceeds one per cent
of the revenue from operations or Rs.10,00,000, whichever is
higher, in addition to the consideration of `materiality' as
specified in clause 7 of the General Instructions for Preparation
of Financial Statements of a Company;
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(d) interest Income;
(e) interest Expense;
(f) dividend income;
(g) net gain or loss on sale of investments;
(h) net gain or loss on foreign currency transaction and translation
(other than considered as finance cost);
(i) payments to the auditor as (a) auditor, (b) for taxation matters,
(c) for company law matters, (d) for other services, (e) for
reimbursement of expenses;
(j) in case of companies covered under section 135, amount of
expenditure incurred on corporate social responsibility activities;
and
(k) details of items of exceptional nature;
8. Changes in Regulatory Deferral Account Balances shall be presented
in the Statement of Profit and Loss in accordance with the relevant
Indian Accounting Standards.
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GN on Division II - Ind AS Schedule III to the Companies Act 2013
PART III- GENERAL INSTRUCTIONS FOR THE PREPARATION OF
CONSOLIDATED FINANCIAL STATEMENTS
Name of Net Assets, Share in profit Share in other Share in total
the entity i.e., total or loss comprehensiv comprehensi
in the assets minus e income ve income
Group total
liabilities
comprehensi
As % of total
consolidated
consolidated
consolidated
As % of
Amount
As % of
Amount
As % of
Amount
Amount
Parent
Subsidiarie
s
Indian
1.
2.
3.
.
.
Foreign
1.
2.
3.
.
.
Non-
controlling
Interests in
all
Subsidiarie
s
Associates
(Investmen
138
GN on Division II - Ind AS Schedule III to the Companies Act 2013
t as per the
equity
method)
Indian
1.
2.
3.
.
.
Foreign
1.
2.
3.
.
.
Joint
Ventures
(investment
as per the
equity
method)
Indian
1.
2.
3.
.
.
Foreign
1.
2.
3.
.
.
Total
1. Where a company is required to prepare Consolidated Financial
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GN on Division II - Ind AS Schedule III to the Companies Act 2013
Statements, i.e., consolidated balance sheet, consolidated statement of
changes in equity and consolidated statement of profit and loss, the company
shall mutatis mutandis follow the requirements of this Schedule as applicable
to a company in the preparation of balance sheet, statement of changes in
equity and statement of profit and loss. In addition, the consolidated financial
statements shall disclose the information as per the requirements specified in
the applicable Indian Accounting Standards notified under the Companies
(Indian Accounting Standards) Rules 2015, including the following, namely:-
(i) Profit or loss attributable to `non-controlling interest' and to `owners of
the parent' in the statement of profit and loss shall be presented as
allocation for the period. Further, `total comprehensive income' for the
period attributable to `non-controlling interest' and to `owners of the
parent' shall be presented in the statement of profit and loss as
allocation for the period. The aforesaid disclosures for `total
comprehensive income' shall also be made in the statement of
changes in equity. In addition to the disclosure requirements in the
Indian Accounting Standards, the aforesaid disclosures shall also be
made in respect of `other comprehensive income'.
(ii) `Non-controlling interests' in the Balance Sheet and in the Statement
of Changes in Equity, within equity, shall be presented separately from
the equity of the `owners of the parent'.
(iii) Investments accounted for using the equity method.
2. In Consolidated Financial Statements, the following shall be disclosed
by way of additional information:
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.
140
Annexure B
Key Differences in Division I and Division II of Schedule III to the
Companies Act, 2013
Division I Division II
1. Applicability
Division I is applicable to a Company Division II is applicable to a
whose Financial Statements are not Company whose Financial
required to comply Ind AS. Statements are required to comply
with Ind AS.
2. What it includes?
Division I read with Accounting Division II read with Indian
Standards includes: Accounting Standards includes:
1. Balance Sheet 1. Balance Sheet
2. Statement of Profit and Loss 2. Statement of Changes in Equity
3. Statement of Cash Flow 3. Statement of Profit and Loss.
4. Notes, comprising a summary of 4. Statement of Cash Flow
significant accounting policies and 5. Notes, comprising a summary of
other explanatory information significant accounting policies and
other explanatory information
6. A balance as at the beginning
of the earliest comparative period
when an entity applies an
accounting policy retrospectively
or makes a retrospective
restatement of items in its
Financial Statements, or when it
reclassifies items in its Financial
Statements.
Statement of Profit and Loss shall
include profit or loss for the
period and Other Comprehensive
Income for the period.
GN on Division II - Ind AS Schedule III to the Companies Act 2013
Division I Division II
3. Materiality
A Company shall disclose by way of A Company shall disclose by way of
notes additional information any item notes additional information any item
of expenditure and income which of expenditure and income which
exceeds one per cent of the revenue exceeds one per cent of the revenue
from operations or Rs. 1,00,000 from operations or Rs. 10,00,000
whichever is higher. whichever is higher.
Also disclosure is to be made of
all material items i.e. the items if
they could, individually or
collectively, influence the
economic decisions that users
make on the Financial Statements.
4. Earnings Per Share
No separate disclosure is required for Division II requires separate
earning per share for continuing and disclosure of the earning per share
discontinuing operations. for continuing and discontinuing
operations.
5. Extraordinary Items
Separate disclosure is required. There is no separate disclosure of
extraordinary items which is in line
with IND AS 1.
6. Investments
Under each classification of Under each classification of
investments details shall be given of investments details shall be given of
names of bodies corporate indicating names of bodies corporate indicating
separately whether such bodies are separately whether such bodies that
1. Subsidiaries are
2. Associates 1. Subsidiaries
3. Joint ventures 2. Associates
4. Controlled special purpose entities 3. Joint ventures
The following shall also be disclosed. 4.Controlled special purpose entities
(a) The basis of valuation of 4. Structured entities
individual investment The following shall also be
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GN on Division II - Ind AS Schedule III to the Companies Act 2013
Division I Division II
(b) Aggregate amount of quoted disclosed.
investments and market value (a) The basis of valuation of
thereof individual investment
(c) Aggregate amount of unquoted (a) Aggregate amount of quoted
investments investments and market value
(d) Aggregate provision made for thereof
diminution in value of (b) Aggregate amount of unquoted
investments investments
(c) Aggregate amount of
impairment in value of
investments
7. Trade Receivables
Aggregate amount of Trade No such requirement
receivable outstanding for a period
exceeding six months from the date
they are due for payment should be
separately disclosed
8. Contingent liabilities
Contingent liabilities includes all Contingent liabilities pertaining to
guarantees guarantees excluding financial
guarantees.
9. Finance Cost
Finance cost shall be classified as Finance cost shall be classified as
(a) Interest Expense (a) Interest Expense
(b) Other borrowing cost (b) Dividend on redeemable
(c) Applicable net gain/loss on preference shares
foreign currency transactions (c) Exchange differences
and translations regarded as an adjustment
to borrowing cost and
(d) Other borrowing cost (specify
nature)
10. Revenue
Revenue is disclosed as Sales net of Revenue includes excise duty.
Excise duty
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Division I Division II
11. Bank deposits
Bank deposits with more than 12 Bank deposits with more than 12
months maturity should be classified months maturity should be classified
under Other bank balances under Other Financial Assets
12. Defined benefit plan
Gains/losses arising on defined Ind AS Schedule III states that Re-
benefit plan is recognized in measurement gains/ losses on
statement of profit and loss defined benefit plans should form
part of retained earnings.
Ind AS requires that Re-
measurement gains/ (losses) arising
on defined benefit plans should be
recognized in the other
comprehensive income (OCI) and
these gains/ losses cannot
subsequently be reclassified to
profit or loss.
However, Ind AS does not contain
any specific guidance/ requirement
whether such gains/ losses should
be recognized in the retained
earnings or should appear as a
separate reserve within the
statement of changes in equity.
13. Liquidity
Where compliance with the Where compliance with the
requirements of the Act including requirements of the Act including
Accounting Standards as applicable Indian Accounting Standards
to the companies require any change (except the option of presenting
in treatment or disclosure including assets and liabilities in the order
addition, amendment, substitution or of liquidity as provided by the
deletion in the head or sub-head or relevant Ind AS) as applicable to
any changes, inter se, in the financial the companies require any change
statements or statements forming in treatment or disclosure including
part thereof, the same shall be made addition, amendment, substitution or
and the requirements of this deletion in the head or sub-head or
Schedule shall stand modified any changes inter se, in the financial
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GN on Division II - Ind AS Schedule III to the Companies Act 2013
Division I Division II
accordingly. statements or statements forming
part thereof, the same shall be made
and the requirements under this
Schedule shall stand modified
accordingly.
14. Other disclosures of Statement of Profit and Loss
The following disclosures are These disclosures are no longer
required required under Division II to
A. (a) In the case of manufacturing Schedule III.
companies,
(1) Raw materials under broad
heads.
(2) goods purchased under broad
heads.
(b) In the case of trading companies,
purchases in respect of goods traded
in by the company under broad
heads.
(c) In the case of companies
rendering or supplying services,
gross income derived from services
rendered or supplied under broad
heads.
(d) In the case of a company, which
falls under more than one of the
categories mentioned in (a), (b) and
(c) above, it shall be sufficient
compliance with the requirements
herein if purchases, sales and
consumption of raw material and the
gross income from services rendered
is shown under broad heads.
(e) In the case of other companies,
gross income derived under broad
heads.
B. In the case of all concerns having
works in progress under broad
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GN on Division II - Ind AS Schedule III to the Companies Act 2013
Division I Division II
heads.
C. (a) The aggregate, if material, of
any amounts set aside or proposed to
be set aside, to reserve, but not
including provisions made to meet
any specific liability,
Contingency or 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.
D. (a) The aggregate, if material, of
the amounts set aside to provisions
made for meeting specific liabilities,
contingencies or commitments.
(b) The aggregate, if material, of the
amounts withdrawn from such
provisions, as no longer required.
E. Expenditure incurred on each of
the following items, separately for
each item:
(a) Consumption of stores and
spare parts;
(b) Power and fuel;
(c) Rent;
(d) Repairs to buildings;
(e) Repairs to machinery;
(f) Insurance;
(g) Rates and taxes, excluding
taxes on income;
(h) Miscellaneous expenses,
F. (a) Dividends from subsidiary
companies.
(b) Provisions for losses of subsidiary
companies.
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GN on Division II - Ind AS Schedule III to the Companies Act 2013
Division I Division II
G. The profit and loss account shall
also contain by way of a note the
following information, namely:
(a) Value of imports calculated on
C.I.F basis by the company during
the financial year in respect of
I. Raw materials;
II. Components and spare parts;
III. Capital goods;
(b) Expenditure in foreign currency
during the financial year on account
of royalty, know-how, professional
and consultation fees, interest, and
other matters;
(c) Total value if all imported raw
materials, spare parts and
components consumed during the
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
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GN on Division II - Ind AS Schedule III to the Companies Act 2013
Division I Division II
fees;
III. Interest and dividend;
IV. Other income, indicating the
nature thereof.
15. Dividend on Preference Shares
Dividend on redeemable preference Dividend on redeemable preference
shares was regarded as an shares is now presented as a part
adjustment to reserves. of Finance cost.
16. Prior Period Items
A separate disclosure was required There is no concept of Prior
for Prior Period Items. period items and any
retrospective application of
accounting policy or retrospective
restatement of items in Financial
Statements, or reclassification of
items in Financial Statements
requires restatement of
comparative period.
17. Rounding off Disclosure
Depending upon the turnover of the Depending upon the turnover of the
company, the figures appearing in the company, the figures appearing in
Financial Statements may be the Financial Statements shall be
rounded off as given in Non-Ind AS rounded off as given in Ind AS
Schedule III. Schedule III.
18. Investments - Names of Bodies Corporate
Under each classification of Under each classification of
investments details shall be given of investments details shall be given of
names of bodies corporate indicating names of bodies corporate that are
separately whether such bodies are 1. Subsidiaries
1. Subsidiaries 2. Associates
2. Associates 3. Joint ventures
3. Joint ventures 4. Control special purpose entities
4. Control special purpose entities 4. Structured entities
Accordingly details of bodies
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Division I Division II
Corporates other than those listed
above may not be given.
19. Investment Property
Investment property was disclosed as Investment Property is disclosed as
a part of Investments. a separate line item on the face of
balance sheet.
Also the following disclosure needs
to be given
A reconciliation of the gross and
net carrying amounts of each
class of property at the beginning
and end of the reporting period
showing additions, disposals,
acquisitions through business
combinations and other
adjustments and the related
depreciation and impairment
losses or reversals shall be
disclosed separately.
20. Disclosure in standalone financial statements
No such explicit Requirement Disclosures required by Act or
Regulation shall be made in the
standalone financial statements
which shall be made in addition to
those required under this
Schedule.
21. Property, Plant and Equipment and Intangible Assets
Property, Plant and Equipment Property, Plant and Equipment
Tangible assets Classification shall be given as:
Classification shall be given as: (i) Land
(i) Land; (ii) Buildings
(ii) Buildings; (iii) Plant and Equipment
(iii) Plant and Equipment; (iv) Furniture and Fixtures
(iv) Furniture and Fixtures; (v) Vehicles
(v) Vehicles; (vi) Office equipment
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GN on Division II - Ind AS Schedule III to the Companies Act 2013
Division I Division II
(vi) Office equipment; (vii) Bearer Plants
(vii) Others (specify nature) (viii) Others (specify nature)
Intangible Assets included Goodwill Goodwill is shown separately on the
face of the Balance Sheet and
remaining shall be shown as Other
Intangible Assets.
Clause common to Tangible assets and
Intangible assets: Clause common to Property, Plant &
Equipment and Other Intangible
Assets:
(ix)
22. Capital reduction
Where sums have been written-off on No such requirement
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.
23. Biological Assets other than bearer plants
No such requirement A reconciliation of the carrying
amounts of each class of assets
at the beginning and end of the
reporting period showing
additions, disposals, acquisitions
through business combinations
and other adjustments shall be
disclosed separately.
24. Loans: Non-current
Long-term loans and advances shall Loans shall be classified as-
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Division I Division II
be classified as: (a) Capital Advances;
(a) Capital Advances; (a) Security Deposits;
(b) Security Deposits; (b) Loans to related parties
(c) Loans and advances to related (giving details thereof); and
parties (giving details thereof); (c) Other loans (specify nature).
(d) Other loans and advances
(specify nature).
25. Other non-current assets
Other non-current assets shall be Other non-current assets shall be
classified as: classified as:
(i) Long-term Trade Receivables (i) Capital Advances;
(including trade receivables on (ii) Advances other than capital
deferred credit terms); advances;
(ii) Others (specify nature); Advances other than capital
(iii) Long-term Trade Receivables, advances shall be classified as:
shall be sub-classified as: a) Security Deposits;
(a) Secured, considered good; b) Advances to related parties
(b) Unsecured, considered (giving details thereof); and
good; c) Other advances (specify
(c) Doubtful. nature)
Allowance for bad and doubtful debts Advances to directors or other
shall be disclosed under the relevant officers of the company or any of
heads separately. them either severally or jointly with
Debts due by directors or other any other persons or advances to
officers of the company or any of firms or private companies
them either severally or jointly with respectively in which any director is
any other persons or advances to a partner or a director or a member
firms or private companies should be separately stated. In case
respectively in which any director is a advances are of the nature of a
partner or a director or a member financial asset as per relevant Ind
should be separately stated. AS, these are to be disclosed
under `other financial assets'
separately.
(iii) Others (specify nature)
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26. Loans: Current
Short-term loans and advances shall Short Term Loans and advances
be classified as: shall be classified as:
(a) Loans and advances to related (a) Security deposits;
parties (giving details thereof); (b) Loans to related parties
(b) Others (specify nature). (giving details thereof); and
(c) Others (specify nature).
27. Other current assets
This is an all-inclusive heading, which This is an all-inclusive heading,
incorporates current assets that do which incorporates current assets
not fit into any other asset categories. that do not fit into any other asset
categories. Other current assets
shall be classified as:
(i) Advances other than capital
advances
Advances other than capital
advances shall be classified as:
a) Security Deposits;
b) Advances to related parties
(giving details thereof);
c) Other advances (specify
nature).
Advances to directors or other
officers of the company or any of
them either severally or jointly
with any other persons or
advances to firms or private
companies respectively in which
any director is a partner or a
director or a member should be
separately stated.
(ii) Others (specify nature)
28. Share capital
For each class of share capital For each class of equity share
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Division I Division II
(different classes of preference capital (different classes of
shares to be treated separately): preference shares to be treated
(j) terms of any securities separately):
convertible into equity/preference (j) terms of any securities
shares issued along with the earliest convertible into equity/ preference
date of conversion in descending shares issued along with the earliest
order starting from the farthest such date of conversion in descending
date; order starting from the farthest such
date;
29. Reserves and Surplus / Other Equity
(i) Reserves and Surplus shall be (i) `Other Reserves' shall be
classified as: classified in the notes as-
(a) Capital Reserves; (a) Capital Reserve;
(b) Capital Redemption Reserve; (b) Capital Redemption Reserve;
(c) Securities Premium; (c) Securities Premium Reserve;
(d) Debenture Redemption (d) Debenture Redemption
Reserve; Reserve;
(e) Revaluation Reserve; (e) Revaluation Reserve;
(f) Share Options Outstanding (f) Share Options Outstanding
Account; Account; and
(g) Other Reserves-(specify the (g) Others (specify the nature
nature and purpose of each and purpose of each reserve
reserve and the amount in and the amount in respect
respect thereof); thereof);
(h) Surplus i.e., balance in (Additions and deductions since last
Statement of Profit and Loss balance sheet to be shown under
disclosing allocations and each of the specified heads)
appropriations such as (ii) Retained Earnings
dividend, bonus shares and represents surplus i.e. balance of
transfer to/ from reserves, etc.; the relevant column in the
(Additions and deductions since last Statement of Changes in Equity;
balance sheet to be shown under (iii) A reserve specifically
each of the specified heads); represented by earmarked
(ii) A reserve specifically investments shall disclose the
represented by earmarked fact that it is so represented;
investments shall be termed as a (iv) Debit balance of Statement of
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Division I Division II
"fund". Profit and Loss shall be shown as a
(iii) Debit balance of statement of negative figure under the head
profit and loss shall be shown as a `retained earnings'. Similarly, the
negative figure under the head balance of `Other Equity', after
"Surplus". Similarly, the balance of adjusting negative balance of
"Reserves and Surplus", after retained earnings, if any, shall be
adjusting negative balance of shown under the head `Other
surplus, if any, shall be shown under Equity' even if the resulting figure is
the head "Reserves and Surplus" in the negative; and
even if the resulting figure is in the (v) Under the sub-head `Other
negative. Equity', disclosure shall be made
for the nature and amount of each
item.
30. Borrowings: Non-current
Long-term borrowings shall be Long-term Borrowings shall be
classified as: classified as-
(a) .. (i) ..
(b) .. (ii) ..
(c) .. (iii) ..
(d) .. (iv) ..
(e) Loans and advances from (v) Loans and advances from
related parties related parties
(f) .. (vi) ..
(g) Other loans and advances (vii) Liability component of
(specify nature) compound financial
Period and amount of continuing instruments
default as on the balance sheet date (viii) Other loans and
in repayment of loans and interest, advances(specify nature)
shall be specified separately in each Period and amount of continuing
case. default as on the balance sheet date
in repayment of loans borrowings
and interest shall be specified
separately in each case.
31. Other non-current liabilities
Other Long-term Liabilities shall be Other Long-term non-current
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Division I Division II
classified as: liabilities;
(a) Trade payables (a) Trade Payables
(b) Others (a) Advances
(b) Others (specify nature)
32. Trade Payables
Trade payables is classified on the Trade Payables:
face of the balance sheet without (A) Total outstanding dues of
disclosing those trade payables from Small Enterprises and
micro enterprises and small Micro enterprises
enterprises (B) Total outstanding dues of
creditors other than small
enterprises and micro
enterprises.
33. Borrowings: Current
Short-term borrowings shall be Short-term Borrowings shall be
classified as: classified as-
(a) .. (a) ..
(b) Loans and advances from (b) Loans and advances from
related parties related parties
(c) .. (c) ..
(d) Other loans and advances (d) Other loans and advances
(specify nature) (specify nature)
Period and amount of default as on Period and amount of default as on
the balance sheet date in repayment the balance sheet date in repayment
of loans and interest, shall be of loans borrowings and interest,
specified separately in each case. shall be specified separately in each
case.
34. Other current liabilities
The amounts shall be classified as: Other Financial liabilities shall be
(a) Current maturities of long-term classified as-
debt; (i) Current maturities of long-
(b) Current maturities of finance term debt;
lease obligations; (ii) Current maturities of finance
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Division I Division II
(c) Interest accrued but not due on lease obligations;
borrowings; (iii) Interest accrued;
(d) Interest accrued and due on (iv) Unpaid dividends;
borrowings; (v) Application money received
(e) Income received in advance; for allotment of securities to
(f) Unpaid dividends; the extent refundable and
(g) Application money received for interest accrued thereon;
allotment of securities and due (vi) Unpaid matured deposits and
for refund and interest accrued interest accrued thereon;
thereon; (vii) Unpaid matured debentures
(h) Unpaid matured deposits and and interest accrued thereon;
interest accrued thereon; and
(i) Unpaid matured debentures (viii) Others (specify nature).
and interest accrued thereon; `Long term debt' is a borrowing
(j) Other payables (specify having a period of more than
nature). twelve months at the time of
origination.
Other current liabilities shall be
classified as-
(a) revenue received in
advance;
(b) other advances (specify
nature); and
(c) others (specify nature);
35. Non-current assets held for sale
No such requirement The presentation of liabilities
associated with group of assets
classified as held for sale and
non-current assets classified as
held for sale shall be in
accordance with the relevant
Indian Accounting Standards (Ind
ASs).
36. Proposed dividend
The amount of dividends proposed to The amount of dividends proposed
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Division I Division II
be distributed to equity and to be distributed to equity and
preference shareholders for the preference shareholders for the
period and the related amount per period and the related amount per
share shall be disclosed separately. share shall be disclosed separately.
Arrears of fixed cumulative dividends Arrears of fixed cumulative
on preference shares shall also be dividends on irredeemable
disclosed separately. preference shares shall also be
disclosed separately.
As per AS 4 Contingencies and As per Ind AS 10 Events after the
Events Occurring After the Balance Reporting Period, proposed
Sheet Date (Revised 2016), proposed dividends should not be recognized
dividends should not be recognized as a liability but rather should be
as a liability but rather should be disclosed as a separate note.
disclosed as a separate note. Hence, there is no difference
between Indian GAAP and Ind AS.
37. Share application money
Share application money includes Share application money pending
advances towards allotment of share allotment shall be classified into
capital. The terms and conditions equity or liability in accordance
including the number of shares with relevant Indian Accounting
proposed to be issued, the amount of Standards. Share application
premium, if any, and the period money to the extent not
before which shares shall be allotted refundable shall be shown under
shall be disclosed. It shall also be the head Equity and share
disclosed whether the company has application money to the extent
sufficient authorised capital to cover refundable shall be separately
the share capital amount resulting shown under `Other financial
from allotment of shares out of such liabilities'.
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
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Division I Division II
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"
38. Classification of preference shares
No such requirement Preference shares including
premium received on issue, shall
be classified and presented as
`Equity' or `Liability' in
accordance with the requirements
of the relevant Indian Accounting
Standards. Accordingly, the
disclosure and presentation
requirements in this regard
applicable to the relevant class of
equity or liability shall be
applicable mutatis mutandis to
the preference shares. For
instance, redeemable preference
shares shall be classified and
presented under `non-current
liabilities' as `borrowings' and the
disclosure requirements in this
regard applicable to such
borrowings shall be applicable
mutatis mutandis to redeemable
preference shares.
39. Compound financial instruments
No such requirement Compound financial instruments
such as convertible debentures,
where split into equity and
liability components, as per the
requirements of the relevant
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Division I Division II
Indian Accounting Standards,
shall be classified and presented
under the relevant heads in
`Equity' and `Liabilities'
40. Regulatory Deferral Account
No such requirement Regulatory Deferral Account
Balances and changes in such
Balances shall be presented in
the Balance Sheet and Statement
of Profit and Loss in accordance
with the relevant Indian
Accounting Standards.
41. Board's opinion on realisable value
If, in the opinion of the Board, any of No such requirement in
the assets other than Property, Plant accordance with Ind AS.
and Equipment and non-current
investments do not have a value on
realisation in the ordinary course of
business at least equal to the amount
at which they are stated, the fact that
the Board is of that opinion, shall be
stated.
42. Revenue from operations
In respect of a company other than a Revenue from operations shall
finance company revenue from disclose separately in the notes
operations shall disclose separately (a) sale of products (including
in the notes revenue from- Excise Duty);
(a) Sale of products; (b) sale of services
(b) Sale of services; (c) other operating revenues
(c) Other operating revenues;
Less:
(d) Excise duty
In respect of a finance company,
revenue from operations shall include
revenue from-
(a) Interest
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Division I Division II
(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.
43. Other income
Other income shall be classified as: Other income shall be classified as-
(a) interest income (in case of a (a) interest income(in case of a
company other than a finance company other than a finance
company) company)
(b) dividend income (b) dividend income
(c) Net gain/loss on sale of (c) other non-operating income
investments (net of expenses directly
(d) other non-operating income attributable to such income)
(net of expenses directly Additional information still
attributable to such income) requires separate presentation
of `Net gain / loss on sale of
investment. The same may be
shown under `Other Income'
44. Employee benefits expense
Employee benefits expense shall Employee benefits expense shall
classified as: classified as:
(i) salaries and wages, (a) salaries and wages
(ii) contribution to provident and (b) contribution to provident and
other funds other funds
(iii) expense on Employee Stock (c) share based payments to
Option Scheme (ESOP) and employees
Employee Stock Purchase (d) staff welfare expenses
Plan (ESPP)
(iv) staff welfare expenses
45. Adjustments to carrying amount of investments
A Company shall disclose by way of No such requirement
notes additional information regarding
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Division I Division II
aggregate expenditure and income
on adjustments to the carrying
amount of investments.
46. Payment to auditors
Payments to auditor shall be Payments to auditor shall be
classified as: classified as:
(a) auditor (a) auditor
(b) for taxation matters (b) for taxation matters
(c) for company law matters (c) for company law matters
(d) for management services (d) for management services
(e) for other services (d) for other services
(f) for reimbursement of expenses (e) for reimbursement of
expenses
47. Consolidated financial statements
"Minority interests" in the balance `Non-controlling interests' in the
sheet within equity shall be presented Balance Sheet and in the
separately from the equity of the Statement of Changes in Equity,
owners of the parent. within equity, shall be presented
separately from the equity of the
`owners of the parent'.
Consolidated financial statements
shall also disclose investments
accounted for using the equity
method.
48. Retrospective restatement or reclassification
No such requirement When a company applies an
accounting policy retrospectively
or makes a restatement of items
in the financial statements or
when it reclassifies items in its
financial statements, the company
shall attach to the Balance Sheet,
a "Balance Sheet" as at the
beginning of the earliest
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Division I Division II
comparative period presented.
49. Other Comprehensive Income
No such requirement Other Comprehensive Income
shall be classified into:
(A) Items that will not be
reclassified to profit or loss:
(i) Changes in revaluation
surplus;
(ii) Remeasurements of the
defined benefit plans;
(iii) Equity Instruments
through Other
Comprehensive Income;
(iv) Fair value changes
relating to own credit risk
of financial liabilities
designated at FVTPL; or
(v) Share of Other
Comprehensive Income in
Associates and Joint
Ventures, to the extent
not to be classified into
profit or loss; and
(vi) Others (specify nature).
Income tax relating to items that
will not be reclassified to profit or
loss
(B) Items that will be reclassified
to profit or loss:
(i) Exchange differences in
translating the financial
statements of a foreign
operation;
(ii) Debt Instruments through
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Division I Division II
Other Comprehensive
Income;
(iii) The effective portion of
gains and loss on
hedging instruments in a
cash flow hedge;
(iv) Share of Other
Comprehensive Income in
Associates and Joint
Ventures, to the extent to
be classified into profit or
loss; and
(v) Others (specify nature).
Income tax relating to items that
will be reclassified to profit or
loss
163
Annexure C
Illustrative list of disclosures required under the Companies Act 2013
1. Section 69 - Transfer of certain sums to capital redemption
reserve account.
Where a company purchases its own shares out of free reserves or securities
premium account, a sum equal to the nominal value of the shares so
purchased shall be transferred to the capital redemption reserve account and
details of such transfer shall be disclosed in the balance sheet.
2. Section 129 - Financial Statements
(5) Without prejudice to sub-section (1), where the Financial Statements
of a company do not comply with the accounting standards referred to in sub-
section (1), the company shall disclose in its Financial Statements, the
deviation from the accounting standards, the reasons for such deviation and
the financial effects, if any, arising out of such deviation.
3. Section 131 - Voluntary revision of Financial Statements or
Board's report
(1) If it appears to the directors of a company that--
(a) the Financial Statements of the company; or
(b) the report of the Board, do not comply with the provisions of section 129
or section 134 they may prepare revised Financial Statements or a revised
report in respect of any of the three preceding financial years after obtaining
approval of the Tribunal on an application made by the company in such form
and manner as may be prescribed and a copy of the order passed by the
Tribunal shall be filed with the Registrar:
Provided that the Tribunal shall give notice to the Central Government and
the Income tax authorities and shall take into consideration the
representations, if any, made by that Government or the authorities before
passing any order under this section:
Provided further that such revised Financial Statements or report shall not be
prepared or filed more than once in a financial year:
Provided also that the detailed reasons for revision of such Financial
Statements or report shall also be disclosed in the Board's report in the
relevant financial year in which such revision is being made.
GN on Division II - Ind AS Schedule III to the Companies Act 2013
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 (as amended)
(3) Every company shall disclose in its profit and loss account the total
amount contributed by it under this section during the financial year to which
the account relates.
6. Section 183 - Power of Board and other persons to make
contributions to national defence fund, etc.
(2) Every company shall disclose in its profits and loss account the total
amount or amounts contributed by it to the Fund referred to in sub-section (1)
during the financial year to which the amount relates.
7. Section 186 - Loan and investment by company
(4) The company shall disclose to the members in the Financial
Statements the full particulars of the loans given, investment made or
guarantee given or security provided and the purpose for which the loan or
guarantee or security is proposed to be utilised by the recipient of the loan or
guarantee or security.
8. Section 272 - Petition for winding up
(4) The Registrar shall be entitled to present a petition for winding up
under subsection (1) on any of the grounds specified in sub-section (1) of
section 271, except on the grounds specified in clause (b), clause (d) or
clause (g) of that sub-section:
Provided that the Registrar shall not present a petition on the ground that the
company is unable to pay its debts unless it appears to him either from the
financial condition of the company as disclosed in its balance sheet or from
the report of an inspector appointed under section 210 that the company is
unable to pay its debts:
Provided further that the Registrar shall obtain the previous sanction of the
Central Government to the presentation of a petition:
Provided also that the Central Government shall not accord its sanction
unless the company has been given a reasonable opportunity of making
representations.
165
Annexure D
List of Indian Accounting Standards notified as on date:
Ind AS Description
Ind AS 101 First-time Adoption of Indian Accounting Standards
Ind AS 102 Share-based Payment
Ind AS 103 Business Combinations
Ind AS 104 Insurance Contracts
Ind AS 105 Non-current Assets Held for Sale and Discontinued
Operations
Ind AS 106 Exploration for and Evaluation of Mineral Resources
Ind AS 107 Financial Instruments: Disclosures
Ind AS 108 Operating Segments
Ind AS 109 Financial Instruments
Ind AS 110 Consolidated Financial Statements
Ind AS 111 Joint Arrangements
Ind AS 112 Disclosure of Interests in Other Entities
Ind AS 113 Fair Value Measurement
Ind AS 114 Regulatory Deferral Accounts
Ind AS 115 Revenue from Contracts with Customers
Ind AS 116 Leases
Ind AS 1 Presentation of Financial Statements
Ind AS 2 Inventories
Ind AS 7 Statement of Cash Flows
Ind AS 8 Accounting Policies, Changes in Accounting Estimates and
Errors
Ind AS 10 Events after the Reporting Period
Ind AS 12 Income Taxes
Ind AS 16 Property, Plant and Equipment
GN on Division II - Ind AS Schedule III to the Companies Act 2013
Ind AS 19 Employee Benefits
Ind AS 20 Accounting for Government Grants and Disclosure of
Government Assistance
Ind AS 21 The Effects of Changes in Foreign Exchange Rates
Ind AS 23 Borrowing Costs
Ind AS 24 Related Party Disclosures
Ind AS 27 Separate Financial Statements
Ind AS 28 Investments in Associates and Joint Ventures
Ind AS 29 Financial Reporting in Hyperinflationary Economies
Ind AS 32 Financial Instruments: Presentation
Ind AS 33 Earnings per Share
Ind AS 34 Interim Financial Reporting
Ind AS 36 Impairment of Assets
Ind AS 37 Provisions, Contingent Liabilities and Contingent Assets
Ind AS 38 Intangible Assets
Ind AS 40 Investment Property
Ind AS 41 Agriculture
167
Annexure E
General Circular No. 39/2014 dated: 14th October, 2014
To
All Regional Directors,
All registrars of Companies,
All Stakeholders
Subject: Clarification on matters relating to Consolidated Financial
Statements.
Sir,
Government has received representations from stakeholders seeking
clarifications on the manner of presentation of notes in Consolidated
Financial Statements (CFS) to be prepared under Schedule III to the Act.
These representations have been examined in consultation with the Institute
of Chartered Accountants of India (ICAI) and it is clarified that Schedule III to
the Act read with the applicable Accounting Standards does not envisage
that a company while preparing its CFS merely repeats the disclosures made
by it under stand-alone accounts being consolidated. In the CFS, the
company would need to give all disclosures relevant for CFS only.
2. This issues with the approval of the competent authority.
Annexure F
Illustrative Standalone Financial Statements
Balance Sheet as at ________
Particulars Note Figures Figures at
No. at the the end of
end of previous
current reporting
reporting period
period
(1) ASSETS
Non-current assets
(a) Property, Plant and Equipment
(b) Capital work-in-progress
(c) Investment Property
(d) Goodwill
(e) Other Intangible assets
(f) Intangible assets under
development
(g) Biological Assets other than
bearer plants
(h) Financial Assets
(i) Investments
(ii) Loans
(iii) Trade receivables
(iv) Others (to be specified)
(i) Deferred tax assets (net)
(j) Other non-current assets
(2) Current assets
(a) Inventories
(b) Financial Assets
(i) Investments
(ii) Trade receivables
GN on Division II - Ind AS Schedule III to the Companies Act 2013
(iii) Cash and cash equivalents
(iv) Bank balances other than (iii)
above
(v) Loans
(vi) Others (to be specified)
(c) Current Tax Assets (Net)
(d) Other current assets
Assets held-for-sale / Assets included
in disposal group(s) held-for-sale
Total Assets
(1) EQUITY AND LIABILITIES
Equity
(a) Equity Share capital
(b) Instruments entirely equity in
nature
(c) Other Equity
LIABILITIES
Non-current liabilities
(a) Financial Liabilities
(i) Borrowings
(ii) Trade payables
(A) Total outstanding dues of
Small Enterprises and Micro
enterprises
(iii) (B) Total outstanding dues
of creditors other than small
enterprises and micro enterprises.
Other financial liabilities (other than
those specified in item (b), to be
specified)
(b) Provisions
(c) Deferred tax liabilities (Net)
(d) Other non-current liabilities
(2) Current liabilities
(a) Financial Liabilities
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GN on Division II - Ind AS Schedule III to the Companies Act 2013
(i) Borrowings
(ii) Trade payables
(A) Total outstanding dues of
Micro enterprises and Small
Enterprises
(B) Total outstanding dues of
creditors other than micro
enterprises and small
enterprises.
(iii) Other financial liabilities (other
than those specified in item (c))
(b) Other current liabilities
(c) Provisions
(d) Current Tax Liabilities (Net)
Liabilities classified as held for sale /
Liabilities included in disposal group
held-for-sale
Total Equity and Liabilities
Statement of Changes in Equity for the year ended
______________
A. Equity Share Capital
Balance at the Changes in equity share Balance at the end
beginning of the capital during the year of the reporting
reporting period period
B. Instruments entirely equity in nature ^
a. Compulsorily Convertible Preference Shares
Balance at the Changes in compulsorily Balance at the end
beginning of the convertible preference shares of the reporting
reporting period during the period period
b. Compulsorily Convertible Debentures
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GN on Division II - Ind AS Schedule III to the Companies Act 2013
Balance at the Changes in compulsorily Balance at the end
beginning of the convertible debentures during of the reporting
reporting period the period period
c. [Instrument] (Any other instrument entirely equity in nature)
Balance at the Changes in [Instrument] Balance at the end
beginning of the during the period of the reporting
reporting period period
172
C. Other Equity
Share Equity Reserves and Surplus Debt Equity Effectiv Reval Exchang Other Mon Tot
applicat compo instrument instrume e uation e items of ey al
GN on Division II - Ind AS Schedule III to the Companies Act 2013
ion nent of s through nts portion Surpl differenc Other recei
money compo Other through of us es on Compreh ved
pending und Comprehe Other Cash translati ensive agai
allotme financi nsive Compreh Flow ng the Income nst
nt al Income ensive Hedge financial (specify shar
instru Income s stateme nature) e
ments nts of a warr
foreign ant
operatio
n
173
Capit Securit Other Retai
al ies Reserv ned
Rese Premiu es Earni
rve m (specif ngs
y
nature)
Balance at
the
beginning of
the
reporting
period
Changes in
accounting
policy or
GN on Division II - Ind AS Schedule III to the Companies Act 2013
prior period
errors
Restated
balance at
the
beginning of
the
reporting
period
Total
Comprehen
sive Income
174
for the year
Dividends
Transfer to
retained
earnings
Any other
change (to
be
specified)
Balance at
the end of
the
reporting
period
GN on Division II - Ind AS Schedule III to the Companies Act 2013
Statement of Profit and Loss for the year ended _______
Particulars Note Figures for Figures for
No. the current the
reporting previous
period reporting
period
I Revenue From Operations
II Other Income
III Net gain on de-recognition of
financial assets at amortized
cost
IV Net gain on reclassification of
financial assets**
V Total Income (I + II + III+ IV)
VI EXPENSES
Cost of materials consumed
Excise Duty
Purchases of Stock-in-Trade
Changes in inventories of
finished goods,
Stock-in-Trade and work-in-
progress
Employee benefits expense
Finance costs
Depreciation and amortization
expense
Impairment losses
Net loss on de-recognition of
financial assets at amortized
cost
Net loss on reclassification of
financial assets**
Other expenses
Total expenses (VI)
175
GN on Division II - Ind AS Schedule III to the Companies Act 2013
VII Profit/(loss) before exceptional
items and tax (V- VI)
VIII Exceptional Items
IX Profit/(loss) before tax(VII+VIII)
X Tax expense:
(1) Current tax
(2) Deferred tax
XI Profit (Loss) for the period from
continuing operations (IX-X)
XII Profit/(loss) from discontinued
operations
XIII Tax expense of discontinued
operations
XIV Profit/(loss) from Discontinued
operations (after tax) (XII XIII)
XV Profit/(loss) for the period
(XI+XIV)
XVI Other Comprehensive Income
A (i) Items that will not be
reclassified to profit or loss
(ii) Income tax relating to items
that will not be reclassified to
profit or loss
B (i) Items that will be
reclassified to profit or loss
(ii) Income tax relating to items
that will be reclassified to profit
or loss
XVII Total Comprehensive Income
for the period (XV+
XVI)(Comprising Profit/(Loss)
and Other Comprehensive
Income for the period)
XVIII Earnings per equity share (for
176
GN on Division II - Ind AS Schedule III to the Companies Act 2013
continuing operation):
(1) Basic
(2) Diluted
XIX Earnings per equity share (for
discontinued operation):
(1) Basic
(2) Diluted
XX Earnings per equity share(for
discontinued & continuing
operations)
(1) Basic
(2) Diluted
** Difference arising on reclassification of financial assets at the
reclassification date
177
GN on Division II - Ind AS Schedule III to the Companies Act 2013
Illustrative Consolidated Financial Statements
Consolidated Balance Sheet as at _______
Particulars Note Figures as at Figures as at
No. the end of the end of
current the previous
reporting reporting
period period
(1) ASSETS
Non-current assets
(a) Property, Plant and
Equipment
(b) Capital work-in-progress
(c) Investment Property
(d) Goodwill
(e) Other Intangible assets
(f) Intangible assets under
development
(g) Biological Assets other
than bearer plants
(h) Investments accounted
for using the equity
method
(i) Financial Assets
(i) Investments
(ii) Loans
(iii) Trade receivables
(iv) Others (to be specified)
(2) (j) Deferred tax assets (net)
(k) Other non-current assets
Current assets
(a) Inventories
(b) Financial Assets
(i) Investments
(ii) Trade receivables
(iii) Cash and cash
equivalents
(iv) Bank balances other
than (iii) above
178
GN on Division II - Ind AS Schedule III to the Companies Act 2013
(v) Loans
(vi) Others (to be specified)
(c) Current Tax Assets (Net)
(d) Other current assets
Assets held-for-sale / Assets
included in disposal group(s)
held-for-sale
Total Assets
(1) EQUITY AND LIABILITIES
Equity
(a) Equity Share capital
(b) Instruments entirely
equity in nature
(c) Other Equity
(d) Non-controlling
interests
Liabilities
Non-current liabilities
(a) Financial Liabilities
(i) Borrowings
(ii) Trade payables
(iii) Other financial liabilities
(other than those
specified in item (b), to
be specified)
(b) Provisions
(2) (c) Deferred tax liabilities
(Net)
(d) Other non-current
liabilities
Current liabilities
(a) Financial Liabilities
(i) Borrowings
(ii) Trade payables
(iii) Other financial liabilities
(other than those
specified in item (c)
(b) Other current liabilities
179
GN on Division II - Ind AS Schedule III to the Companies Act 2013
(c) Provisions
(d) Current Tax Liabilities
(Net)
Liabilities classified as held
for sale / Liabilities included
in disposal group held-for-
sale
Total Equity and Liabilities
Consolidated Statement of Changes in Equity for the year ended ______
A. Equity Share Capital
Balance at the Changes in equity share Balance at the end
beginning of the capital during the year of the reporting
reporting period period
B. Instruments entirely equity in nature
a. Compulsorily Convertible Preference Shares
Balance at the Changes in compulsorily Balance at the end of
beginning of the convertible preference the reporting period
reporting period shares during the period
b. Compulsorily Convertible Debentures
Balance at the Changes in compulsorily Balance at the end of
beginning of the convertible debentures the reporting period
reporting period during the period
c. [Instrument] (Any other instrument entirely equity in nature)
Balance at the Changes in [Instrument] Balance at the end of
beginning of the during the period the reporting period
reporting period
180
C. Other Equity
GN on Division II - Ind AS Schedule III to the Companies Act 2013
Share Equity Reserves and Surplus Debt Equity Effe Revalu Excha Other Mon Attributa Non- Tota
applic compo instrume instrume ctive ation nge items of ey ble to contr l
ation nent nts nts porti Surplu differe Other recei owners olling
mone of through through on of s nces Compreh ved of the inter
y compo Other Other Cas on ensive agai parent est
pendi und Compreh Compreh h transl Income nst
ng financi ensive ensive Flow ating (specify shar
allotm al Income Income Hed the nature) e
ent instru ges financi warr
ments al ant
state
181
ments
of a
foreig
n
operat
ion
Capit Secur Other Retai
al ities Rese ned
Reser Premi rves Earni
ve um (spec ngs
ify
natur
e)
GN on Division II - Ind AS Schedule III to the Companies Act 2013
Balance
at the
beginnin
g of the
reporting
period
Changes
in
accounti
ng policy
or prior
period
182
errors
Restated
balance
at the
beginnin
g of the
reporting
period
Total
Compreh
ensive
Income
for the
year
Dividend
s
Transfer
GN on Division II - Ind AS Schedule III to the Companies Act 2013
to
retained
earnings
Any
other
change
(to be
specified
)
183
Balance
at the
end of
the
reporting
period
GN on Division II - Ind AS Schedule III to the Companies Act 2013
Consolidated Statement of Profit and Loss for the year ended _______
Particulars Note Figures Figures for
No. for the
the previous
current reporting
reporting period
period
I Revenue From Operations
II Other Income
III Net gain on de-recognition of
financial assets at amortized
cost
IV Net gain on reclassification of
financial assets**
V Total Income (I + II + III+ IV)
VI EXPENSES
Cost of materials consumed
Excise Duty
Purchases of Stock-in-Trade
Changes in inventories of
finished goods,
Stock-in-Trade and work-in-
progress
Employee benefits expense
Finance costs
Depreciation and amortization
expense
Impairment losses
Net loss on de-recognition of
financial assets at amortized
cost
184
Guidance Note on the Schedule III to the Companies Act, 2013
Net loss on reclassification of
financial assets**
Other expenses
Total expenses (VI)
VII Profit/(loss) before share of
profit/(loss) of an associate / a
joint venture and exceptional
items (V - VI)
VIII Share of profit/(loss) of an
associate / a joint venture
IX Profit/(loss) before exceptional
items and tax (VII + VIII)
X Exceptional Items
XI Profit/(loss) before tax(IX+X)
XII Tax expense:
(1) Current tax
(2) Deferred tax
XIII Profit (Loss) for the period
from continuing operations (XI
- XII)
XIV Profit/(loss) from discontinued
operations
XV Tax expense of discontinued
operations
XVI Profit/(loss) from Discontinued
operations (after tax) (XIV -XV)
XVII Profit/(loss) for the period (XV
+XVI)
XVIII Other Comprehensive Income
A (i) Items that will not be
reclassified to profit or loss
(ii) Income tax relating to items
185
Guidance Note on the Schedule III to the Companies Act, 2013
that will not be reclassified to
profit or loss
B (i) Items that will be
reclassified to profit or loss
(ii) Income tax relating to items
that will be reclassified to profit
or loss
XIX Total Comprehensive Income
for the period (XVII+XVIII) /
(Comprising Profit (Loss) and
Other Comprehensive Income
for the period)
Attributable to:
Owners of the parent
Non-controlling interests
Of the Total Comprehensive
Income above,
Profit for the year attributable
to:
Owners of the parent
Non-controlling interests
Of the Total Comprehensive
Income above,
Other comprehensive income
attributable to:
Owners of the parent
Non-controlling interests
XX Earnings per equity share (for
continuing operation):
(1) Basic
(2) Diluted
XXI Earnings per equity share (for
discontinued operation):
(1) Basic
186
Guidance Note on the Schedule III to the Companies Act, 2013
(2) Diluted
XXII Earnings per equity share(for
discontinued & continuing
operations)
(1) Basic
(2) Diluted
**Difference arising on reclassification of financial assets at the
reclassification date
187
Glossary
Act The Companies Act, 2013
Ind AS Schedule III Division II to Schedule III to the Act
Ind AS Indian Accounting Standards
Companies Ind AS Companies Ind AS Rules, 2015 as amended from
Rules time to time
Ind AS Framework Framework for the preparation and presentation of
Financial Statements in accordance with Indian
Accounting Standards
Non Ind AS Accounting Standards
Companies AS Rules Companies Accounting Standards Rules, 2006 as
amended from time to time
FVTPL Fair Value through Profit or Loss
FVOCI Fair Value through other Comprehensive Income
SEBI Securities and Exchange Board of India
SEBI (LODR) SEBI (Listing Obligations and Disclosure
Requirements) Regulations, 2015
GAAP Generally Accepted Accounting Principles
MSMED The Micro, Small and Medium Enterprises
Development Act, 2006
CENVAT Central Value Added Tax
GST Goods and Services Tax
MAT Minimum Alternate Tax
CFS / SFS Consolidated Financial Statements / Standalone
Financial Statements
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