Exposure Draft of Revised Guidance Note on Division III Non Ind AS Schedule III
to the Companies Act, 2013 by Corporate Laws & Corporate Governance
Committee ICAI
ED/GN-Div-III/2019-2020/50
EXPOSURE DRAFT
ON
GUIDANCE NOTE ON DIVISION III
TO SCHEDULE III
TO THE COMPANIES ACT 2013
FOR NBFC THAT IS REQUIRED TO
COMPLY WITH INDIAN ACCOUNTING
STANDARDS (IND AS)
(Last date for Comments: September 8, 2019)
Issued by Corporate Laws & Corporate Governance
Committee
THE INSTITUTE OF CHARTERED
ACCOUNTANTS OF INDIA
(Set up under an Act of Parliament)
Exposure Draft of Revised Guidance Note on Division III Non Ind AS Schedule III
to the Companies Act, 2013 by Corporate Laws & Corporate Governance
Committee ICAI
Exposure Draft
Guidance Note
on
Division III to Schedule III
to the Companies Act, 2013 for NBFC that is required to
comply with Ind AS
Following is the Exposure Draft of the Guidance Note on Division III to
Schedule III to the Companies Act 2013 for NBFC that us required to
comply with Ind AS issued by the Corporate Laws & Corporate
Governance Committee of the Institute of Chartered Accountants of
India, for comments.
The Committee invites comments on any aspect of this Exposure Draft.
Comments are most helpful if they indicate the specific paragraph or
group of paragraphs to which they relate, contain a clear rationale and,
where applicable, provide a suggestion for alternative wording.
Comments can be submitted using one of the following methods, so as to
be received not later than September 8, 2019.
1. Electronically: Click on http: to submit comments online. (Preferred
method): https://forms.gle/pfu8q2xBJvTFantP9
2. Email: Comments can be sent to comments.clcgc@icai.in
3. Postal: Corporate Laws & Corporate Governance Committee, The
Institute of Chartered Accountants of India, ICAI Bhawan, A- 29,
Sector- 62, Noida 203209.
Further clarifications on any aspect of this Exposure Draft may be
sought by e-mail to comments.clcgc@icai.in.
Index
Sr. Contents Page
No. No.
1. Introduction 1
2. Objective and Scope 2
3. Applicability 4
4. Main Principles Summary of Division III - `Ind AS Schedule 5
III'
5. Structure of Ind AS Schedule III 9
6. General Instructions for Preparation of Financial Statements: 9
Notes
7. Part I Notes General Instructions for Preparation of Balance 12
Sheet
8. Part I Form of Balance Sheet and Notes General 12
Instructions for Preparation of Balance Sheet: Notes 6 to 11
9. Part II Statement of Profit and Loss and Notes General 69
Instructions for Preparation of Statement of Profit and Loss:
Notes 1 to 10
10. Other Comprehensive Income 87
11. Additional information to be disclosed by way of Notes to 89
Statement of Profit and Loss
12. Part III General Instructions for Preparation of Consolidated 90
Financial Statements
Annexures
Annexure A Division III to Schedule III (`Ind AS Schedule 100
III') to the Companies Act, 2013
Annexure B Key Difference between Division I and Division 139
III and Key Difference between Division II and Division III
Annexure C Illustrative List of Disclosures required under 172
the Companies Act, 2013
Annexure D List of Indian Accounting Standards notified as 173
on date
Annexure E General Circular No. 39 / 2014 dated 14th 175
October 2014
Exposure Draft of Revised Guidance Note on Division III to Schedule III to the
Companies Act, 2013 for NBSC that is required to comply with Ind AS by Corporate
Laws & Corporate Governance Committee ICAI
1. Introduction
1.1 Schedule III to the Companies Act, 2013 (`the Act') was notified along
with the Act itself on August 29, 2013 thereby providing the manner in which
every company registered under the Act shall prepare its Financial
Statements. Financial Statements as defined under the Act include Balance
Sheet, Statement of Changes in Equity for the period, the Statement of Profit
and Loss for the period, Cash flow statement as applicable for the financial
year and Notes.
1.2 Ministry of Corporate Affairs (`MCA') notified Indian Accounting
Standards (`Ind AS') on February 16, 2015 thereby laying down the roadmap
for all companies, except insurance companies, banking companies and non -
banking finance companies, for a doption of Ind AS (`MCA roadmap'). Further,
MCA notified amendments to Schedule III to the Act on April 6, 2016
whereby:
1.2.1 The existing Schedule III was renamed as `Division I' to
Schedule III (`Non- Ind AS Schedule III') which gives a format
of Financial Statements for Non-Ind AS companies, that are
required to comply with the Companies (Accounting Standards)
Rules, 2006. In other words, Non-Ind AS companies, will be
required to prepare Financial Statements as per Companies
(Accounting Standards) Rules, 2006, as per the format of
Division I to Schedule III to the Act;
1.2.2 `Division II' - `Ind AS Schedule III' was inserted to give a format
of Financial Statements for companies that are required to
comply with the Companies (Indian Accounting Standards)
Rules, 2015, as amended from time to time (`Companies Ind AS
Rules') . This was newly inserted into Schedule III for companies
that adopt Ind AS as per Rule 4(1)(i) or Rule 4(1)(ii) or Rule
4(1)(iii) of the Companies Ind AS Rules. Accordingly, such
Companies, while preparing its first and subsequent Ind AS
Financial Statements, would apply Division II to Ind AS
Schedule III to the Act.
1.3 . The MCA issued a notification dated March 30, 2016 announcing the
Ind AS roadmap for scheduled commercial banks (excluding regional rural
banks), insurers/ insurance companies and non-banking financial companies
Exposure Draft of Revised Guidance Note on Division III to Schedule III to the
Companies Act, 2013 for NBSC that is required to comply with Ind AS by Corporate
Laws & Corporate Governance Committee ICAI `
(`NBFC'). Further, MCA notified amendments to Schedule III to the Act on
October 11, 2018 whereby:
1.3.1 `Division III' - `Ind AS Schedule III' (Refer Annexure A, Page 100 )
was inserted to give a format of Financial Statements for NBFC's
that are required to comply with the Companies (Indian Accounting
Standards) Rules, 2015, as amended from time to time (`Companies
Ind AS Rules') . As per the Companies Ind AS Rules, "Non-Banking
Financial Company" means a Non -Banking Financial Company as
defined in clause (f) of section 45-I of the Reserve Bank of India Act,
1934 and includes Housing Finance Companies, Merchant Banking
companies, Micro Finance Companies, Mutual Benefit Companies,
Venture Capital Fund Companies, Stock Broker or Sub-Broker
Companies, Nidhi Companies, Chit Companies, Securitisation and
Reconstruction Companies, Mortgage Guarantee Companies,
Pension Fund Companies, Asset Management Companies and Core
Investment C ompanies.'. Accordingly, such NBFC's and any other
such class of NBFC's , while preparing its first and subsequent Ind
AS Financial Statements, would apply Division III to Ind AS
Schedule III to the Act.
1.4 It may, however, be clarified that for companies engaged in the generation
or supply of electricity, neither the Electricity Act, 2003, nor the rules framed
thereunder, prescribe any specific format for presentation of Financial
Statements by an electricity company. Section 1(4) of the Act states that the Act
will apply to electricity companies, to the extent it is not inconsistent with the
provisions of the Electricity Act. Keeping this in view, Ind AS Schedule III
Division I or Division II as applicable may be followed by such companies till the
time any other format is prescribed by the relevant statute.
2. Objective and Scope
2.1 The objective of this Guidance Note is to provide guidance in the
preparation and presentation of Financial Statements in accordance with
various aspects of Ind AS Schedule III, for NBFC's adopting Ind AS. The
disclosure requirements under Ind AS, the Companies Act, 2013, other
pronouncements of the Institute of Chartered Accountants of India (ICAI),
other statutes, etc., would be in addition to the guidance provided in this
Guidance Note.
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Exposure Draft of Revised Guidance Note on Division III to Schedule III to the
Companies Act, 2013 for NBSC that is required to comply with Ind AS by Corporate
Laws & Corporate Governance Committee ICAI `
2.2 Guidance given in `Guidance Note on Division I to the Schedule III to
the Companies Act, 2013' published in February 2016 and revised in June
2019 would continue to be applied by Non-Ind AS companies which are
required to prepare Financial Statements as per the format of Non-Ind AS
Schedule III.
2.3 In preparing this Guidance Note, reference has been made to Ind
AS notified under Section 133 of the Act read together with Paragraph 3 of the
Companies Ind AS Rules given in Annexure D ( Pg 173) 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. The Guidance Note would primarily provide guidance on the line
items contained in the Division III to the Schedule III rather than the specific
issues which an NBFC may face.
2.4 This Guidance Note includes changes to presentation and
disclosure requirements of 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 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 remains
substantially unchanged from Ind AS 17, the requirements for lessee
changes significantly as compared to Ind AS 17. An entity shall present and
disclose rights and obligations arising from lease arrangements as per Ind
AS 116 and the requirements under this schedule stand modified accordingly
(Refer para 2 of General Instructions for preparation of Financial Statements
of a Non-Banking Financial Company (NBFC) that are required to comply
with Indian Accounting Standards (Ind AS)).
2.5 As per the clarification issued by ICAI regarding the authority attached
to the Documents issued by ICAI, `Guidance Notes' are primarily designed to
provide guidance to members on matters which may arise in the course of 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
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Exposure Draft of Revised Guidance Note on Division III to Schedule III to the
Companies Act, 2013 for NBSC that is required to comply with Ind AS by Corporate
Laws & Corporate Governance Committee ICAI `
note relating to an accounting matter have been followed or not. If the same have
not been followed, the member should consider whether keeping in view the
circumstances of the case, a disclosure in his report is necessary."
3. Applicability
3.1 As per the Government Notification no. S.O. 902 (E) dated 26 th March,
2014, Schedule III is applicable for the Financial Statements prepared for the
financial year commencing on or after April 1, 2014. As per the Government
Notification no. G.S.R. 404(E) dated April 6, 2016, Schedule III is amended
to include a format of Financial Statements for a company preparing
Financial Statements in compliance with the Companies Ind AS Rules.
Further, as per the Government Notification no. G.S.R. 1022 (E) dated
October 11, 2018, the Schedule III is amended to include a format of
Financial Statements for a NBFC preparing Financial Statements in
compliance with the Companies Ind AS Rules. Every Non-Banking Financial
company as defined in the Companies (Indian Accounting Standards)
(Amendment) Rules, 2016 to which Indian Accounting Standards apply, shall
prepare its financial statements in accordance with this Schedule or with
such modification as may be required under certain circumstances. 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 2018-19 (i.e. 1 st April 2018 to 31 st
March 2019), corresponding amounts need to be given for the financial year
2017- 18. As per Ind AS 101, a company's first Ind AS financial statements
shall include at least three balance sheets, two statements of profit and loss,
two statements of cash flows and two statements of changes in equity and
related notes. This Guidance Note does not deal with the presentation
aspects of reconciliations that are required to be provided as a part of a
company's first Ind AS financial statements.
3.2 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:
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Exposure Draft of Revised Guidance Note on Division III to Schedule III to the
Companies Act, 2013 for NBSC that is required to comply with Ind AS by Corporate
Laws & Corporate Governance Committee ICAI `
"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,
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.
3.3 Listed entities shall follow guidelines issued by SEBI by way of
circulars prescribing formats for publishing financial results (quarterly, half-
yearly and annual) which are guided by the relevant provisions of the Ind AS
and Ind AS Schedule III and may make suitable modifications, as applicable.
4. Main principles Summary of Ind AS Schedule III
4.1 Every Non-Banking Financial company as defined in the Companies
(Indian Accounting Standards) (Amendment) Rules, 2016 to which Indian
Accounting Standards apply, shall prepare its financial statements in
accordance with this Schedule or with such modification as may be required
under certain circumstances.
4.2 The provisions of Schedule III also apply when a company is required
to prepare consolidated financial statements, in addition to the disclosure
requirements specified under Ind AS.
4.3 Financial Statements include Balance Sheet, Statement of Changes in
Equity for the period, Statement of Profit and Loss for the period and Notes.
Cash Flow Statement shall be prepared in accordance with the requirements
of the relevant Ind AS.
4.4 Balance sheet
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Exposure Draft of Revised Guidance Note on Division III to Schedule III to the
Companies Act, 2013 for NBSC that is required to comply with Ind AS by Corporate
Laws & Corporate Governance Committee ICAI `
-- The division provides a format of the balance sheet and sets out the
minimum requirements of disclosure on the face of the balance sheet
for NBFCs.
-- Items presented in the balance sheet are to be classified as financial
and non-financial.
-- It permits NBFCs to avail of the option of presenting assets and
liabilities in the order of liquidity, as provided by Ind AS 1,
Presentation of Financial Statements.
-- It requires an NBFC to disclose such information that enables users
of its financial statements to evaluate the NBFC's objectives, policies
and processes for managing capital.
4.5 Statement of Profit and Loss
-- The division provides a format of the statement of profit and loss
and sets out the minimum requirements of disclosure on the face
of the statement of profit and loss.
-- Items comprising `revenue from operations' and `other
comprehensive income' have to be disclosed on the face of the
statement of profit and loss
4.6 Statement of changes in equity
-- The statement of changes in equity would reconcile opening to
closing amounts for each component of equity including reserves
and surplus and items of other comprehensive income.
-- NBFCs are specifically required to disclose the statutory reserves
as part of `other equity' in the statement of changes in equity.
-- Additionally, the conditions or restrictions for distribution attached
to statutory reserves have to be separately disclosed in the notes
as stipulated by the relevant statute.
4.7 Materiality
NBFCs are required to disclose all `material' items in their financial
statements i.e., the items if they could, individually or collectively, influence
the economic decisions that users make on the basis of financial statements.
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Exposure Draft of Revised Guidance Note on Division III to Schedule III to the
Companies Act, 2013 for NBSC that is required to comply with Ind AS by Corporate
Laws & Corporate Governance Committee ICAI `
Materiality depends on the size and nature of the item judged in particular
circumstances. However, while preparing the statement of profit and loss, it
specifies that an NBFC should disclose a note for any item of `other income'
or `other expenditure' which exceeds 1 per cent of the t otal income, in
addition to the consideration of materiality.
A General Instruction on `Materiality' has been included in Note 7 to General
Instructions for Preparation of Financial Statements requiring Financial
Statements to disclose items that could, individually or collectively, influence
the economic decisions that users make on the basis of the Financial
Statements. Materiality depends on the size or nature of the item or a
combination of both, to be judged based on particular facts and in particular
circumstances. Moreover, 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.
The General Instructions for Preparation of Financial Statements also lay
down the principle that in preparing Financial Statements including Notes, a
balance shall be maintained between providing excessive detail that may not
assist users of Financial Statements and not providing important information
as a result of too much aggregation. Compliance with this requirement is a
matter of professional judgement and may vary on a case to case basis
based on facts and circumstances. However, it is necessary to strike a
balance between overburdening Financial Statements with excessive detail
that may not assist users of Financial Statements and obscuring important
information as a result of too much aggregation. For example, a company
should not obscure important information by including it among a large
amount of insignificant detail or in a way that it obscures important
differences between individual transactions or associated risks.
4.8 As per para 60 of Ind AS 1, an entity shall present current and non-
current assets, and current and non-current liabilities, as separate
classifications in its balance sheet except when a presentation based on
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Exposure Draft of Revised Guidance Note on Division III to Schedule III to the
Companies Act, 2013 for NBSC that is required to comply with Ind AS by Corporate
Laws & Corporate Governance Committee ICAI `
liquidity provides information that is reliable and more relevant. When that
exception applies, an entity shall present all assets and liabilities in order of
liquidity. The assets and liabilities are to be classified as financial, non-
financial as opposed to current, non-current classification as required by
Division I and Division II of Schedule III.
4.9 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 the minimum requirements and in addition to the disclosure requirements
specified in the Ind AS. Line items, sub-line items and sub-totals shall be
presented as an addition or substitution on the face of the Financial
Statements when such presentation is relevant to an understanding of the
NBFC's financial position or performance or to cater to categories of NBFCs
as prescribed by the relevant regulator or sector-specific disclosure
requirements or when required for compliance with the amendments to the
relevant statutes or under the Indian Accounting Standards. For e.g., line
items required by 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 E (Pg 175) .
4.10 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.
4.11 Where any Act, Regulation, Guidelines or Circulars issued by the
relevant regulators from time to time requires specific disclosures to be made
in the standalone financial statements of an NBFC, the said disclosures shall
be made in addition to those required under Ind AS Schedule III.
4.12 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 meaning as defined by the applicable Ind AS. For example, the
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Exposure Draft of Revised Guidance Note on Division III to Schedule III to the
Companies Act, 2013 for NBSC that is required to comply with Ind AS by Corporate
Laws & Corporate Governance Committee ICAI `
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 Standard s (`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 paragraph 10 to paragraph 12 of Ind AS 8 for the purpose of developing
and applying an accounting policy.
4.13 The NBFCs preparing financial statements as per this Schedule may
change the order of presentation of line items on the face of financial
statements or order of line items within the schedules in order of liquidity, if
appropriate, considering the operations performed by the NBFC.
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 Non-
Banking Financial Company (NBFC) that is required to comply with Ind
AS (`General Instructions for Preparation of Financial Statements')
B. Part I Form of Balance Sheet and Statement of Changes in Equity
C. Part I Notes General Instructions for Preparation of Balance Sheet
D. Part II Form of Statement of Profit and Loss
E. Part II Notes General Instructions for Preparation of Statement of
Profit and Loss
F. Part III General Instructions for the Preparation of Consolidated
Financial Statements
6. General Instructions for Preparation of Financial
Statements: Notes 1 to 10
6.1 The General Instructions lay down the broad principles and guidelines
for preparation and presentation of Financial Statements.
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Exposure Draft of Revised Guidance Note on Division III to Schedule III to the
Companies Act, 2013 for NBSC that is required to comply with Ind AS by Corporate
Laws & Corporate Governance Committee ICAI `
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.
6.3 The Ind AS Schedule III requires that if compliance with the
requirements of the Act, Regulation, Guidelines or Circulars issued by the
relevant regulators from time to time including applicable Ind AS require any
change in the presentation or disclosure including addition, amendment,
substitution or deletion in the head/sub-head or any changes in the Financial
Statements or Notes to Accounts thereof, the same shall be made and the
requirements of 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.
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Companies Act, 2013 for NBSC that is required to comply with Ind AS by Corporate
Laws & Corporate Governance Committee ICAI `
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 172).
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) of the SEBI (Listing Obligations
and Disclosure Requirements) Regulations, 2015; and the statutory
requirements by RBI such as Asset-Liability Management, Concentration of
exposure, Asset Quality etc.
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 8.2.11.
6.10 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.
6.11 Ind AS Schedule III has specified the rounding off requirements as
Non-Ind AS Schedule III, as given below:
Ind AS Schedule III
Total Income < Rs. 100 Crores - Round off to the nearest hundreds,
thousands, lakhs or millions or decimal thereof.
Total Income >= Rs. 100 Crores - Round off to the nearest lakhs,
millions or crores, or decimal thereof
6.12 A Note below Note 10 of the General Instructions for Preparation of
Financial Statements clarifies that 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 NBFC's financial position
or performance or to cater to categories of NBFC's as pres cribed by the
relevant regulator or sector-specific disclosure requirements, apart from,
when required for compliance with amendments to the Act or Ind AS.
7. Part I Notes: General Instructions for Preparation of
Balance Sheet
Financial/ Non-financial assets and liabilities:
The Ind AS Schedule III and Ind AS-1 Presentation of Financial Statements
require all items in the Balance Sheet of an NBFC to be classified as either
Financial or Non-financial and be reflected as such.
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Companies Act, 2013 for NBSC that is required to comply with Ind AS by Corporate
Laws & Corporate Governance Committee ICAI `
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.
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 financial assets and non-financial assets as
below:
Financial assets
(a) Cash and cash equivalents
(b) Bank Balance other than (a) above
(c) Derivative financial instruments
(d) Receivables
(I) Trade Receivables
(II) Other Receivables
(e) Loans
(f) Investments
(g) Other Financial assets (to be specified)
Non-financial assets
(a) Inventories
(b) Current Tax Assets (Net)
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(c) Deferred Tax Assets (Net)
(d) Investment Property
(e) Biological assets other than bearer plants
(f) Property, Plant and Equipment
(g) Capital work-in-progress
(h) Intangible assets under development
(i) Goodwill
(j) Other Intangible assets
(k) Other non-financial assets (to be specified)
Financial Assets
8.1.1. Cash and cash equivalents:
Cash and cash equivalents shall be classified as:
(a) Cash on hand;
(b) Balances with banks (of the nature of cash and cash equivalents);
(c) Cheques, drafts on hand; and
(d) Others (specify nature).
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.
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Further, interest accrued on fixed deposit will have to be included to the
carrying value of fixed deposit.
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.
8.1.2. Bank Balance other than cash and cash equivalents
Bank balances other than cash and cash equivalents as above, i.e. having a
maturity of more than three months shall be disclosed as Bank
Balance other than cash and cash equivalents on the face of the Balance
Sheet.
Further, Note (A) of General Instructions for Preparation of Balance Sheet
requires the following disclosures with regard to Bank Balance other than
cash and cash equivalents:
(a) Earmarked balances with banks (for e.g., for unpaid dividend)
shall be separately stated;
(b) Balances with banks to the extent held as margin money or
security against the borrowings, guarantees, other commitments
shall be disclosed separately;
(c) Repatriation restrictions, if any, in respect of cash and bank
balances shall be separately stated.
The disclosure regarding `bank balances other than cash and cash
equivalents' should include items such as Balances with banks held as
margin money or security against borrowings, guarantees, etc.
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8.1.3. Derivative Financial Instruments:
As per Appendix A of Ind AS 109 deri vative is defined as "A financial
instrument or other contract within the scope of the Standard with all three of
the following characteristics:
(a) its value changes in response to the change in a specified interest rate,
financial instrument price, commodity price, foreign exchange rate, index of
prices or rates, credit rating or credit index, or other variable, provided in the
case of a non-financial variable that the variable is not specific to a party to
the contract (sometimes called the `underlying').
(b) it requires no initial net investment or an initial net investment that is
smaller than would be required for other types of contracts that would be
expected to have a similar response to changes in market factors.
(c) it is settled at a future date."
The following has to be disclosed in the note for Derivative Financial
Instruments:
An explanation has to be given for the use of derivatives, how the risk
is mitigated and for what purpose has the company entered into
derivatives in accordance with Paras 21A to 21F of Ind AS 107. Eg. to
hedge its foreign currency risks, interest rate risks and equity price
risks a company may enter into the following kinds of derivative
contracts such as interest rate swaps, cross-currency swaps, forward
foreign exchange contracts, futures and options on interest rates,
foreign currencies and equities etc.
A cross-reference to the financial risks section for management of risks
arising from derivatives has to be done. As per paragraphs 31 to 33 of Ind
AS 107, an entity shall disclose information that enables users of its financial
statements to evaluate the nature and extent of risks arising from financial
instruments to which the entity is exposed at the end of the reporting period.
Disclosures should explain what the financial risks are, how the entity
manages the risk and why the entity enters into various derivative contracts
to hedge the risks .i.e, Credit Risk, liquidity risk, market risk and other risk.
Derivatives are recorded at fair value and carried as assets when their fair
value is positive and as liabilities when their fair value is negative. The
notional amount and fair value of such derivatives are disclosed separately.
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Changes in the fair value of derivatives are included in net gain on fair value
changes unless hedge accounting is applied.
Embedded derivative which is separated must be disclosed under the
relevant heading, for example, options, etc.
Part I below caters to the derivative financial instruments based on the risk
that the entity intends to hedge.
Part II below caters to the derivative financial instruments on which hedge
accounting is applied or not applied.
The notional amounts, fair value assets, and fair value liabilities shall be
disclosed for each category and sub-category of Derivative financial
instruments as:
1. Part I
(i) Currency Derivatives
- Spot and forwards
- Currency futures
- Currency swaps
- Options purchased
- Options sold (written)
- Others
Subtotal (i)
(ii) Interest Rate Derivatives
- Forward rate agreements and interest rate
swaps
- Options purchased
- Options sold (written)
- Futures
- Others
Subtotal (ii)
(iii) Credit Derivatives
(iv) Equity Linked Derivatives
(v) Other Derivatives (Please specify)
Total Derivative financial instruments
(i)+(ii)+(iii)+(iv)+(v)
2. Part II
Included in above (Part I) are derivatives held for hedging and risk
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management purposes as follows
(i) Fair value hedging
- Currency Derivatives
- Interest rate derivatives
- Credit derivatives
- Equity linked derivatives
- Others
Subtotal (i)
(ii) Cash flow hedging
- Currency Derivatives
- Interest rate derivatives
- Credit derivatives
- Equity linked derivatives
- Others
Subtotal (ii)
(iii) Net investment hedging
(iv) Undesignated derivatives
Total Derivative financial instruments (i)+(ii)+(iii)+(iv)
With respect to hedges and hedge accounting, NBFCs should provide a
description in accordance with the requirements of Indian Accounting
Standards, of how derivatives are used for hedging, explain types of hedges
recognized for accounting purposes and their usage/ application by the
entity.
8.1.4. Receivables:
Receivables are classified as `Trade and Other Receivables'.
A receivable should be classified as 'trade receivable' if it is in respect of the
amount due on account of goods sold or services rendered in the normal
course of business and the company has a right to an amount of
consideration that is unconditional (i.e. if only the passage of time is required
before payment of that consideration is due).
Other receivables would generally mean receivables emanating from items
that are classified as `others' under `Revenue from Operations'. Other
receivables shall also include debts due by directors or other officers of the
NBFC or any of them either severally or jointly with any other person or debts
due by firms including limited liability partnerships (LLPs), private companies
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respectively in which any director is a partner or a director or a member if the
same is not in the nature of Trade receivables.
Refer para 8.1.7 for items that may be classified as `other financial assets'.
Receivables shall be sub-classified as:
(i) (a) Receivables considered good - Secured;
(b) Receivables considered good - Unsecured;
(c) Receivables which have significant increase in credit risk; and
(d) Receivables credit impaired
(ii) Allowance for impairment loss allowance shall be disclosed under the
relevant heads separately.
(iii) Debts due by directors or other officers of the NBFC or any of them
either severally or jointly with any other person or debts due by firms
including limited liability partnerships (LLPs), private companies
respectively in which any director is a partner or a director or a
member should be separately stated.
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:
a) The general approach, where an entity recognises ECL in the
following stages viz.,
credit exposures for which there has not been a significant
increase in credit risk since initial recognition;
credit exposures for which there has been a significant
increase in credit risk since initial recognition but not credit-
impaired;
credit exposures that are credit impaired;
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b) The simplified approach, where an entity does not separately track
changes in credit risk.
c) The purchased or originated credit-impaired approach.
For trade receivables that do not contain a significant financing component, it
is a requirement to apply a simplified approach while for trade receivables
that contain a significant financing component, and for lease receivables, a
choice between a general approach or simplified approach is available.
Application Guidance to Ind AS 109 allows using practical expedients when
measuring expected credit losses if they are consistent with the
measurement principles reflecting a probability-weighted outcome, the time
value of money and reasonable and supportable information that is available
without undue cost or effort at the reporting date about past events, current
conditions and forecasts of future economic conditions, for e.g., using a
provision matrix based calculation of expected credit loss on trade
receivables.
Disclosure under the general approach
If the company chooses to calculate impairment under the general approach
for trade receivables containing significant financing component, then the
disclosure representing the following different categories of Trade
Receivables would be provided:
Trade Receivables
Particulars Exposure Loss Net
Allowance Amount
Rs. Rs. Rs.
Considered good Secured -- -- --
Considered good 1,25,000 13,000 1,12,000
Unsecured*
Trade Receivables which have 20,000 10,000 10,000
significant increase in credit
risk
Trade Receivables credit 5,000 4,000 1,000
impaired
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Total 1,50,000 27,000 1,23,000
* It is assumed for simplicity that all the Trade Receivables considered good
are Unsecured.
Similar table as mentioned above would be required for any debts due which
are in the nature of trade receivables and where general approach has been
used by the company for any debts due by any directors or other officers of
the NBFC or any of them either severally or jointly with any other person or
debts due by firms including limited liability partnerships (LLPs), private
companies respectively in which any director is a partner or a director or a
member
Except in case of purchased or originated credit-impaired trade receivables
where a company only recognises cumulative changes in lifetime expected
credit losses since initial recognition, the impairment loss allowance does not
reduce the carrying amount of the trade receivables.
In disclo sing `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 disclos ing `Trade Receivables credit impaired', the company shall
disclose the amount of trade receivables which are credit impaired as
defined in Ind AS- 109 .
The balance amount of trade receivables which have neither experienced
significant increase in credit risk nor are credit impaired as per Ind AS 109,
shall be disclosed as `good'.
For calculating the loss allowance, reference shall be drawn from Ind AS
109.
Disclosure under the simplified approach
If the company chooses to calculate impairment under the simplified
approach for trade receivables containing significant financing component
and for the impairment calculated on trade receivables that do not contain
significant financing component, then the company is not required to
separately track changes in credit risk of trade receivables as the impairment
amount represents "lifetime" expected credit loss.
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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:
Trade Receivables
Particulars Exposure Loss Net
Allowance Amount
Rs. Rs. Rs.
Considered Good Secured -- -- --
Considered Good 2,00,000 25,000 1,75,000
Unsecured*
Trade Receivables which have - - -
significant increase in credit
risk
Trade Receivables credit - - -
impaired
Total 2,00,000 25,000 1,75,000
* It is assumed for simplicity that all the Trade Receivables are Unsecured.
Break- up of trade receivables into `significant increase in credit risk'
and `credit impaired'
Ind AS 109 neither prohibits nor mandates a company to perform individual
assessment of credit risk for some of its financial assets, if company
performs individual credit risk assessment on specific parties despite the
normal collective pool-based assessment for a group of parties falling under
a particular credit exposure bucket (e.g., ageing, rating, etc.) and if it
indicates that a trade receivable has experienced a significant increase in
credit risk or is credit impaired then disclosure to be provided as under.
The disclosure of trade receivables in the manner as required by Schedule III
shall be made specifically where the company has a trade receivable for
which credit risk is assessed individually. However, the disclosure of `trade
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receivables credit impaired' shall be made if such trade receivables meet
the definition of `credit impaired' as per Ind AS 109.
When a company has assessed credit risk on an individual basis irrespective
of recognition of a loss allowance, it is recommended that a company should
disclose the following by way of a footnote just after the illustrative table
given below:
The amount of trade receivables for which the company has assessed
credit risk on an individual basis; and
The amount of loss allowance recognized for such trade receivables .
Trade Receivables
Particulars Exposure Loss Net
Allowance Amount
Rs. Rs. Rs.
Considered Good Secured -- -- --
Considered Good 1,50,000 25,000 1,25,000
Unsecured*
Trade Receivables which have - - -
significant increase in credit
risk
Trade Receivables credit 50,000 50,000 -
impaired
Total 2,00,000 75,000 1,25,000
*Where a company has performed credit assessment on an individual basis
and the assessment indicates that the trade receivable has experienced
significant increase in credit risk but is not credit impaired, in that case the
exposure to such trade receivable and its respective loss allowance would be
shown as part of Considered good - secured and Considered good
Unsecured as the case may be. In case of `trade receivables' under the
simplified approach a company is not required to separately track the
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changes in credit risk and even if the company does individual assessment it
will not be possible for a company to establish that there has been significant
increase in credit risk. Hence any exposure of trade receivables other than
that which is credit impaired and the respective loss allowance will be shown
as part of Considered Good Secured / Unsecured as the case may be.
Similar tables as mentioned above would be required for any debts due by
directors or other officers of the NBFC or any of them either severally or
jointly with any other person or debts due by firms including limited liability
partnerships (LLPs), private companies respectively in which any director is a
partner or a director or a member.
Presentation of loss allowance
Except in case of purchased or originated credit-impaired trade receivables
where a company only recognises cumulative changes in lifetime expected
credit losses since initial recognition, the impairment loss allowance does not
reduce the carrying amount of the trade receivables. Accordingly, the total
expected credit loss allowance is presented as a deduction in a single line
item from the total carrying amount of the trade receivables, as shown above.
The above 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.
Impairment for Other Receivables
Similar disclosures as mentioned above under the general approach may be
followed for impairment for Other Receivables.
8.1.5. Loans:
An NBFC shall disclose the following in the Notes under the head `Loans':
(i) Bills purchased and bills discounted
(ii) Loans repayable on demand
(iii) Term Loans
(iv) Leasing
(v) Factoring
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(vi) Others (to be specified , example of `Others' could be Inter -corporate
Deposits, Staff loans , loans to related party, etc)
Loans should be classified as measured at amortised cost, at fair value
through Other Comprehensive Income, fair value through Profit or Loss, or
designated at fair value through Profit or Loss.. The impairment loss
allowance as per Ind AS 109 should be disclosed as a separate line item
under the aforesaid measurement category.
A break up of the total loan should also be disclosed as:
(a) Secured by tangible assets
(b) Secured by intangible assets
(c) Covered by Bank/ Government Guarantee
(d) Unsecured
As per Guidance Note on Terms Used in Financial Statements, Secured
loan is defined as loan secured wholly or partly against an asset.
Loans shall be additionally disclosed into loans secured by book debts, fixed
deposits and other working capital items as applicable. Loans to the extent
they are covered by guarantees of Indian/ foreign governments and Indian/
foreign banks shall be included in line item (c) above. Government refers to
government, government agencies, and similar bodies whether local, national
or international. All loans or parts thereof that are not classified under the
previous sub-heads shall be included in line item (d) above. For instance, if
an advance is secured by tangible assets to the extent of 75 percent, the
secured component shall be reflected under secured advance, while the
balance 25 percent unsecured component would be included under this sub-
head. The total of the above line items, after deducting impairment loss
allowance in a separate line item, should match with the net loans and
advances.
Additional disclosure of loans within India and outside India is required to be
made. Further within India it should be classified as public sector and others
(to be specified). Advances to Central and State Governments and other
Government undertakings including Government Companies and statutory
corporations are to be included in the category `Public Sector'. All other loans
are included in `Others ' category for example loans to retail or Corporate or
industry wise classification etc. based on the business of the company.
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All the above mentioned disclosures are required to be given for each of the
measurement categories namely measured at amortised cost, at fair value
through other comprehensive income, fair value through Profit or Loss or
designated at fair value through Profit or Loss.
For finance lease receivables, an entity shall apply the presentation and
disclosure requirements under Ind AS 116 in addition to the requirements of
Ind AS Schedule III. The disclosure requirements of Ind AS 107 would also
apply to such receivables and the requirements under this schedule stand
modified accordingly (Refer para 2 of General Instructions for preparation of
Financial Statements of a Non-Banking Financial Company (NBFC) that are
required to comply with Indian Accounting Standards (Ind AS))
8.1.6. Investments:
Investments shall be classified as:
(i) Investments in Mutual funds
(ii) Investments in Government securities
(iii) Investments in Other approved securities
(iv) Investments in Debt Securities
(v) Investments in Equity Instruments
(vi) Investments in Subsidiaries
(vii) Investments in Associates
(viii) Investments in Joint Ventures
(ix) Others (Specify)
Investments should further be classified as:
a.) Measured at amortised cost,
b.) Fair value through Other Comprehensive Income,
c.) Fair value through Profit or Loss, and
d.) Designated at fair value through Profit or Loss.
Additional disclosure of Investments within and outside India is required to be
provided.
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Exposure Draft of Revised Guidance Note on Division III to Schedule III to the
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Where the NBFC has used a basis other than amortised cost or fair value,
the same may be included in column `Others', with the basis of measurement
to be disclosed as a footnote. Eg. Investment in subsidiaries measured at
cost under Ind AS 109 shall be classified under `Others'.
The impairment loss allowance as per Ind AS 109 should be disclosed as a
separate line item under the sub-heads mentioned above.
8.1.6.1 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
portion of fair value change, if any, attributable to a change in credit risk of
such investment, by applying the impairment requirements of Ind AS 109 in
recognising and measuring the loss allowance, and disclose the same in the
statement of profit and loss with a corresponding impact in other
comprehensive income. In other words, the company shall not
reduce/increase the carrying amount of such investment in the balance sheet
on account of change in the credit risk as the investment needs to be
presented at fair value. Disclosure pertaining to impairment shall be
disclosed by way of Notes in accordance with the requirements of Ind AS
107.
As per Ind AS 109, equity instruments measured at other than at cost and
debt instruments measured at fair value through profit or loss do not require
a separate evaluation of impairment amount. Hence, in such cases the
disclosure pertaining to impairment shall not be applicable.
For the purpose of disclosing aggregate provision for impairment in the value
of investments, an entity shall disclose an amount equal to the aggregate
amount of impairment recognized and measured in accordance with Ind AS
109, as stated in the paragraphs above.
The aggregate provision for impairment shall be presented in totality for each
measurement category.
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8.1.6.2 Investments in Subsidiaries / Associates / Joint Ventures
The terms `subsidiary', `associate' and `joint venture' shall be as defined in
the respective Ind AS. Ind AS 32, Ind AS 107 and Ind AS 109 scope out
those interests in subsidiaries, associates, joint ventures that are accounted
for in accordance with Ind AS 110 Consolidated Financial Statements , Ind AS
27 Separate Financial Statements or Ind AS 28 Investments in Associates
and Joint Ventures .
In some cases, Ind AS 110, Ind AS 27 or Ind AS 28 require or permit an
entity to account for an interest in a subsidiary, associate or joint venture in
accordance with Ind AS 109. Accordingly, only in its Separate Financial
Statements, the entity shall present such interests in a subsidiary, associate
or joint venture under `Others' if an entity uses a basis for measurement for
the same other than specified under Ind AS 109.
As per Part III General Instructions for the Preparation of Consolidated
Financial Statements, the Consolidated Financial statements shall further
disclose the information as per the requirements specified in the applicable
Indian Accounting Standards notified under the Companies (Indian Ac-
counting Standards) Rules 2015. Thus for an entity's Consolidated Financial
Statements, investments accounted using the equity method (i.e. associates
and joint ventures) need to be shown under the line item `Investments' under
the heading `Financial Assets'.
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.
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Ind AS Schedule III also requires disclosure of the `nature and extent' of the
investment so made. In case of an Investment in other than a structured
entity, the nature and extent would imply the number of such instruments
held and the face value of such instrument. In case of a Structured Entity,
rights are mainly established by way of contractual arrangements and
therefore as a part of `nature and extent', a bri ef description of the nature of
contracts may be provided along with the rights held in such entities as
evidenced by such contracts.
8.1.7. Other Financial assets:
Other financial assets shall include items such as dues in respect of
insurance claims, sale of Property, Plant and Equipment, contractually
reimbursable expenses, security deposits etc. In case advances are of the
nature of a financial asset as per Ind AS 32, these are to be disclosed under
`other financial assets' separately.
Application money paid towards securities
Any application money paid towards securities, where security has not been
allotted on the date of the Balance Sheet, shall be disclosed as a separate line
item under `other financial assets'. If the amount is material, details about the
date of allotment or when the allotment is expected to be completed may also be
disclosed.
Non-Financial Assets
8.1.8. Inventories:
(i) Inventories shall be classified as:
(a) Raw materials;
(b) Work-in-progress;
(c) Finished goods;
(d) Stock-in-trade (in respect of goods acquired for trading);
(e) Stores and spares;
(f) Loose tools;
(g) Others (specify nature).
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(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.
8.1.9. Current Tax Assets (Net):
If amount of tax already paid in respect of current and prior periods exceeds
the amount of tax due for those periods (assessment year-wise and not
cumulative unless tax laws allow 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
recovered / realised within one year from the balance sheet date and if so ,
the same shall be presented under non-financial assets. An entity should
evaluate whether current tax assets meet the definition of current assets or
not and should accordingly present the same.
8.1.10. Investment property:
Ind AS 40 Investment Property defines Investment Property as the property
(land or a building--or part of a building --or both) held (by the owner or by
the lessee as a right of use asset) to earn rentals or for capital appreciation
or both, rather than for: (a) use in the production or supply of goods or
services or for administrative purposes; or (b) sale in the ordinary course of
business.
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.
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The guidance given below on Property, Plant and Equipment, to the extent
applicable, is also to be used for Investment Property.
8.1.11. Biological assets other than bearer plants:
As per Ind AS-41 Agriculture , a biological asset is a living animal or plant.
Examples of biological assets are sheep, Trees in a timber plantation, Dairy
Cattle, Cotton plants, Tea bushes, Oil palms, Fruit trees, etc. Some plants, for
example, cotton plants, tea bushes, oil palms, fruit trees, grape vines, 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;
(vi) net exchange differences arising on the translation of financial statements
into a different presentation currency, and on the translation of a foreign
operation into the presentation currency of the reporting entity; and
(vii) other changes.
The guidance given below on Property, Plant and Equipment, to the extent
applicable, is also to be used for Biological Assets other than bearer plants.
8.1.12. Property, Plant and Equipment:
The company shall disclose the following in the Notes under the head
`Property, Plant and Equipment':
(i) Classification shall be given as:
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(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 as part of Notes.
For assets under lease, an entity shall apply the presentation and
disclosure requirements under Ind AS 116 in addition to the
requirements of 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.
Illustrative Table
Particulars Building
Freeh Owner Right to
Occupied Use
old property under a
lease
Current Year
At cost or fair value at the beginning of the year
Additions
Revaluation adjustment, if any
Disposals
Reclassification from/to held for sale
Other adjustments (please specify)
At cost or fair value at the end of the year
Accumulated depreciation and impairment as at
the beginning of the year
Depreciation for the year
Disposals
Impairment/(reversal) of impairment
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Reclassification from/to held for sale
Other adjustments (please specify)
Accumulated depreciation and impairment as at
the end of year
Net carrying amount as at the end of the year (A)
Capital Work in Progress including advances for
capital assets (B)
Total (C) = (A) + (B)
`Similar presentation may be provided for all the above mentioned assets.
8.1.12.1 Since reconciliation of gross and net carrying amounts of Property,
Plant and Equipment, Investment Property and Other Intangible assets is
required, the corresponding depreciation/amortization for each class of asset
should be disclosed in terms of Opening Accumulated Depreciation, Depreciation
/ amortization for the year, Deductions / Other adjustments and Closing
Accumulated Depreciation / Amortization. Similar disclosures should also be
made for Impairment, if any, as applicable.
8.1.12.2 As per Ind AS 101, 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.
8.1.12.3 In case if the company wants to disclose information regarding gross
block of assets, accumulated depreciation and provision for impairment as per
previous GAAP, the same may only be disclosed as an additional information by
way of a note forming part of the financial statements.
8.1.12.4 All acquisitions, whether by way of an asset acquisition or through a
business combination are to be disclosed as part of the reconciliation in the note
on Property, Plant and Equipment, Investment Property (refer para 8.1.10), Other
Intangible assets (refer para 8.1.16) and Biological Assets other than bearer
plants (refer para 8.1.11). Acquisitions through `Business Combinations' need to
be disclosed separately for each class of assets. Similarly, though not specifically
required, it is advisable that asset disposals through demergers, etc. may also be
disclosed separately for each class of assets.
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8.1.12.5 Other adjustments may include items as required by disclosure
requirements of Ind AS 16 and such disclosure should be made in the manner
prescribed therein. It may also include, for example net exchange gain / loss
arising on the translation of the financial statements from the functional currency
into a presentation currency.
8.1.12.6 Under 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.
8.1.13. Capital work-in-progress
As per Ind AS Schedule III, capital advances should be included under other
non-financial assets and hence, cannot be included under capital work-in-
progress.
8.1.14. Intangible assets under development
Intangible Assets under development should be disclosed under this head
provided they can be recognized based on the criteria laid down in Ind AS-38
Intangible Assets .
8.1.15. Goodwill
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.
8.1.16. Other Intangible assets
The company shall disclose the following in the Notes to Accounts:
(i) Classification shall be given as:
(a) Brands / trademarks;
(b) Computer software;
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(c) Mastheads and publishing titles;
(d) Mining rights;
(e) Copyrights, patents, other intellectual property rights, services
and operating rights;
(f) Recipes, formulae, models, designs and prototypes;
(g) Licenses and franchises;
(h) Others (specify nature).
(ii) A reconciliation of the gross and net carrying amounts of each class of
assets at the beginning and end of the reporting period showing additions,
disposals, acquisitions through business combinations and other
adjustments and the related amortization and impairment losses or
reversals shall be disclosed separately.
The guidance given above on Property, Plant and Equipment, to the extent
applicable, is also to be used for Other Intangible Assets.
8.1.17. Contract assets and impairment thereof
Ind AS 115 requires in case of a contract with customer, when either party has
performed, to present a contract asset in the balance sheet as a line item
separate from trade receivables. Contract asset arises if an entity performs by
transferring goods or services to a customer before the customer pays
consideration or before payment is due. It excludes any amounts presented as a
receivable.
The presentation requirements of trade receivables (viz., secured and
unsecured, considered good, significant increase in credit risk and credit
impaired) may be applied to contract assets if a company has sufficient and
appropriate information.
Ind AS 115 also requires impairment of contract assets to be measured
presented and disclosed on the same basis as a financial asset that is within
the scope of Ind AS 109.
Accordingly, all the impairment related requirements as outlined above for trade
receivables (Section 8.1.4) shall be applied to contract assets as well.
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8.1.18. Other non-financial assets (to be specified)
Capital advances are advances given for procurement of Property, Plant and
Equipment including bearer plants, Investment Property, Other Intangible
Assets or Biological Assets which are non-financial assets. Typically,
companies do not expect to realize them in cash. Rather, over the period,
these get converted into Property, Plant and Equipment including bearer
plants, Investment Property, Other Intangible assets or Biological Assets,
respectively, which are non-financial assets. Hence, capital advances should
be treated as other non-financial assets irrespective of when the Property,
Plant and Equipment including bearer plants, Investment Property, Other
Intangible assets or Biological Assets are expected to be received.
Security Deposits under other non-financial assets should include those
deposits which do not meet the definition of a financial asset.
Other advances include all other items in the nature of advances which do
not meet the definition of a financial asset viz., Prepaid expenses, GST
receivable, etc.
It may be noted that in case advances are of the nature of a financial asset
as per Ind AS 32, these are to be disclosed under `other financial assets'
separately.
Non-current Assets and disposal group held for sale
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.
8.2 Liabilities and Equity
Liabilities
On the face of the Balance Sheet, Ind AS Schedule III requires the following
items to be presented under financial liabilities as well as non-financial
liabilities as below:
Financial Liabilities
(a) Derivative financial instruments
(b) Payables
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(I) Trade Payables
(i) total outstanding dues of micro enterprises and small enterprises
(ii) total outstanding dues of creditors other than micro enterprises and
small enterprises
(II) Other Payables
(i) total outstanding dues of micro enterprises and small enterprises
(ii) total outstanding dues of creditors other than micro enterprises and
small enterprises
(c) Debt Securities
(d) Borrowings (Other than Debt Securities)
(e) Deposits
(f) Subordinated Liabilities
(g) Other financial liabilities (to be specified)
Non-financial Liabilities
(a) Current tax liabilities (Net)
(b) Provisions
(c) Deferred tax liabilities (Net)
(d) Other non-financial liabilities (to be specified)
Financial Liabilities
8.2.1. Payables
8.2.1.1 Ind AS Schedule III requires presenting `Payables' as a separate line
item on the face of the Balance Sheet under `Financial Liabilities'.The following
shall be disclosed as sub-heads on the face of the Balance Sheet under
payables as per Division III of Schedule III:
(I) Trade Payables
(i) Total outstanding dues of micro enterprises and small
enterprises
(ii) Total outstanding dues of creditors other than micro
enterprises and small enterprises
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(II) Other Payables
(i) Total outstanding dues of micro enterprises and small
enterprises
(ii) Total outstanding dues of creditors other than micro
enterprises and small enterprises
8.2.1.2 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. Amounts due under contractual obligations other than
purchase of goods and services or statutory payables shall not be included within
Trade Payables. Such items may include dues payable in respect of statutory
obligations like contribution to provident fund or contractual obligations like
contractually reimbursable expenses, amounts due towards purchase of capital
goods, etc. These amounts should be shown under Non-financial liability (Refer
para 8.2.9).
8.2.1.3 Unpaid Creditors for Capital goods and Debts due to directors or other
officers of the NBFC or any of them either severally or jointly with any other
person or debts due to firms including LLPs, Private companies respectively in
which director is a partner or a director or a member if they are not in the nature
of `Trade Payables' should be classified as `Other payables'.
As per Schedule III, the Payables should present separately the portion
representing outstanding dues of micro and small enterprises and others.
Amount due from `Medium enterprises' shall form part of `Others'
8.2.1.4 As per the requirements of Schedule III the following shall be disclosed:
(a) the principal amount and the interest due thereon (to be shown
separately) remaining unpaid to any supplier at the end of each
accounting year;
(b) the amount of interest paid by the buyer in terms of section 16 of the
Micro, Small and Medium Enterprises Development Act, 2006, along
with the amount of the payment made to the supplier beyond the
appointed day during each accounting year;
(c) the amount of interest due and payable for the period of delay in making
payment (which has been paid but beyond the appointed day during the
year) but without adding the interest specified under the Micro, Small
and Medium Enterprises Development Act, 2006;
(d) the amount of interest accrued and remaining unpaid at the end of each
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accounting year; and
(e) the amount of further interest remaining due and payable even in the
succeeding years, until such date when the interest dues above are
actually paid to the small enterprise, for the purpose of disallowance of a
deductible expenditure under section 23 of the Micro, Small and Medium
Enterprises Development Act, 2006.
Similar requirements are given under The Micro, Small and Medium Enterprises
Development (MSMED) Act, 2006.
8.2.1.5 The terms ''appointed day'', ''buyer'', ''enterprise'', ''micro
enterprise'', "medium enterprise", ''small enterprise'' and'' supplier'', shall be as
defined under clauses (b), (d), (e), (h), (m) and (n) respectively of section 2 of the
Micro, Small and Medium Enterprises Development Act, 2006.
8.2.2. Debt Securities
8.2.2.1 The head `Debt Securities' under `Financial Liabilities' will include
securities other than those which are classified as `Subordinated debt'. Debt
securities shall comprise of liability component of Compound Financial
instruments as per Ind AS and Other such as Bonds and Debentures. Debt
securities should be further classified into the following measurement categories
such as
a) Amortised Cost,
b) Fair value through Profit or loss and
c) Designated at Fair Value through Profit or loss.
8.2.2.2 Additional disclosures of Debt securities within India and Outside India
is required to be made.
8.2.2.3 Refer para 8.2.12.8 on guidance on liability component of compound
financial instrument. Moreover disclosure requirements as applicable to other
debt securities shall be applicable to `liability component of compound financial
instrument' under the heading `Debt securities'
8.2.2.4 Bonds or debentures (along with the rate of interest, and particulars of
redemption or conversion, as the case may be) shall be stated in descending
order of maturity or conversion, starting from earliest redemption or conversion
date, as the case may be. Where bonds/debentures are redeemable by
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instalments, the date of maturity for this purpose must be reckoned as the date
on which the first instalment becomes due.
8.2.2.5 Particulars of any redeemed bonds or debentures which the NBFC has
power to reissue shall be disclosed.
8.2.2.6 Liabilities arising out of Securitisation transactions resulting into issue of
Debt securities shall be classified as Debt securities.
8.2.3. Borrowings (Other than Debt Securities)
Borrowings (Other than Debt Securities) shall be classified as:
(a) Term Loans
(i) From banks
(ii) From other parties
(b) Deferred payment liabilities
(c) Loans from related parties
(d) Finance lease obligations*
(e) Liability component of compound financial instruments
(f) Loans repayable on demand
(i) From banks
(ii) From other parties
(g) Other loans (specify nature) example securitization liabilities.
*Ind AS Schedule III requires finance lease obligation to be disclosed under
Borrowings, however basis the facts and circumstances of the case the
presentation may be different i.e. if it is presented as other financial liabilities
instead of Borrowings.
8.2.3.1 The borrowings should be further classified into the following
measurement categories such as:
a) Amortised Cost,
b) Fair value through Profit or loss and
c) Designated at Fair Value through Profit or loss.
Additional disclosures of Borrowings within India and Outside India is required to
be made.
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8.2.3.2 Borrowings shall further be sub-classified as secured and unsecured.
Nature of security shall be specified separately in each case.
8.2.3.3 Where borrowings have been guaranteed by directors or others, the
aggregate amount of such borrowings under each head shall be disclosed. The
word "others" used in the phrase "directors or others" would mean any person or
entity other than a director. Therefore, this is not restricted to mean only parties
related to the Directors.
8.2.3.4 Terms of repayment of term loans and other loans is also required to be
stated.
8.2.3.5 Period and amount of default as on the Balance Sheet date in
repayment of borrowings and interest shall be specified separately in each case.
8.2.3.6 The phrase "term loan" has not been defined in the Schedule III. Term
loans normally have a fixed or pre-determined maturity period and / or repayment
schedule.
8.2.3.7 Deferred payment liabilities would include any liability for which
payment is to be made on deferred credit terms. E.g. deferred payment for
acquisition of Property, Plant and Equipment, etc.
8.2.3.8 Ind AS Schedule III also stipulates that the nature of security shall be
specified separately in each case. A blanket disclosure of different securities
covering all loans classified under the same head such as `All Term loans from
banks' will not suffice. However, where one security is given for multiple loans,
the same may be clubbed together for disclosure purposes with adequate details
or cross referencing.
8.2.3.9 Disclosure about the nature of security should also cover the type of
asset given as security e.g. inventories, plant and machinery, land and building,
etc. This is because the extent to which loan is secured may vary with the nature
of asset against which it is secured.
8.2.3.10 When promoters, other shareholders or any third party have given any
personal security for any borrowing, such as shares or other assets held by
them, disclosure should be made thereof, though such security does not result in
the classification of such borrowing as secured.
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8.2.3.11 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.
8.2.3.12 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 deferred payment liabilities, finance lease
obligations, etc. and not only to items classified as "loans" such as term loans,
etc.
8.2.3.13 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 those breaches made during the reporting period, which
permitted the lender to demand accelerated repayment and, were not remedied
on or before the end of the reporting period.
8.2.3.14 Terms of repayment of term loans and other loans shall be disclosed.
The term `other loans' is used in general sense and should be interpreted to
mean all categories listed under the heading `Borrowings' as per Ind AS
Schedule III. Disclosure of terms of repayment should be made for each loan
unless the repayment terms of individual loans within a category are similar, they
may be aggregated.
8.2.3.15 Disclosure of repayment terms should include the period of maturity
with respect to the Balance Sheet date, number and amount of instalments due,
the applicable rate of interest, other significant and relevant terms, if any.
8.2.3.16 Loans from related parties are required to be disclosed. All the
disclosure requirements of borrowings would be applicable to such loans from
related parties.
8.2.3.17 Refer para 8.2.12.8 for guidance on liability component of compound
financial instrument. Moreover disclosure requirements as applicable to other
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Borrowings shall be applicable to `liability component of compound financial
instrument' under the heading `Borrowings'.
8.2.3.18 Liabilities arising out of Securitisation transactions resulting into issue of
Borrowings shall be classified as Borrowings.
8.2.4. Deposits
8.2.2.7 Deposits shall be classified as Public Deposits, from Banks, and
from others. Others would also include Inter corporate deposits. Deposits
should be further classified into the following measurement categories such as:
d) Amortised Cost,
e) Fair value through Profit or loss and
f) Designated at Fair Value through Profit or loss.
8.2.5. Subordinated Liabilities
Subordinated Liabilities shall be classified as:
(a) Perpetual Debt Instruments to the extent that do not qualify as
equity;
(b) Preference Shares other than those that qualify as equity;
(c) Others (Specifying the nature and type of instrument issued).
The subordinated liabilities shall be disclosed both within and outside India.
Others will include those liabilities which are considered as subordinated by the
respective regulator for e.g. RBI has defined it as "subordinated debt" means an
instrument, which is fully paid up, is unsecured and is subordinated to the claims
of other creditors and is free from restrictive clauses and is not redeemable at the
instance of the holder or without the consent of the supervisory authority of the
non-banking financial company. The book value of such instrument shall be
subjected to discounting as provided hereunder:
Remaining Maturity of the instruments Rate of discount
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(a) Upto one year 100 per cent
(b) More than one year but upto two years 80 per cent
(c) More than two years but upto three years 60 per cent
(d) More than three years but upto four years 40 per cent
(e) More than four years but upto five years 20 per cent to the extent such
discounted value does not exceed fifty per cent of Tier I capital;
Disclosure as required by `debt securities' will have to be given and additional
disclosures as required by the RBI.
8.2.6. Other Financial liabilities (to be specified)
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 should be presented under other financial liabilities, as under:
(a) Interest accrued;
(b) Unpaid dividends;
(c) Application money received for allotment of securities to the extent
refundable and interest accrued thereon;
(d) Unpaid matured deposits and interest accrued thereon;
(e) Unpaid matured debentures and interest accrued thereon;
(f) Margin money (to be specified); and
(g) Others (specify nature)
Items which meet the definition of financial liabilities as per Ind AS 32, like
contingent consideration, derivative contracts, financial guarantee contracts
issued, contractually reimbursable expenses etc. should be presented under
other financial liabilities.
Interest Accrued
Interest accrued on financial liabilities shall form part of its carrying amount
whether it is at amortized cost (i.e. as per effective interest method), or at fair
value. Accordingly, an entity shall not present `Interest Accrued' separately
from the related financial liability.
Offsetting a Financial Asset and a Financial Liability
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In accordance with Para 42 of Ind AS 32, to offset a financial asset and a
financial liability, an entity must have a currently enforceable legal right to set
off the recognised amounts and the intension to either settle on a net basis
or to realize the asset and settle the liability simultaneously.
Non-financial liabilities
Current Tax Liabilities
Current tax is the amount of income taxes payable (recoverable) in respect of
the taxable profit (tax loss) for a period. Currently tax for current and prior
periods shall, to the extent unpaid, be recognised as a liability.
If the amount already paid in respect of current and prior periods exceeds the
amount due for those periods, the excess shall be recognised as an asset.
8.2.7. 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 litigation, provision for decommissioning
liabilities, loan commitments etc. These amounts should be disclosed
separately specifying nature thereof.
For loan commitments and financial guarantee contracts as per Ind AS 109 the
loss allowance is recognised as a provision. An entity should disclose information
about the changes in the loss allowance for financial assets separately from
those for loan commitments and financial guarantee contracts. However, if a
financial instrument includes both a loan (i.e. financial asset) and an undrawn
commitment (i.e. loan commitment) component and the entity cannot separately
identify the expected credit losses on the loan commitment component from
those on the financial asset component, the expected credit losses on the loan
commitment should be recognised together with the loss allowance for the
financial asset. To the extent that the combined expected credit losses exceed
the gross carrying amount of the financial asset, the expected credit losses
should be recognised as a provision.
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8.2.8. Deferred Tax Liability (Net)
Ind AS 12 requires companies to recognise deferred tax assets or liabilities
using a balance sheet approach, i.e. comparing the Ind AS carrying value o f
the asset or liability to its tax base
8.2.9. Other non-financial liabilities (to be specified)
The amounts shall be classified as:
(a) Revenue received in advance;
(b) Other advances (specify nature);
(c) Others (specify nature).
Other advances, that satisfy the requirements for being classified as non-
financial liabilities as defined in Ind AS 32, should be classified under `Other
non- financial liabilities'. For e.g., amount received in advance. Others should
include items under other non-financial 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, Goods and Services Tax (GST), etc.
Guidance on disclosure under this clause should be drawn from the guidance
given under Other Financial Liabilities, to the extent applicable.
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
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).
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8.2.10. Liabilities for assets held for sale
As per Ind AS 105, the liabilities associated with group of assets classified
as held for sale and assets classified as held for sale shall be presented
under this section.
8.2.11. Contingent liabilities and commitments
(i) Contingent liabilities shall be classified as:
(a) Claims against the company not acknowledged as debt;
(b) Guarantees excluding financial guarantees; and
(c) Other money for which the company is contingently liable.
(ii) Commitments shall be classified as:
(a) Estimated amount of contracts remaining to be executed on
capital account and not provided for;
(b) Uncalled liability on shares and other investments partly paid
(c) Other commitments (specify nature)
The provisions of Ind AS-37 Provisions, Contingent Liabilities and Contingent
Assets , will be applied for determining contingent liabilities.
8.2.11.1 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.
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
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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.
8.2.11.2 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.
8.2.11.3 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 expendit ure in
respect of which contracts have been made. Hence, drawing inference from
such definition, the term `commitment' would simply imply future liability for
contractual expenditure. Accordingly, the term `Other commitments' would
include all expenditure related contractual commitments apart from capital
commitments such as undrawn lease commitments, employee contracts,
lease commitments, etc. However, the disclosure of all contractual
commitments should be made bearing in mind the overarching principle
under Note 4(ii) in General Instructions for Preparation of Financial
Statements that "a balance shall be maintained between providing excessive
detail that may not assist users of Financial Statements and not providing
important information as a result of t oo much aggregation."
8.2.11.4 Disclosures relating to lease commitments are required to be
disclosed as per Ind AS-116 Leases for example short term leases as per
para 5 of Ind AS 116.
8.2.11.5 Accordingly, the disclosures required to be made for `other
commitments' should include only those non-cancellable contractual
commitments (i.e. cancellation of which will result in a penalty
disproportionate to the benefits involved) based on the professional
judgement of the management which are material and relevant in
understanding the Financial Statements of the company and impact the
decision making of the users of Financial Statements. Examples may include
commitments in the nature of buy-back arrangements, commitments to fund
subsidiaries and associates, non-disposal of investments in subsidiaries and
undertakings, derivative related commitments, etc. Care should be taken to
ensure that items that are to be reflected as liabilities under Ind AS do not
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get disclosed under this head and appropriate disclosure required by Ind AS
should be complied with.
8.2.11.6 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 .
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.
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 (S) and (T) to General
Instructions for Preparation of Balance Sheet.
In the Statement of Changes in Equity, the portion for `Equity Share Capital'
provides reconciliation:
(a) Balance at the beginning of the reporting period;
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(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 Reserve;
(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;
(ii) Changes in accounting policy or prior period errors;
(iii) Restated balance at the beginning of the reporting period;
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(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 stat es 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."
8.2.12. Equity Share Capital
8.2.12.1 Notes to the General Instructions for Preparation of Balance Sheet
require a company to disclose in the Notes items referred to in Note (S).
Such disclosures are required for each class of equity share capital. The
disclosure requirements for share capital are common under Non-Ind AS
Schedule III as well as Ind AS Schedule III. However, Division III restricts the
disclosures to `Equity' while D ivision 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.
8.2.12.2 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 ."
8.2.12.3 The said Guidance Note defines `Share Capital' as the "aggregate
amount of money paid or credited as paid on the shares and/or stocks of a
corporate enterprise."
8.2.12.4 Section 2(84) of the Act defines "share" as " a share in the share
capital of a company and includes stock" . While, section 2(30) of the Act
defines "debenture" to "include debenture stock, bonds or any other
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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.
8.2.12.5 On the other hand, Ind AS 32 defines an equity instrument as " any
contract that evidences a residual interest in the assets of an entity after
deducting all of its liabilities" . The accounting definition of `Equity' is principle
based as compared to the legal definition of `Equity' or `Share', such that any
contract that evidences residual interest in an entity's net 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 n ature of `Equity' for the purpose of Ind AS
Schedule III. Such instruments shall be termed as `Instruments entirely equity
in nature'.
As per Para 11 of Ind AS 32 "The issuer of a financial instrument shall
classify the instrument, or its component parts, on initial recognition as a
financial liability, a financial asset or an equity instrument in accordance with
the substance of the contractual arrangement and the definitions of a
financial liability, a financial asset and an equity instrument." A preference
share, for example, may display either equity or liability characteristics
depending on the substance of the rights attaching to it.
8.2.12.6 Instruments entirely equity in nature, may be presented as a
separate line item on the face of the Balance Sheet under `Equity' after
`Equity Share Capital' but before `Other Equity', as shown below:
Name of the Company..........
Balance Sheet as at...............
(Rupees in.............)
Particulars Note Figures Figures
No. as at the as at the
end of end of
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current previous
reporting reporting
period period
EQUITY AND LIABILITIES
Equity
(a) Equity Share Capital
(b) Instruments entirely equity in
nature
(c) Other Equity
In the Statement of Changes in Equity, the reconciliation for instruments
entirely equity in nature should be presented as below:
STATEMENT OF CHANGES IN EQUITY
Name of the Company.......................
Statement of Changes in Equity for the period ended....................
(Rupees in...............)
A. Equity Share Capital
Balance at the Changes in equity Balance at the end of
beginning of the share capital during the reporting period
reporting period the period
B. Instruments entirely equity in nature *
(a) Compulsorily Convertible Preference Shares
Balance at the Changes in Balance at the end of
beginning of the compulsorily the reporting period
reporting period convertible preference
shares during the
period
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(b) Compulsorily Convertible Debentures
Balance at the Changes in Balance at the end of
beginning of the compulsorily the reporting period
reporting period convertible debentures
during the period
(c) [Instrument] (Any other instrument entirely equity in nature)
Balance at the Changes in Balance at the end of
beginning of the [Instrument] during the the reporting period
reporting period period
C. Other Equity
[Table providing reconciliation of Other Equity]
* It is assumed that Instruments entirely equity in nature have such terms and
conditions that qualify them for being entirely equity in nature based on the
criteria given in para 16 of Ind AS 32. Companies should assess terms and
conditions specific to their instruments for deciding whether they are entirely
equity in nature.
All the disclosures as required by Note (S) to General Instructions in
Preparation of Balance Sheet shall be provided for all instruments entirely
equity in nature, to the extent applicable.
8.2.12.7 Premium received on Compulsorily Convertible Preference Shares
which are entirely equity in nature shall be classified and presented as a part
of `Other Equity' under `Securities Premium'.
8.2.12.8 As per Para 28 of Ind AS 32, "The issuer of a non-derivative
financial instrument shall evaluate the terms of the financial instrument to
determine whether it contains both a liability and an equity component. Such
components shall be classified separately as financial liabilities, financial
assets or equity instruments in accordance with paragraph 15 " . Hence, all
those compound financial instruments which have both `Equity' and `Liability'
components, shall be split and their `Equity component' shall be presented
under `Other Equity' portion of Statement of Changes in Equity while their
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`Liability component' shall be presented as a separate line item under either
`Debt Securities' or `Borrowings'.
An entity may issue an instrument that at the end of its life is mandatorily
convertible into a fixed number of its equity shares (rather than conversion
being at the option of the holder). This instrument may carry an obligation for
the issuer for fixed interest payments during the life of the mandatorily
convertible instrument. In such a case, the instrument also includes a
financial liability component.
8.2.12.9 Ind AS Schedule III, Notes 2 and 3 of Other Classification related
General Instructions highlight that the disclosure and presentation
requirements as applicable to the relevant class of `Equity' or `Liability' shall
be applicable mutatis mutandis to the instruments (including, their
components) classified and presented under the relevant heads in `Equity'
and `Liabilities'. Accordingly, it is recommended that the companies provi de
all the relevant disclosures for `Equity component of a compound financial
instrument' as applicable to `Equity Share Capital' (given in Note (S) of
General Instructions for Preparation of Balance Sheet), to the extent
applicable. An example could be to disclose, for equity component of
compound financial instrument, terms as per Clause (j) i.e. terms of any
securities convertible into equity shares issued along with the earliest date of
conversion in descending order starting from the farthest such date, etc. For
the liability component of compound financial instruments, all the disclosures
applicable to `Debt Securities' and `borrowings' (refer para 8.2.2 and 8.2.3)
shall be made, to the extent applicable. An example could be to disclose the
rate of interest, particulars of redemption or conversion stated in descending
order of maturity or conversion, etc. However, for those instruments which
are entirely liability in nature, all disclosures applicable to `Borrowings' or
`Debt Securities' should be made.
8.2.12.10 Clause (a) of Note (S) - the number and amount of shares
authorized:
As per the Guidance Note on Terms Used in Financial Statements
`Authorised Share Capital' means "the number and par value, of each class
of shares that an enterprise may issue in accordance with its instrument of
incorporation. This is sometimes referred to as nominal share capital ."
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This disclosure is recommended for instruments entirely equity in nature as
well as for compound instruments that have an equity component, to the
extent applicable.
8.2.12.11 Clause (b) of Note (S) - the number of shares issued,
subscribed and fully paid, and subscribed but not fully paid:
The disclosure is for shares:
Issued;
Subscribed and fully paid;
Subscribed but not fully paid.
Though the disclosure is only for the number of shares under each of the
above three categories, to make the disclosure relevant to understanding the
company's share capital, even the amount for each category above should
be disclosed. Issued shares are those which are offered for subscription
within the authorised limit. It is possible that all shares offered are not
subscribed to and to the extent of unsubscribed portion, there will be
difference between shares issued and subscribed. As per the Guidance Note
on Terms Used in Financial Statements, the expression `Subscribed Share
Capital' is "that portion of the issued share capital which has actually been
subscribed and allotted. This includes any bonus shares issued to the
shareholders."
Though there is no requirement to disclose the amount per share called, if
shares are not fully called, it should be appropriate to state the amount per
share called.
As per the definition contained in the Guidance Note on Terms Used in
Financial Statements, the expression `Paid- up Share Capital' is "that part of
the subscribed share capital for which consideration in cash or otherwise has
been received. This includes bonus shares allotted by the corporate
enterprise."
This disclosure is recommended for instruments entirely equity in nature as
well as for compound instruments that have an equity component, to the
extent applicable.
8.2.12.12 Clause (c) of Note (S) par value per share:
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Par value per share is the face value of a share as indicated in the Capital
Clause of the Memorandum of Association of a company. It is also referred
to as `face value' per share. In the case of a company having share capital,
(unless the company is an unlimited company), the Memorandum shall also
state the amount of share capital with which the company is registered and
their division thereof into shares of fixed amount as required under clause
(e)(i) to the sub-section (1) of section 4 of the Act. In the case of a company
limited by guarantee, Memorandum shall state that each member undertakes
to contribute to the assets of the company in the event of winding -up while
he is a member or within one year after he ceases to be a member, for
payment of debts and liabilities of the company, as the case may be. There is
no specific mention for the disclosure by companies limited by guarantee and
having share capital, and companies limited by guarantee and not having
share capital. Such companies need to consider the requirement so as to
disclose the amount each member undertakes to contribute as per their
Memorandum of Association.
This disclosure is recommended for instruments entirely equity in nature as
well as for compound instruments that have an equity component, to the
extent applicable.
8.2.12.13 Clause (d) of Note (S) a reconciliation of the number of
shares outstanding at the beginning and at the end of the reporting
period:
As per 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 (S)]
above, to make the disclosure relevant for understanding the company's
share capital, the reconciliation is to be given even for the amount of share
capital. Reconciliation for the comparative previous period is also to be
given. Further, the above reconciliation should be disclosed separately for
each class of Equity Shares issued.
This disclosure is recommended for instruments entirely equity in nature.
Also, for compound instruments having both equity and liability components,
the reconciliation should be given for total number of shares / debentures
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outstanding, which will facilitate understanding the movement of compound
instrument upon either redemption or conversion or when both occur partly.
8.2.12.14 Clause (e) of Note (S) the rights, preferences and restrictions
attaching to each class of shares including restrictions on the
distribution of dividends and the repayment of capital:
As per the Guidance Note on Terms Used in Financial Statements, the
expression `Preference Share Capital' means "that part of the share capital of
a corporate enterprise which enjoys preferential rights in respect of payments
of fixed dividend and repayment of capital. Preference shares may also have
full or partial participating rights in surplus profits or surplus capital." The
rights, preferences and restrictions attached to shares are based on the
classes of shares, terms of issue, etc., whether equity or preference. In
respect of Equity Share Capital, it may be with voting rights or with
differential voting rights as to dividend, voting or otherwise in accordance
with such rules and subject to such conditions as may be prescribed under
Companies (Share Capital and Debentures) Rules, 2014. In respect of
Preference Shares, the rights include (a) with respect to dividend, a
preferential right to be paid a fixed amount or at a fixed rate and, (b) with
respect to capital, a preferential right of repayment of amount of capital on
winding up. For Compulsorily Convertible Debentures, the rights could be
with the holder to convert into Equity Shares.
This disclosure is recommended for instruments entirely equity in nature as
well as for compound instruments that have an equity component, to the
extent applicable.
8.2.12.15 Clause (f) of Note (S) shares in respect of each class in the
company held by its holding company or its ultimate holding company
including shares held by or by subsidiaries or associates of the holding
company or the ultimate holding company in aggregate:
The requirement is to disclose shares of the company held by -
Its holding company;
Its ultimate holding company;
Subsidiaries of its holding company;
Subsidiaries of its ultimate holding company;
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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. The equivalent term `parent' is defined in Ind AS 110.
Notwithstanding the aforesaid definitions, for the purposes of the above
disclosures, shares held by the entire chain of subsidiaries and associates
starting from the holding company and going right up to the ultimate holding
company would have to be disclosed.
In case of a joint arrangement viz., a joint venture or a joint operation
conducted through a separate legal entity, disclosure may be made for
shares of such joint arrangement held by its venturers.
This disclosure is recommended for instruments entirely equity in nature, to
the extent applicable.
8.2.12.16 Clause (g) of Note (S) shares in the company held by each
shareholder holding more than 5 percent shares specifying the number
of shares held:
In the absence of any specific indication of the date of holding, the date for
computing such percentage should be taken as the Balance Sheet date. For
example, if during the year, any shareholder held more than 5% Equity
shares but does not hold as much at the Balance Sheet date, disclosur e 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 recommended for instruments entirely equity in nature, to
the extent applicable.
8.2.12.17 Clause (h) of Note (S) shares reserved for issue under
options and contracts or commitments for the sale of shares or
disinvestment, including the terms and amounts:
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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 recommended for instruments entirely equity in nature as
well as for compound instruments that has an equity component and liability
component, to the extent applicable.
8.2.12.18 Clause (i) of Note (S) For the period of five years immediately
preceding the date as at which the Balance Sheet is prepared:(a)
Aggregate number and class of shares allotted as fully paid up pursuant
to contract(s) without payment being received in cash. (b) Aggregate
number and class of shares allotted as fully paid up by way of bonus
shares. (c) Aggregate number and class of shares bought back:
(a) Aggregate number and class of shares allotted as fully paid up
pursuant to contract(s) without payment being received in cash.
The following illustrate the allotments which are considered as shares
allotted for payment being received in cash and not as without
payment being received in cash and accordingly, the same are not to
be disclosed under this Clause:
(i) If the subscription amount is adjusted against a bona fide debt
payable in money at once by the company;
(ii) Conversion of loan into shares in the event o f 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.
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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 recommended for instruments entirely equity in nature, to
the extent applicable.
8.2.12.19 Clause (j) of Note (S) Terms of any securities convertible into
equity/preference shares issued along with the earliest date of
conversion in descending order starting from the farthest such date:
Under this Clause, disclosure is required for any security, when it is either
convertible into equity or preference shares. In this case, terms of such
securities and the earliest date of conversion are required to be disclosed. If
there are more than one date of conversion, disclosure is to be made in the
descending order of conversion. If the option can be exercised in different
periods then earlier date in that period is to be considered. In case of
compulsorily convertible securities, where conversion is done in fixed
tranches, all the dates of conversion have to be considered. Terms of
convertible securities are required to be disclosed under this Clause.
However, in case of Convertible debentures/bonds, etc., for the purpose of
simplification, reference may also be made to the terms disclosed und er the
note on borrowings where these are required to be classified in the Balance
Sheet, rather than disclosing the same again under this clause.
This disclosure is recommended 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 provide d as a part of `Borrowings'. Accordingly,
duplication of disclosures is not intended.
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8.2.12.20 Clause (k) of Note (S) - Calls unpaid (showing aggregate value
of calls unpaid by directors and officers):
A separate disclosure is required for the aggregate value of calls unpaid by
directors and also officers of the company.
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 recommended for instruments entirely equity in nature, to
the extent applicable.
8.2.12.21 Clause (m) of Note (S) - An NBFC shall disclose information
that enables users of its financial statements to evaluate the NBFC's
objectives, policies and processes for managing capital.
Para 134 of Ind AS 1 also requires an entity to disclose information that
enables users of its financial statements to evaluate the entity's objectives,
policies and processes for managing capital. . Hence guidance as stated in
Para 135 and 136 of Ind AS 1 may be referred upon for this disclosure.
8.2.13. Other Equity
Note (T) of the General Instructions for Preparation of Balance Sheet deals
with the disclosures of "Other Equity" in the Notes. Disclosure should be
made for the nature and amount of each item.
Disclosures in Other Equity are required to be made for the following:
(i) Share application money pending allotment
Share Application money pending allotment is to be disclosed as a
separate line item under Other Equity. Note 2 of Other Classification
related General Instructions states that share application money
pending allotment shall be classified into equity or liability in
accordance with relevant Ind AS. Share application money to the
extent not refundable shall be shown in this line item and share
application money to the extent refundable shall be separately shown
under `other financial liabilities'.
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(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 co mponent 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. above).For
recommended disclosures for equity component of compound financial
instrument, refer guidance given in para 8.2.12.8 Reserves and
Surplus these shall be further disclosed as (discussed in para
8.2.13):
(a) Capital Reserve;
(b) Securities Premium;
(c) Other Reserves
i. Capital Redemption Reserve;
ii. Debenture Redemption Reserve;
iii. Share Options Outstanding Account;
iv. Statutory Reserves;
v. Others (specify the nature and purpose of each reserve
and the amount in respect thereof);
(d) Retained Earnings.
(iii) 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;
(iv) 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
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instruments, the cumulative fair value gain or loss is presented as a
part of Other Equity under this heading;
(v) 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
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;
(vi) Revaluation Surplus
As per Ind AS 16 and Ind AS 38 , if an asset's carrying amount is
increased as a result of revaluation, the increase shall be recognized
in other comprehensive income and accumulated in equity under the
heading of revaluation surplus. However, such increase shall be
recognized in profit or loss to the extent that it reverses a revaluation
decrease of the same asset previously recognized in profit or loss.
Correspondingly, decreases as a result of revaluation are recognized
in other comprehensive income thereby reducing the amount
accumulated under this heading of revaluation surplus, to the extent of
any credit balance existing in the revaluation surplus in respect of that
asset.
(vii) 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.
(viii) Other items of Other Comprehensive Income (specific nature)
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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 8.2.13.3. for guidance on presentation of `re -measurement
of defined benefit plans'.
(ix) Money received against share warrants
Generally, in case of listed companies, share warrants are issued to
promoters and others in terms of the Guidelines for preferential issues
viz., SEBI (Issue of Capital and Disclosure Requirements), Guidelines,
2009. Ind AS 33 Earnings per Share defines `warrants' as "financial
instruments which give the holder the right to acquire equity shares".
Thus, effectively, warrants are nothing but the amount which would
ultimately form part of the Shareholders' funds. Since shares are yet to
be allotted against the same, these are not reflected as part of Share
Capital but as a separate line item `Money received against share
warrants.'
8.2.13.1 Reserves & Surplus:
Ind AS 103, Appendix C on Business Combinations under Common Control
defines the term `Reserve' as "the por tion 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 thi s
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 pres ent 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
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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 transaction with the
shareholders / owners of entity hence it should be recognized in equity as a
credit to Capital Reserve.
A gain on bargain purchase arising in a business combination where clear
evidence of the underlying reasons does not exist, shall be recognized
directly in equity as Capital Reserves as per para 36 of Ind AS 103.
Further as per para 34 of Ind AS 103 where clear evidence of the
underlying reasons exists the acquirer shall recognise the resulting gain
in other comprehensive income on the acquisition date and accumulate
the same in equity as capital reserve.
(b) Securities Premium:
The Guidance Note of Terms Used in Financial Statements defines `Share
Premium' as "the excess of the issue price of shares over their face value."
Other Reserves (specify the nature and purpose of reserve and the
amount in respect thereof) :
Every other reserve which is not covered in above paragraphs is to be
reflected as `Other Reserves'. However, since the nature, purpose a nd 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.
(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 res erve called `capital redemption reserve'.
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(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
adequate amounts, out of its profits every year to debenture
redemption reserve, until such debentures are redeemed.
On redemption of the debentures for which the reserve is created, the
amounts no longer necessary to be retained in this account need to be
transferred to the Retained Earnings. The Ministry of Corporate Affairs
on 19th August 2019 has amended the Companies (Share Capital &
Debentures) Rules by removing Debenture Redemption Reserve
requirement for Listed Companies, NCFCs and HFCs. The
Amendment
(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'.
(iv) Statutory Reserves:
Ind AS Schedule III requires Statutory Reserves to be shown as a part
of `Reserve and Surplus' under `Other Reserves'. For instance,
Section 29C (i) of The National Housing Bank Act, 1987 defines that
every housing finance institution which is a Company shall create a
reserve fund and transfer therein a sum not less than twenty percent
of its net profit every year as disclosed in the statement of profit and
loss before any dividend is declared. For this purpose any special
reserve created by the Company under Section 36(1) (viii) of Income
tax Act 1961, is considered to be an eligible transfer.
Similarly section 45-IC of Reserve Bank of India Act, 1934 requires
every non-banking financial company to create a reserve fund to
transfer a sum not less than twenty per cent of its net profit every year
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as disclosed in the profit and loss account and before any dividend is
declared.
Thus, the amounts transferred to such reserve and the nature and
purpose of the reserve shall be disclosed.
(c) Additions and deductions since the last Balance Sheet to be
shown under each of the specified heads:
This requires the company to disclose the movement in each of the reserves
and surplus since the last Balance Sheet.
Further, as per Ind AS Schedule III, a reserve specifically represented by
earmarked investments shall disclose the fact that it so represented.
(d) 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'.
8.2.13.2 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 `Non -controlling Interest
Reserve' shown under `Other Reserves' by specifying the nature.
8.2.13.3 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)
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.
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 5 of Other Classification Related General Instructions requires
Regulatory Deferral Account Balances to be presented in the Balance Sheet
in accordance with the relevant Ind AS.
Accordingly, as per Ind AS 114, the separate line items for the totals of all
regulatory deferral account debit balances and the totals of all regulatory
deferral account credit balances shall be distinguished from the assets and
liabilities that are presented in accordance with other Standards by the use of
sub-totals, which are drawn before the regulatory deferral account balances
are presented.
8.4 Presentation of earlier comparative period
Note 1 to Other Classification Related General Instructions states that when
a company applies an accounting policy retrospectively or makes a
restatement of items in the financial statements or when it reclassifies items
in its financial statements, the company shall attach to the Balance Sheet, a
Balance Sheet as at the beginning of the earliest comparative period
presented.
Similar requirement is also in 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
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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9. Part II Statement of Profit and Loss and Notes
General Instructions for Preparation of Statement of
Profit and Loss: Notes 1 to 10
Part II deals with disclosures relating to the Statement of Profit and Loss.
The format prescribed is the vertical form wherein 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 "Gener al 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
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other comprehensive income in the current or previous periods.
The Statement of Profit and Loss is a single statement of profit and loss, with
profit or loss and other comprehensive income presented in two sections, as
per Part II of 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 encompasses 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;
(b) Gains and losses arising from the de-recognition of financial assets
measured at amortized cost;
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(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 5
and Note 9 of General Instructions for Preparation of Statement of Profit and
Loss, that requires disclosure of any item of `Other Income' or `Other
Expenses' exceeding one percent of the total income, in addition to the
consideration of `materiality'. An entity should consider these requirements
as mutually exclusive.
9.1. Revenue from operations
The aggregate of Revenue from operations needs to be disclosed on the
face of the Statement of Profit and Loss as per Schedule III.
9.1.1. Note 3 of General Instructions for the Preparation of Statement of
Profit and Loss require that revenue from operations is to be separately
disclosed on the face of the Statement of Profit and Loss, showing:
(a) Interest Income;
(b) Dividend Income;
(c) Rental Income;
(d) Fees and commission Income;
(e) Net gain on fair value changes;
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(f) Net gain on derecognition of financial instruments under amortised
cost category;
(g) Sale of products (including Excise duty);
(h) Sale of services; and
(i) Others (to be specified)
9.1.2. For the purpose of presentation Ind AS 113 and 115 will have to be
referred to. As per the definition of Revenue in Ind AS 115, "revenue is
income arising in the course of an entity's ordinary activities" and as per
definition of Income in Ind AS 115, "increases in economic benefits during
the accounting period in the form of income or enhancements of assets or
decreases of liabilities that result in an increase in equity, other than those
relating to contributions from equity participants". Further, as per Ind AS
115, revenue includes only the gross increase in economic benefits occurring
to the entity on its own account. Amounts collected, in capacity of an agent,
on behalf of third parties such as sales taxes, goods and services taxes and
value added taxes are not economic benefits which flow to the entity and do
not result in increases in equity. Therefore, they are excluded from revenue.
Similarly, in an agency relationship, the gross increase in economic benefits
include amounts collected on behalf of the principal and which do not result
in increases in equity for the entity. The amounts collected on behalf of the
principal are not revenue.
9.1.3. Under the GST regime, the collection of GST by an entity would not be
an inflow on the entity's own account but it shall be made on behalf of the
government authorities. Accordingly, the revenue from operations should be
presented net of GST.
9.1.4. The revenue from operation shall include:
9.1.7.1 Interest Income:
As per Note 3 of General Instructions for Preparation of Profit and Loss,
Interest Income shall be classified as:
(a) Interest on loans;
(b) Interest income from investments;
(c) Interest on deposits with banks;
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(d) Other interest income
Interest income should be classified based on the financial assets measured
at fair value through OCI, at amortised cost, or classified as fair value through
profit or loss.
As per para 82 (a) of Ind AS 1, in addition to items required by other Ind ASs,
the profit or loss section of the statement of profit and loss shall include line
items that present the revenue, presenting separately interest revenue
calculated using the effective interest method.
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. The Effective
interest rate is the rate that exactly discounts estimated future cash receipts
through the expected life of the financial instrument or, when appropriate, a
shorter period, to the net carrying amount of the financial asset.
Interest Income - Other Interest Income includes any other interest/ discount
income not included in sub-heads (a), (b) and (c) as mentioned above.
Dividend in the nature of interest should be classified here as per the
requirements of Indian Accounting Standards. Also, interest income on
unwinding of security deposits and interest received on delayed payments by
customers should be classified under other interest income. Interest income
on income tax refund which are in the nature of income tax should be treated
as per Ind AS 12.
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
part of fair value changes or presents separately.
9.1.7.2 Dividend Income
As per Para 5.7.1A of Ind AS 109 dividends are recognised in profit
or loss only when:
(a) the entity's right to receive payment of the dividend is
established;
(b) it is probable that the economic benefits associated with the
dividend will flow to the entity; and
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c) the amount of the dividend can be measured reliably.
As per para 5.7.6 of Ind AS 109 if the entity makes an make an
irrevocable election to present the fair value changes in other
comprehensive income, it shall recognize in profit or loss
dividends from that investment in accordance with para 5.7.1A
of Ind AS 109.
Further, Ind AS 107 para B5(e) requires a company to disclose
whether dividend income on financial assets measured at
FVTPL is included as a part of fair value changes. Accordingly,
a company shall disclose as its accounting policy, whether it
presents dividend income on financial assets at FVTPL as part
of fair value changes or presents separately.
9.1.7.3 Rental Income
Rental Income shall comprise of rent on Investment property and operating
lease payments received if the entity is in the nature of such renting business.
9.1.7.4 Fees and commission income:
Fees that are not an integral part of effective interest rate in accordance with
Ind AS 109 should be considered under this head. `Fees and Commission
Income' shall include all remuneration on services such as commission on
collections, commission/ exchange on remittances and transfers, commission
on letters of credit, and guarantees, commission on Government business,
commission on other permitted agency business including consultancy,
distribution of third party products and other services, brokerage, fees
charged for servicing a loan, loan syndication fees etc.
9.1.7.5 Net gain/(loss) on fair value changes:
As per Note 4 of General Instructions for preparation of Profit and Loss , the
fair value gains or losses (net) on financial assets which are measured at
FVTPL should be presented under `Revenue from Operations' with t he
following line items:
(A) Net Gain/ (Loss) on financial instruments at fair value through profit or
loss
(i) On trading portfolio
- Investments
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- Derivatives
- Others
(ii) On financial instruments designated at fair value through profit or
loss
(B) Others (to be specified)
Total Net gain/ (loss) on fair value changes (C)
Fair value changes:
- Realised
- Unrealised
Total Net gain/ (loss) on fair value changes (D) to tally with (C)
The fair value changes in this schedule are other than those arising on
account of accrued interest income/ expense.
The amount of net loss under this section should be disclosed in Expenses
Net loss on fair value changes.
Others may include those instruments other than for trading or designated at
fair value through profit or loss such as debt instruments which are classified
as fair value through profit or loss.
Further, Para B5(e ) of Ind AS 107 as mentioned above is also required to be
referred.
9.1.7.6 Others (to be specified) The term "others" is not defined. This
would include Revenue ari sing from a company's operating activities, i.e.,
either its principal or ancillary revenue-generating activities, but which is not
revenue arising from the sub items mentioned above. Whether a particular
income constitutes "other operating revenue" or "other income" is to be
decided based on the facts of each case and detailed understanding of the
company's activities.
9.2. Other income
The aggregate of `Other income' is to be disclosed on face of the Statement
of Profit and Loss. As per Note 5 of General Instructions for the Preparation
of Statement of Profit and Loss `Other Income' shall be classified as:
(a) Net gain/ (loss) on ineffective portion of hedges;
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(b) Net gain/ (loss) on derecognition of property, plant and equipment;
(c) Net gain or loss on foreign currency transaction and translation (other
than considered as finance cost)(to be specified)
(d) Others (to be specified)
As per para 6.5.11 (b) and (c) of Ind AS 109, for designated and qualifying
cash flow hedges, the effective portion of the cumulative gain or loss on
the hedging instrument is initially recognised directly in OCI within equity
(cash flow hedge reserve). The ineffective portion of the gain or loss on the
hedging instrument is recognised immediately in net gain/loss on fair value
changes in the profit and loss statement.
Net gain/ (loss) on derecognition of property, plant and equipment includes
profit/loss on sale of furniture, land and building, motor vehicles, etc. Only
the net position should be shown. If the net position is a loss, the amount
should be shown as an expense.
Any gains on account of foreign exchange fluctuations are to be disclosed
separately as per Ind AS 21. Thus, net exchange gain should be classified
under other income and the amount so included should be separately
disclosed.
Interest on Income tax refund shall form part of `others' under `Other Income'.
Rental income other than those presented under `Revenue from operations'
shall be disclosed under `others'.
Income under `others' should be disclosed net off expenses directly
attributable to such income. However, the expenses so netted off should be
separately disclosed.
Any item under the head `Other Income' which exceeds one per cent of the
total income should be presented separately.
9.3. Expenses
The aggregate of the following expenses are to be disclosed on the face
of the Statement of Profit and Loss:
Finance Costs
Fees and commission expense
Net loss on fair value changes
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Net loss on derecognition of financial instruments under amortised
cost category
Impairment of financial instruments
Cost of materials consumed
Purchases of Stock-in-Trade
Changes in inventories of finished goods, stock-in-trade and work-in-
progress
Employee benefits expense
Depreciation, amortization and impairment
Other expenses (to be specified)
9.3.1 Finance Costs
As per Note 6 of the General Instructions for the Preparation of the
Statement of Profit and Loss, disclosure of finance costs is to be bifurcated
under the following:
(a) Interest on deposits
(b) Interest on borrowings
(c) Interest on debt securities
(d) Interest on subordinated liabilities
(e) Other interest expense
The finance costs should be classified based on financial liabilities measured
at fair value through profit or loss or on financial liabilities measured at
amortised cost. The same should be calculated as per the effective interest
method as per Ind AS 107.
Interest on deposits: Interest on deposits includes interest paid on all types
of deposits including deposits from banks and other institutions.
Interest on deposits also includes unwinding of the discount that results in an
increase in financial liabilities such as security deposits for assets taken on
lease.
Interest on borrowings: Interest on borrowings includes discount/interest on
all borrowings and refinance from banks and other institutions and agencies.
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Interest in respect of lease liabilities recognised in accordance with Ind AS 116,
Leases
Interest on debt securities: Interest on debt securities includes interest on
bonds/ debentures and liability component of financial instruments.
Dividend on 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
`Other Interest expense' under `Finance cost'. Accordingly, the corresponding
Dividend Distribution Tax on such portion of non-discretionary dividends
should also be presented in the Statement of Profit and Loss under `Interest
expense'. On the other hand, where there is a discretion of issuer over the
payments of dividend on preference shares, whether redeemable or
convertible, the entire dividend is in the nature of distribution of profit and
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.
Interest on subordinated liabilities: This includes interest expense on all
subordinated liabilities.
Other interest expense: Other interest expense comprises of the following:
1. Increases in the carrying amount of provisions / decommissioning
liabilities where such increase reflects the passage of time;
2. Net interest on net defined benefit liability which reflects the change in
net defined benefit liability that arises from the passage of time.
9.3.2 Ind AS 21 and Ind AS 23 deal with foreign exchange differences
arising on foreign currency transactions included in the financial
statements of an entity. The same shall be disclosed under `Other
interest expense' finance cost. All exchange differences wit hin 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
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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. 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'. Fees and commission expense
Fee and commission expenses includes all expenses on services such as
commission on documents sent on collection, commission/ exchange on
remittances and transfers, commission on letters of credit, and guarantees,
commission on other permitted agency business including consultancy and
other services, brokerage, etc. If any of these elements are required to be
included under effective interest under Indian Accounting Standards, it
should not be considered under this head.
9.3.3 Net loss on fair value changes
(Refer para 9.1.7.5. for the line items to be presented as a part of Net gains
(losses) on fair value changes)
9.3.4 Impairment of financial instruments
As per Note 8 of the General Instructions for the Preparation of the
Statement of Profit and Loss, disclosure of Impairment of financial
instruments is to be bifurcated under the following:
(a) Loans
(b) Investments
(c) Others (to be specified)
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The same is to be classified based on financial instruments measured at fair
value through OCI, and on financial instruments measured at amortised cost.
Ind AS 109 requires that its impairment provisions are also applied to loan
commitments and trade receivables. Thus the same would be included under
the sub- head `Others' as mentioned above.
Amount of loss written-off which is greater than the accumulated loss
allowance, the difference will be in the nature of impairment loss and should
thus be presented under this line item. In case of subsequent recoveries
which is higher than previously written off asset, the nature of recoveries is
similar to reversals of impairment and should thus be presented in the
impairment line in profit or loss as it would provide useful and relevant
information to the users of the financial statements.
9.3.5 Employee benefits expense [Note 7]
This requires disclosure of the following details:
As per para 7 of Ind AS 19 states the following: An employee may provide
services to an entity on a full-time, part-time, permanent, casual or temporary
basis. For the purpose of this Standard, employees include directors and
other management personnel.
9.3.5.1 Salaries and wages
The aggregate amounts paid/payable by the company for payment of
salaries and wages are to be disclosed here. Expenses on account of bonus,
leave encashment, compensation and other similar payments also need to
be disclosed here. Where a separate fund is maintained for Gratuity payouts,
contribution to Gratuity fund should be disclosed under the sub-head
Contribution to provident and other funds.
9.3.5.2 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
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statutory authorities are not strictly in the nature of `contribution' and should
not be disclosed here.
9.3.5.3 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.
9.3.5.4 Staff welfare expense
The total expenditure on staff welfare is to be disclosed herein.
9.3.6 Depreciation, amortization and impairment
A company has to disclose depreciation provided on Property, Plant and
Equipment, Investment Property and amortization of intangible assets and
any impairment under this head.
9.3.7 Other Expenses
All other expenses not classified under other heads will be classified here. As
per Note 9 of General instructions for preparation of Profit and Loss, Other
expenses shall be bifurcated into:
(a) Rent, taxes and energy costs;
(b) Repairs and maintenance;
(c) Communication costs;
(d) Printing and stationery;
(e) Advertisement and publicity;
(f) Director's fees, allowances, and expenses;
(g) Auditor's fees and expenses;
(h) Legal and Professional charges;
(i) Insurance;
(j) Other expenditure.
Rent, taxes and energy costs: Rent will include expenses such as rent on low
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value or short term leases. Taxes shall include municipal and other taxes
(excluding income tax) and energy cost shall include electricity and other
similar charges and levies.
Repairs and maintenance: This includes repairs to company's property, plant
and equipment and their maintenance charges, etc.
Communication costs: This includes postal charges (like stamps),
telephones, courier costs, facsimile, e-mail, internet, SWIFT charges etc.
Printing and stationery: This includes cost of books, forms and stationery
used by the company and other printing charges which are not incurred by
way of publicity expenditure.
Advertisement and publicity: This includes expenditure incurred by the
company for advertisement and publicity purposes including printing charges
on publicity material.
Director's fees, allowances and expenses: This includes sitting fees and all
other items of expenditure incurred on behalf of Directors including all
allowances and expenses on behalf of directors. The daily allowance, hotel
charges, conveyance charges, etc. which though in the nature of
reimbursement of expenses incurred may be included under this head.
Auditor's fees and expenses: This includes the fees paid to the statutory
auditors and branch auditors for professional services rendered and all
expenses for performing their duties, even though they may be in the nature
of reimbursement of expenses.
Legal and Professional charges: All legal expenses and reimbursement of
expenses incurred in connection with legal services are to be included here.
Professional charges could include fee paid for consultancy, valuations, etc.
Insurance: This includes insurance charges on company's property, plant
and equipment, etc.
Other expenditure: All expenses other than those not included in any of the
other heads like license fees, donations, subscriptions to papers, periodicals,
entertainment expenses, travel expenses, etc. may be included under this
head.
Any item under the head `Other expenditure' which exceeds one per cent of
the total income shall be presented separately.
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9.4. 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.
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 all the individual
items should be disclosed in the Notes.
9.5. Tax expense
This is to be disclosed on the face of the Statement to Profit and Loss and
bifurcated into:
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(1) Current tax and
(2) Deferred tax
9.5.1 Current tax
The term `Current tax' has been defined under Ind AS - 12 "Income Taxes" as
the amount of income taxes payable (recoverable) in respect of the taxable
profit (tax loss) for a period . Hence, details of all taxes on income payable
under the applicable taxation laws should be disclosed here.
Any interest on shortfall in payment of advance income-tax is in the nature of
finance cost and hence should not be clubbed with the Current tax. The
same should be classified as interest expense under finance costs. However,
such amount should be separately disclosed.
Any penalties levied under Income tax laws should not be classified as
Current tax. Penalties which are compensatory in nature should be treated
as interest and disclosed in the manner explained above. Other tax penalties
should be classified under `Other Expenses'.
Excess/Short provision of tax relating to earlier years should be separately
disclosed.
9.5.2 Deferred tax
Any charge/credit for deferred taxes needs to be disclosed separately on the
face of the Statement of Profit and Loss.
Ind AS 12 defines `deferred tax liabilities', `deferred tax assets', `temporary
differences' as:
`Deferred tax liabilities' are the amounts of income taxes payable in future
periods in respect of taxable temporary differences;
`Deferred tax assets' are the amounts of income taxes recoverable in future
periods in respect of:
(a) deductible temporary differences;
(b) the carry forward of unused tax losses; and
(c) the carry forward of unused tax credits.
`Temporary differences' are differences between the carrying amount of an
asset or liability in the balance sheet and its tax base
Ind AS 12 has the concept of temporary differences as against AS 22 which
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had a concept of timing differences. Moreover, deferred tax asset is defined
in Ind AS 12 to include the carry forward of unused tax credits. MAT Credits
are in the form of unused tax credits that are carried forward by the company
for a specified period of time. Accordingly, MAT Credit Entitlement should be
grouped with Deferred Tax Asset (net) in the Balance Sheet of an entity and
a separate note should be provided specifying the nature and amount of MAT
Credit included as a part of deferred tax. However, the company should
review at each balance sheet date the reasonable certainty to recover
deferred tax asset including MAT Credit Entitlement.
Correspondingly, MAT Credit Entitlement should be grouped with deferred
tax in the Statement of Profit and Loss and a separate note should be
provided specifying the amount of MAT Credit.
9.6. Profit / (loss) from discontinued operations
The term 'discontinued operations' is defined in Ind AS 105 "Non-current
Assets Held for Sale and Discontinued Operations" as a component of an
entity that either has been disposed of or is classified as held for sale and:
(a) represents a separate major line of business or geographical area of
operations,
(b) is part of a single co-ordinated plan to dispose of a separate major line
of business or geographical area of operations; or
(c) is a subsidiary acquired exclusively with a view to resale.
Profit or loss from Discontinued Operations needs to be separately disclosed
on the face of Statement of Profit and Loss. This disclosure is in line with the
disclosure requirement of Ind AS 105 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;
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(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.
9.7. 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 9.6.
9.8. Earnings per equity share
Computation of Basic and Diluted Earnings per Share should be made in
accordance with Ind AS 33 Earnings per Share . It is pertinent to note that the
nominal value of equity shares should be disclosed along with the Earnings
per Share figures as required by Ind AS 33.
10. Other Comprehensive Income
10.1 `Other comprehensive income' (OCI) is defined in Ind AS 1 as
`comprising items of income and expense (including reclassification
adjustments) that are not recognised in profit or loss as required or permitted
by other Ind ASs.
10.2 Note 10 of General Instructions for Preparation of Statement of Profit
and Loss state that `Other Comprehensive Income' shall be classified into:
(a) Items that will not be reclassified to profit or loss and its related
income tax effects:
(1) Changes in revaluation surplus;
(2) Re-measurements of the defined benefit plans;
(3) Equity Instruments through other comprehensive income;
(4) Fair value changes relating to own credit risk of financial
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liabilities designated at fair value through profit or loss;
(5) Share of Other Comprehensive Income in Associates and Joint
Ventures, to the extent not to be classified into profit or loss;
and
(6) Others (specify nature);
(b) Items that will be reclassified to profit or loss and its related income
tax effects:
(1) Exchange differences in translating the financial statements of a
foreign operation;
(2) Debt Instruments through other comprehensive income;
(3) The effective portion of gain and loss on hedging instruments in
a cash flow hedge;
(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
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financial instrument as the hedging instrument.
10.4 Schedule III requires an entity to present items of OCI in aggregate
and the related tax effects to be shown separately.
However Ind AS 1, para 91 also gives a choice of presentation for items net-
off tax effects.
10.5 Further, an entity shall present for each component of equity, an
analysis of other comprehensive income by item as required by Ind AS 1,
para 106A (including, reclassification adjustments as required by Ind AS 1,
para 92). Such presentation may be made either in the Statement of
Changes in Equity or in the Notes to Accounts.
10.6 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. 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 11 of the General instructions for
Preparation of Statement of Profit and Loss also require disclosure by way of
notes, additional information regarding aggregate expenditure and income on
the following items:
11.11 Depreciation, amortization and impairment [Clause (i) of Note
11]
A company has to disclose depreciation provided on Property, Plant and
Equipment, Investment Property and amortization of intangible assets and
any impairment under this head.
11.12 Payments to the auditor [Clause (ii) of Note 11]
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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;
11.13 In case of NBFCs covered under section 135, amount of
expenditure incurred on corporate social responsibility
activities [Clause (iii) of Note 11]
This new requirement introduced by the Act is that the companies which are
covered under Section 135 are required to disclose the amount of
expenditure incurred on corporate social responsibility activities. The
Guidance Note on Accounting for Expenditure on Corporate Social
Responsibility Activities issued may be referred to for disclosure
requirements, which are essentially as under:
(a) From the perspective of better financial reporting and in line with the
requirements of Schedule III in this regard, it is recommended that all
expenditure on CSR activities, that qualify to be recognised as
expense should be recognised as a separate line item as `CSR
expenditure' in the statement of profit and loss. Further, the relevant
note should disclose the break-up of various heads of expenses
included in the line item `CSR expenditure'.
(b) The notes to accounts relating to CSR expenditure should also contain
the following:
(1) Gross amount required to be spent by the company during the
year.
(2) Amount spent during the year on:
(i) Construction/acquisition of any asset
(ii) On purposes other than (i) above
The above disclosure, to the extent relevant, may also be made in the
notes to the cash flow statement, where applicable.
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(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.
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.
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
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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. However, where the consolidated financial statements
contains elements pertaining to NBFCs and other than NBFCs, mixed basis
of presentation may be followed for consolidated financial statements where
both kinds of operations are significant.
In addition, the Consolidated Financial Statements shall disclose the
information as per the requirements specified in the applicable 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
amounts of the controlling and non-controlling interests to reflect the
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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 14 th October 2014 that Schedule III to the Act
[Refer Annexure E (Pg 175) ] 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
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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
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have been used or invested.
Share application money pending Separate disclosure should be given
allotment shall be classified into for such monies due outside the
equity or liability in accordance with group in respect of entities which are
relevant Ind AS. Share application consolidated.
money to the extent not refundable
shall be shown under the head
`Equity' and share application
money to the extent refundable shall
be separately shown under `Other
financial liabilities'.
Additional Information for Not relevant at CFS level and
disclosure: hence, may be dispensed with.
(a) 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;
(b) In case of Companies covered
under section 135, amount of
expenditure incurred on
corporate social responsibility
activities
(c) Disclosures required as per the
MSMED Act, 2006
12.2 Indian Accounting Standards
The Consolidated Financial Statements shall also disclose the information as
required under the various Indian Accounting Standards applicable.
12.3 Additional information on the entities included in the
Consolidated Financial Statements
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:
Name of Net Assets i.e., Share in profit Share in other Share in total
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the entity total assets or loss comprehensiv comprehensiv
in the minus total e income e income
Group liabilities
As % of Amount As % of Amount As % of Amount As % of Amount
Consoli Consoli consolid total
dated dated ated compre
net profit or other hensive
assets loss compre income
hensive
income
Parent
Subsidiaries
Indian
1
2
3
...
.....
Foreign
1
2
3
...
.....
Non-
controlling
interest in all
subsidiaries
Associates
(Investment
as per equity
method)
Indian
1
2
3
...
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...
Foreign
1
2
3
...
.....
Joint
Ventures
(Investment
as per equity
method)
Indian
1
2
3
...
.....
Foreign
1
2
3
...
.....
TOTAL
Certain joint arrangements which are of the nature of joint operations will be
consolidated to the extent of the share of joint operator based on the
principles laid down in Ind AS 111. Even though the above table does not
specify a disclosure about joint operations' net assets, profit or loss, other
comprehensive income and total comprehensive income, it should be
disclosed in similar manner as disclosed for joint ventures. This requirement
would apply only if a joint operation is conducted through a separate legal
entity.
Moreover, as regards consolidation adjustments (including elimination of
intra-group transactions), it should be ensured that these are either disclosed
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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
________________________________________________________________________________________
"Division III
Financial Statements for a Non-Banking Financial Company (NBFC) whose financial statements are drawn up
in compliance of the Companies (Indian Accounting Standards) Rules,2015.
GENERAL INSTURCTIONS FOR PREPARATION OF FINANCIAL STATEMENTS OF A NON-
BANKING FINANCIAL COMPANY (NBFC) THAT IS REQUIRED TO COMPLY WITH
INDIAN ACCOUNTING STANDARDS (Ind AS)
1. Every Non-Banking Financial company as defined in the Companies (Indian Accounting Standards)
(Amendment) Rules, 2016 to which Indian Accounting Standards apply, shall prepare its financial statements
in accordance with this Schedule or with such modification as may be required under certain circumstances.
2. Where compliance with the requirements of relevant Act, Regulations, Guidelines or Circulars issued by the
relevant regulator from time to time including Indian Accounting Standards (Ind AS) (except the option of
presenting assets and liabilities in accordance with current, non-current classification as provided by relevant
Ind AS) as applicable to the NBFCs require any change in treatment or disclosure including addition,
amendment, substitution or deletion in the head or sub-head or any changes inter se, in the financial
statements or statements forming part thereof , the same shall be made and the requirements under this
Schedule shall stand modified accordingly.
3. The disclosure requirements specified in this Schedule are in addition to and not in substitution of the
disclosure requirements specified in the Indian Accounting Standards. Additional disclosures specified in the
Indian Accounting Standards shall be made in the Notes or by way of additional statement or statements
unless required to be disclosed on the face of the Financial Statements. Similarly, all other disclosures as
required by the Companies Act, 2013 shall be made in the Notes in addition to the requirements set out in this
Schedule.
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.
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(ii) Each item on the face of the Balance Sheet, Statement of Changes in Equity and Statement of
Profit and Loss shall be cross-referenced to any related information in the Notes. In preparing the
Financial Statements including the Notes, a balance shall be maintained between providing
excessive details that may not assist users of Financial Statements and not providing important
information as a result of too much aggregation.
5. Depending upon the total income of the NBFC, the figures appearing in the Financial Statements shall be
rounded off as below:
Total Income Rounding off
(i) less than one hundred crore rupees To the nearest hundreds, thousands, lakhs or
millions, or decimals thereof.
(ii) one hundred crore rupees or more To the nearest, lakhs, millions or crores, or
decimals thereof.
Once a unit of measurement is used, it should be used uniformly in the Financial Statements.
6. Financial Statements shall contain the corresponding amounts (comparatives) for the immediately preceding
reporting period for all items shown in the Financial Statements including Notes except in the case of first
Financial Statements after incorporation.
7. Financial Statements shall disclose all `material' items, i.e., the items if they could, individually or collectively,
influence the economic decisions that users make on the basis of the financial statements. Materiality depends on
the size or nature of the item or a combination of both, to be judged in the particular circumstances.
8. For the purpose of this Schedule, the terms used herein shall have the same meanings assigned to them in Indian
Accounting Standards.
9. Where any Act, Regulation, Guidelines or Circulars issued by the relevant regulators from time to time requires
specific disclosures to be made in the standalone financial statements of an NBFC, the said disclosures shall be
made in addition to those required under this Schedule.
10. The NBFCs preparing financial statements as per this Schedule may change the order of presentation of line
items on the face of financial statements or order of line items within the schedules in order of liquidity, if
appropriate, considering the operations performed by the NBFC.
Note: This Schedule sets out the minimum requirements for disclosure on the face of the Financial Statements, i.e.,
Balance Sheet, Statement of Changes in Equity for the period, the Statement of Profit and Loss for the period (The
term `Statement of Profit and Loss' has the same meaning as ` Profit and Loss Account') and Notes. Cash flow
statement shall be prepared, where applicable, in accordance with the requirements of the relevant Indian Accounting
Standard.
Line items, sub-line items and sub-totals shall be presented as an addition or substitution on the face of the Financial
Statements when such presentation is relevant to an understanding of the NBFC's financial position or performance or
to cater to categories of NBFCs as prescribed by the relevant regulator or sector-specific disclosure requirements or
when required for compliance with the amendments to the relevant statutes or under the Indian Accounting
Standards.
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PART I BALANCE SHEET
Name of the Non-Banking Financial Company.........................
Balance Sheet as at ...........................
(Rupees in............)
Particulars Note Figures as at the Figures as at the end of
No. end of current the previous reporting
reporting period period
1 2 3
ASSETS
(1) Financial Assets
(a) Cash and cash equivalents
(b) Bank Balance other than (a) above
(c) Derivative financial instruments
(d) Receivables
(I) Trade Receivables
(II) Other Receivables
(e) Loans
(f) Investments
(g) Other Financial assets (to be specified)
(2) Non-financial Assets
(a) Inventories
(b) Current tax assets (Net)
(c) Deferred tax Assets (Net)
(d) Investment Property
(e) Biological assets other than bearer plants
(f) Property, Plant and Equipment
(g) Capital work-in-progress
(h) Intangible assets under development
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(i) Goodwill
(j) Other Intangible assets
(k) Other non-financial assets (to be specified)
Total Assets
LIABILITIES AND EQUITY
LIABILITIES
(1) Financial Liabilities
(a) Derivative financial instruments
(b) Payables
(I)Trade Payables
(i) total outstanding dues of micro enterprises and small
enterprises
(ii) total outstanding dues of creditors other than micro
enterprises and small enterprises
(II) Other Payables
(i) total outstanding dues of micro enterprises and small
Enterprises
(ii) total outstanding dues of creditors other than micro
enterprises and small enterprises
(c) Debt Securities
(d) Borrowings (Other than Debt Securities)
(e) Deposits
(f) Subordinated Liabilities
(g) Other financial liabilities(to be specified)
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(2) Non-Financial Liabilities
(a) Current tax liabilities (Net)
(b) Provisions
(c) Deferred tax liabilities (Net)
(d) Other non-financial liabilities(to be specified)
(3) EQUITY
(a) Equity Share capital
(b) Other Equity
Total Liabilities and Equity
See accompanying notes to the financial statements
STATEMENT OF CHANGES IN EQUITY
Name of the Non-Banking Financial Company.........................
Statement of Changes in Equity for the period ended ........................
(Rupees in.................)
A. Equity Share Capital
Balance at the beginning of the Changes in equity share capital during Balance at the end of the reporting period
reporting period the year
xxx
Xxx xxx
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B. Other Equity
Reserves and Surplus
Share Equity Statutory Capital Securities Other Retained Debt Equity Effective Revalu Exchange Other Money Total
application component Reserve Reserve Premium Reserves Earnings instrument Instrumen portion of ation differences on items of receive
money of s (specify s ts through Cash Flow Surplu translating the Other d
pending compound nature) through Other Hedges s financial Compreh against
allotment financial Other Compreh statements of a ensive share
instrument Comprehe ensive foreign Income warrant
s nsive Income operation (specify s
Income nature)
Balance at
the
beginning
of the
reporting
period
Changes
in
accounting
policy/prior
period
errors
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Restate
d
balance
at the
beginni
ng of
the
reportin
g period
Total
Comprehen
sive
Income for
the year
Dividends
Transfer
to retained
earnings
Any other
change (to
be
specified)
Balance at
the end of
the
reporting
period
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Note:
(i) Remeasurement of defined benefit plans and fair value changes relating to own credit risk of financial liabilities designated at fair value through profit or loss
shall be recognised as a part of retained earnings with separate disclosure of such items alongwith the relevant amounts in theNotes.
(ii) A description of the purpose of each reserve within equity shall be disclosed in the Notes.
Notes
GENERAL INSTRUCTIONS FOR PREPARATION OF BALANCE SHEET
A Non-Banking Financial company shall disclose the following in the notes to accounts:
(A) Cash and cash equivalents: Cash and cash equivalents shall be classified as:
(i) Cash on hand
(ii) Balances with Banks (of the nature of cash and cash equivalents);
(iii) Cheques, drafts on hand; and
(iv) Others (specify nature).
Cash and Bank balances: The following disclosures with regard to cash and bank balances shall be made:
(i) Earmarked balances with banks (for example, for unpaid dividend) shall be separately stated.
(ii) Balances with banks to the extent held as margin money or security against the borrowings, guarantees, other commitments shall be disclosed separately.
(iii) Repatriation restrictions, if any, in respect of cash and bank balances shall be separately stated.
(B) Derivative financial Instruments
1 Explain use of derivatives
2 Cross-reference to Financial Risks section for management of risks arising from derivatives
(Current Year) (Previous Year)
Part I Notional amounts Fair Value Fair Value - Notional Fair Value - Assets Fair Value -
Assets Liabilities amounts Liabilities
(i)Currency
derivatives:
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-Spot and forwards
-Currency Futures
-Currency swaps
-Options
purchased
-Options sold
(written)
-Others
Subtotal (i)
(ii)Interest rate
Derivatives
-Forward Rate
Agreements and
Interest Rate
Swaps
-Options
Purchased
-Options sold
(written)
-Futures
-Others
Subtotal(ii)
(iii)Credit
derivatives
(iv)Equity linked
Derivatives
(v)Other
derivatives
(Please specify)
Total Derivative
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Financial
Instruments
(i)+(ii)+(iii)+(iv)+ (v)
Part II
Included in above
(Part I) are
derivatives held for
hedging and risk
management
purposes as
follows:
(i)Fair value
hedging:
- Currency
Derivatives
- Interest rate
derivatives
- Credit
derivatives
- Equity linked
Derivatives
- Others
Subtotal (i)
(ii)Cash flow
hedging:
- Currency
derivatives
- Interest rate
derivatives
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- Credit
derivatives
- Equity linked
derivatives
- Others
Subtotal (ii)
(iii)Net
investment hedging:
(iv)Undesignated
Derivatives
Total Derivative
Financial
Instruments (i)+
(ii)+(iii)+(iv)
With respect to hedges and hedge accounting, NBFCs may provide a description in accordance with the requirements of Indian Accounting Standards, of how
derivatives are used for hedging, explain types of hedges recognized for accounting purposes and their usage/application by the entity.
(C) Receivables:
(i) Receivables shall be sub-classified as:
(a) Receivables considered good - Secured;
(b) Receivables considered good - Unsecured;
(c) Receivables which have significant increase in Credit Risk; and
(d) Receivables - credit impaired
(ii) Allowance for impairment loss allowance shall be disclosed under the relevant heads separately.
(iii) Debts due by directors or other officers of the NBFC or any of them either severally or jointly with any other person or debts due by firms including limited liability
partnerships (LLPs), private companies respectively in which any director is a partner or a director or a member should be separately stated.
(D) Loans
(Current Year) (Previous Year)
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Amorti At Fair Value Subtotal Total Amorti At Fair Value Subtotal Total
sed Through Through Designat sed Through Through Designate
cost Other profit or ed at cost Other profit or d at fair
Compre loss fair value Compreh loss value
hensive through ensive through
Income profit Income profit or
or loss loss
(1) (2) (3) (4) (5=2+3+4) (6=1+5) (7) (8) (9) (10) (11=8+9+10) (12=(7)
+ (11)
Loans
(A)
(i) Bills
Purchased
and Bills
Discounted
(ii) Loans
repayable on
Demand
(iii) Term
Loans
(iv)
Leasing
(v)
Factoring
(vi) Others
(to be
specified)
Total (A)
Gross
Less:
Impairment
loss
allowance
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Total (A)
- Net
(B)
(i) Secured
by tangible
assets
(ii)Secure
d by
intangible
assets
(iii)
Covered by
Bank/Govern
ment
Guarantees
(iv)
Unsecured
Total (B)-
Gross
Less:
Impairment
loss
Allowance
Total (B)-
Net
(C) (I)
Loans in
India
(i) Public
Sector
(ii) Others (to
be
specified)
Total (C)-
Gross
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Less:
Impairment
loss
Allowance
Total(C)
(I)-Net
(C)
(II)Loans
outside
India
Less:
Impairment
loss
Allowance
Total (C)
(II)- Net
Total C(I)
and C(II)
(E) Investments
Investments
(Current Year) (Previous Year)
At Fair Value Others Total At Fair Value Other Total
Amor Through Through Designa * Amortise Through Through Designat s*
tised Other profit or ted at d cost Other profit or ed at fair
cost Comprehe loss fair Comprehe loss value
Investments value through
nsive nsive
Income through Su Income profit or
profit b- loss Sub-
or loss Tot Total
al
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(1) (2) (3) (4) (5)= (9) (10) (11) (12)= (14)
(2)+ (9)+( =(8)
(7)=(1)+
(3)+ (6) (8) 10)+( (13) +(12
(5)+(6)
(4) 11) )+(1
3)
Mutual funds
Government
securities
Other
approved
securities
Debt
securities
Equity
instruments
Subsidiaries
Associates
Joint
Ventures
Others
(specify)
Total Gross
(A)
(i)
Investments
outside India
(ii)
Investments
in India
Total (B)
Total (A) to tally
with (B)
Less:
Allowance
for
Impairment
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loss (C)
Total Net
D= (A)-(C)
* Other basis of measurement such as cost may be explained as a footnote
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(F) Investment Property
A reconciliation of the gross and net carrying amounts of each class of property at the beginning and end of
the reporting period showing additions, disposals, acquisitions through business combinations and other
adjustments and the related depreciation and impairment losses or reversals shall be disclosed separately.
(G) Biological Assets other than bearer plants:
A reconciliation of the carrying amounts of each class of assets at the beginning and end of the reporting
period showing additions, disposals, acquisitions through business combinations and other adjustments
shall be disclosed separately.
(H) Property, Plant and Equipment
(i) Classification shall be given as:
(a) Land
(b) Buildings
(c) Plant and Equipment
(d) Furniture and Fixtures
(e) Vehicles
(f) Office equipment
(g) Bearer Plants
(h) Others (specify nature)
(ii) Assets under lease shall be separately specified under each class of asset.
(iii) A reconciliation of the gross and net carrying amounts of each class of assets at the beginning and end
of the reporting period showing additions, disposals, acquisitions through business combinations and other
adjustments and the related depreciation and impairment losses or reversals shall be disclosed separately.
(I) Goodwill
A reconciliation of the gross and net carrying amount of goodwill at the beginning and end of the reporting
period showing additions, impairments, disposals and other adjustments.
(J) Other Intangible assets
(i) Classification shall be given as:
(a) Brands or trademarks
(b) Computer software
(c) Mastheads and publishing titles
(d) Mining rights
(e) Copyrights, patents, other intellectual property rights, services and operating rights
(f) Recipes, formulae, models, designs and prototypes
(g) Licenses and franchises
(h) Others (specify nature)
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(ii) A reconciliation of the gross and net carrying amounts of each class of assets at the beginning and
end of the reporting period showing additions, disposals, acquisitions through business
combinations and other adjustments and the related amortization and impairment losses or reversals
shall be disclosed separately.
(K) Payables
The following details relating to Micro, Small and Medium Enterprises shall be disclosed:
(a) the principal amount and the interest due thereon (to be shown separately) remaining unpaid to any supplier
at the end of each accounting year;
(b) the amount of interest paid by the buyer in terms of section 16 of the Micro, Small and Medium Enterprises
Development Act, 2006, along with the amount of the payment made to the supplier beyond the appointed
day during each accounting year;
(c) the amount of interest due and payable for the period of delay in making payment (which have
been paid but beyond the appointed day during the year) but without adding the interest specified
under the Micro, Small and Medium Enterprises Development Act, 2006;
(d) the amount of interest accrued and remaining unpaid at the end of each accounting year; and
(e) the amount of further interest remaining due and payable even in the succeeding years, until such date when
the interest dues above are actually paid to the small enterprise, for the purpose of disallowance of a
deductible expenditure under section 23 of the Micro, Small and Medium Enterprises Development Act, 2006.
Explanation.- The terms `appointed day', `buyer', `enterprise', `micro enterprise', `small enterprise' and
`supplier', shall have the same meaning assigned to those under clauses (b), (d), (e), (h), (m) and
(n) respectively of section 2 of the Micro, Small and Medium Enterprises Development Act, 2006."
(L) Debt Securities
(Current Year) (Previous Year)
At At Fair Designate Total At At Fair Designated Total
Amortised Value d at fair Amortised Value at fair value
Cost Through value Cost Through through
profit or through profit or profit or
loss profit or loss loss
loss
(4)=(1)+(2)+(3) (8)=(5)+(
(1) (2) (3) (5) (6) (7) 6)+(7)
Liability
component
of
compound
financial
instruments
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Others
(Bonds/
Debenture
etc.)
Total (A)
Debt
securities
in India
Debt
securities
outside
India
Total (B)
to tally
with (A)
(i) bonds or debentures (along with the rate of interest, and particulars of redemption or conversion, as the case
maybe) shall be stated in descending order of maturity or conversion, starting from earliest redemption or
conversion date, as the case may be. Where bonds/debentures are redeemable by installments, the date of
maturity for this purpose must be reckoned as the date on which the first installment becomes due;
(ii) particulars of any redeemed bonds or debentures which the NBFC has power to reissue shall be disclosed
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(M) Borrowings (Other than Debt Securities)
(Current Year) (Previous Year)
At At fair Designated Total At At fair Designated Total
Amortised value at fair value Amortised value at fair
Cost Through through Cost Through value
profit or profit or profit or through
loss loss loss profit or
loss
(1) (2) (3) (4)=(1)+(2)+(3) (1) (2) (3) (4)=(1)+(2)+(3)
(a)Term loans
(i)from banks
(ii)from other
parties
(b)Deferred
payment liabilities
(c)Loans from
related parties
(d) Finance lease
obligations
(e)Liability
component of
compound
financial instruments
(f)Loans
repayable on
demand
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(i)from banks
(ii)from other
parties
(g) Other loans
(specify nature)
Total (A)
Borrowings in
India
Borrowings
outside India
Total (B) to tally
with (A)
(i) Borrowings shall further be sub-classified as secured and unsecured. Nature of security shall be specified separately in each case.
(ii) Where borrowings have been guaranteed by directors or others, the aggregate amount of such borrowings under each head shall be
disclosed;
(iii) terms of repayment of term loans and other loans shall be stated; and
(iv) period and amount of default as on the balance sheet date in repayment of borrowings and interest shall be specified separately in each
case.
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(N) Deposits
(Current Year) (Previous Year)
At At fair Designated Total At At fair Designated Total
Amortised value at fair value Amortised value at fair
Cost through through Cost through value
profit or profit or profit or through
loss loss loss profit or
loss
(1) (2) (3) (4)=(1)+(2)+(3) (5) (6) (7) (8)=(5)+(6)+(7)
Deposits
(i) Public
Deposits
(ii) From Banks
(iii)From Others
Total
(O) Subordinated Liabilities
(Current Year) (Previous Year)
At Amortised At fair Designated Total At At fair Designated at Total
Cost value at fair value Amortised value fair value
through through Cost through through profit
profit or profit or profit or or loss
loss loss loss
(1) (2) (3) (4)=(1)+(2)+(3) (5) (6) (7) (8)=(5)+(6)+(7)
Perpetual Debt
Instruments to the
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extent that do not
qualify as equity
Preference Shares
other than those that
qualify as Equity
Others (specifying
the nature and type
of instrument issued)
Total (A)
Subordinated
Liabilities in India
Subordinated
Liabilities outside
India
Total (B) to tally
with (A)
(P) Other Financial Liabilities (to be specified):
Other Financial liabilities shall be classified as-
(a) Interest accrued;
(b) Unpaid dividends;
(c) Application money received for allotment of securities to the extent refundable and interest accrued thereon;
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(d) Unpaid matured deposits and interest accrued thereon;
(e) Unpaid matured debentures and interest accrued thereon;
(f) Margin money (to be specified);and
(g) Others (specify nature)
(Q) Provisions:
The amounts shall be classifiedas-
(a) Provision for employee benefits; and
(b) Others (specify nature)
(R) Other Non-financial liabilities (to be specified):
(a) Revenue received in advance;
(b) Other advances (Specify nature); and
(c) Others (specify nature).
(S) Equity Share Capital :For each class of equity share capital:
(a) the number and amount of shares authorized;
(b) the number of shares issued, subscribed and fully paid, and subscribed but not fully paid;
(c) par value per share;
(d) a reconciliation of the number of shares outstanding at the beginning and at the end of the period;
(e) the rights, preferences and restrictions attaching to each class of shares including restrictions on the distribution of dividends and the repayment of capital;
(f) shares in respect of each class in the company held by its holding company or its ultimate holding company including shares
held by or by subsidiaries or associates of the holding company or the ultimate holding company in aggregate;
(g) shares in the company held by each shareholder holding more than five percent shares specifying the number of shares held;
(h) shares reserved for issue under options and contracts/commitments for the sale of shares or disinvestment, including the terms and amounts;
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(i) For the period of five years immediately preceding the date at which the Balance Sheet isprepared:
Aggregate number and class of shares allotted as fully paid up pursuant to contract without payment being received in cash;
Aggregate number and class of shares allotted as fully paid up by way of bonus shares; and
Aggregate number and class of shares bought back;
(j) terms of any securities convertible into equity shares issued along with the earliest date of conversion in descending order starting from the farthest such
date;
(k) calls unpaid (showing aggregate value of calls unpaid by directors and officers);
(l) forfeited shares (amount originally paid up)
(m) An NBFC shall disclose information that enables users of its financial statements to evaluate the NBFC's objectives, policies and processes for managing
capital.
(T) Other Equity
(i) Other Reserves' shall be classified in the notes as:
(a) Capital Redemption Reserve;
(b) Debenture Redemption Reserve;
(c) Share Options Outstanding Account;
(d) Statutory Reserves; and
(e) Others (specify the nature and purpose of each reserve and the amount in respect thereof);
(Additions and deductions since last balance sheet to be shown under each of the specified heads)
(ii) Retained Earnings represents surplus i.e. balance of the relevant column in the Statement of Changes in Equity;
(iii) A reserve specifically represented by earmarked investments shall disclose the fact that it is so represented;
(iv) Debit balance of Statement of Profit and Loss shall be shown as a negative figure under the head `retained earnings'. Similarly, the balance of
`Other Equity', after adjusting negative balance of retained earnings, if any, shall be shown under the head `Other Equity' even if the
resulting figure is in the negative;
(v) Under the sub-head `Other Equity', disclosure shall be made for the nature and amount of each item; and
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(vi) Under the sub-head `Other Equity', disclosure shall be made for conditions or restrictions for distribution attached to statutory reserves.
(U) Contingent Liabilities and commitments (to the extent not provided for)
(i) Contingent Liabilities shall be classified as:
(a) Claims against the company not acknowledged as debt;
(b) Guarantees excluding financial guarantees; and
(c) Other money for which the company is contingently liable
(ii) Commitments shall be classified as:
(a) Estimated amount of contracts remaining to be executed on capital account and not provided for;
(b) Uncalled liability on shares and other investments partly paid;
(c) Other commitments (specify nature).
(V) The amount of dividends proposed to be distributed to equity and preference shareholders for the period and the related amount per share shall be disclosed
separately. Arrears of fixed cumulative dividends on irredeemable preference shares shall also be disclosed separately.
(W) Where in respect of an issue of securities made for a specific purpose the whole or part of amount has not been used for the specific purpose at the Balance
Sheet date, there shall be indicated by way of note how such unutilized amounts have been used or invested.
(X) Other Classification related General Instructions
1. When an NBFC applies an accounting policy retrospectively or makes a restatement of items in the financial statements or when it reclassifies items in
its financial statements, the NBFC shall attach to the Balance Sheet, a "Balance Sheet" as at the beginning of the earliest comparative period
presented.
2. Share application money pending allotment shall be classified into equity or liability in accordance with relevant Indian Accounting Standards. Share
application money to the extent not refundable shall be shown under the head Equity and share application money to the extent refundable shall be
separately shown under `Other financial liabilities'.
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3. Preference shares including premium received on issue, shall be classified and presented as `Equity' or `Liability' in accordance with the requirements
of the relevant Indian Accounting Standards. Accordingly, the disclosure and presentation requirements in this regard applicable to the relevant class
of equity or liability shall be applicable mutatis mutandis to the preference shares. For instance, plain vanila redeemable preference shares shall be
classified and presented under `liabilities' as `borrowings' or `subordinated liability' and the disclosure requirements in this regard applicable to such
borrowings shall be applicable mutatis mutandis to redeemable preference shares.
4. Compound financial instruments such as convertible debentures, where split into equity and liability components, as per the requirements of the
relevant Indian Accounting Standards, shall be classified and presented under the relevant heads in ``Liabilities and Equity'.
5. Regulatory Deferral Account Balances shall be presented in the Balance Sheet in accordance with the relevant Indian Accounting Standards.
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PART II STATEMENT OF PROFIT AND LOSS
Name of the Non-Banking Financial Company.........................
Statement of Profit and Loss for the period ended ...........................
(Rupees in .................)
Particulars Note No. Figures for the Figures for the
current reporting previous reporting
period period
Revenue from operations
(i) Interest Income
(ii) Dividend Income
(iii) Rental Income
(iv) Fees and commission Income
(v) Net gain on fair value changes
(vi) Net gain on derecognition of financial instruments
under amortised cost category
(vii) Sale of products(including Excise Duty)
(viii) Sale of services
(ix) Others (to be specified)
(I) Total Revenue from operations
(II) Other Income (to be specified)
(III) Total Income (I+II)
Expenses
(i) Finance Costs
(ii) Fees and commission expense
(iii) Net loss on fair value changes
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(iv) Net loss on derecognition of financial instruments under
amortised cost category
(v) Impairment on financial instruments
(vi) Cost of materials consumed
(vii) Purchases of Stock-in-trade
(viii) Changes in Inventories of finished goods, stock-in- trade
and work-in- progress
(ix) Employee Benefits Expenses
(x) Depreciation, amortization and impairment
(xi) Others expenses (to be specified)
(IV ) Total Expenses (IV)
(V ) Profit / (loss) before exceptional items and tax (III-
IV)
(VI ) Exceptional items
(VII ) Profit/(loss) before tax (V -VI )
(VIII) Tax Expense:
(1) Current Tax
(2) Deferred Tax
(IX) Profit / (loss) for the period from continuing
operations(VII-VIII)
(X) Profit/(loss) from discontinued operations
(XI) Tax Expense of discontinued operations
(XII) Profit/(loss) from discontinued operations(After
tax) (X-XI)
(XIII) Profit/(loss) for the period (IX+XII)
(XIV) Other Comprehensive Income
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(A) (i) Items that will not be reclassified to profit or
loss
(specify items and amounts)
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(ii) Income tax relating to items that will not be
reclassified to profit or loss
Subtotal (A)
(B) (i) Items that will be reclassified to profit or
loss
(specify items and amounts)
(ii) Income tax relating to items that will be
reclassified to profit or loss
Subtotal (B)
Other Comprehensive Income (A + B)
(XV) Total Comprehensive Income for the period
(XIII+XIV) (Comprising Profit (Loss) and other
Comprehensive Income for the period)
(XVI) Earnings per equity share (for continuing operations)
Basic (Rs.)
Diluted (Rs.)
(XVII) Earnings per equity share (for discontinued
operations)
Basic (Rs.)
Diluted (Rs.)
(XVIII) Earnings per equity share (for continuing and
discontinued operations)
Basic (Rs.)
Diluted (Rs.)
See accompanying notes to the financial statements
Notes
GENERAL INSTRUCTIONS FOR PREPARATION OF STATEMENT OF PROFIT AND LOSS
1. The provisions of this Part shall apply to the income and expenditure account, in like manner as they apply
to a Statement of Profit and Loss.
2. The Statement of Profit and Loss shall include:
(A) Profit or loss for the period;
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(B) Other Comprehensive Income for the period.
The sum of (A) and (B) above is `Total Comprehensive Income'.
3. Interest Income
(Current Year) (Previous Year)
Particulars On On Financial Interest On On Interest
Financial Assets Income Financial Financial Income
Assets measured at on Assets Assets on
measured at Amortised Financial measured measured at Financial
fair value Cost Assets at fair Amortised Assets
through classified Value Cost classified
OCI at fair through at fair
value OCI value
through through
profit or profit or
loss loss
Interest on Loans
Interest income from
investments
Interest on deposits
with Banks
Other interest
Income
Total
4. Net gain/ (loss) on fair value changes*
Particulars (Current Year) (Previous Year)
(A) Net gain/ (loss) on financial
instruments at fair value through profit
or loss
(i) On trading portfolio
- Investments
- Derivatives
- Others
(ii) On financial instruments
designated at fair value through
profit or loss
(B) Others ( to be specified)
Total Net gain/(loss) on fair value
changes (C)
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Fair Value changes:
-Realised
-Unrealised
Total Net gain/(loss) on fair value
changes(D) to tally with (C)
*Fair value changes in this schedule are other than those arising on account of accrued interest
income/expense.
5. Other Income (to be specified)
Particulars (Current Year) (Previous Year)
Net gain/(loss) on ineffective portion of hedges
Net gain/(loss) on derecognition of property, plant
and equipment
Net gain or loss on foreign currency transaction and
translation (other than considered as finance cost)(
to be specified)
Others ( to be specified)*
Total
* Any item under the subhead `Others' which exceeds one per cent of the total income to be presented
separately.
6. Finance Costs
Particulars (Current Year) (Previous Year)
On On Financial On Financial On Financial
Financial liabilities liabilities liabilities
liabilities measured at measured at measured at
measured at Amortised Cost fair value Amortised
fair value through Cost
through profit or loss
profit or
Loss
Interest on deposits
Interest on borrowings
Interest on debt securities
Interest on subordinated liabilities
Other interest expense
Total
7. Employee Benefits Expenses
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Particulars (Current Year) (Previous Year)
Salaries and wages
Contribution to provident and other funds
Share Based Payments to employees
Staff welfare expenses
Others (to be specified)
Total
8. Impairment on financial instruments
(Current Year) (Previous Year)
Particulars On Financial On Financial On Financial On Financial
instruments Instruments instruments instruments
measured at fair measured at measured at measured at
value through OCI Amortised fair value Amortised
Cost through OCI Cost
Loans
Investments
Others (to be specified)
Total
9. Other expenses (to be specified)
Particulars (Current Year) (Previous Year)
Rent, taxes and energy costs
Repairs and maintenance
Communication Costs
Printing and stationery
Advertisement and publicity
Director's fees, allowances and expenses
Auditor's fees and expenses
Legal and Professional charges
Insurance
Other expenditure
Total
* Any item under the subhead `Others expenditure' which exceeds one per cent of the total income to be
presented separately.
10. Other Comprehensive Income shall be classified into-
(A) Items that will not be reclassified to profit or loss
i. Changes in revaluation surplus;
ii. Remeasurements of the defined benefit plans;
iii. Equity Instruments through Other Comprehensive Income;
iv. Fair value changes relating to own credit risk of financial liabilities designated at fair value
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through profit or loss;
v. Share of Other Comprehensive Income in Associates and Joint Ventures, to the extent not to be
classified into profit or loss; and
vi. Others (specify nature).
(B) Items that will be reclassified to profit or loss;
i. Exchange differences in translating the financial statements of a foreign operation;
ii. Debt Instruments through Other Comprehensive Income;
iii. The effective portion of gains and loss on hedging instruments in a cash flow hedge;
iv. Share of Other Comprehensive Income in Associates and Joint Ventures, to the extent to be
classified into profit or loss; and
v. Others (specify nature).
11. Additional Information: An NBFC shall disclose by way of notes, additional information regarding aggregate
expenditure and income on the following items:
i. Depreciation, amortisation and impairment
ii. payments to the auditor as (a) auditor, (b) for taxation matters, (c) for company law matters,
(d) for other services, (e) for reimbursement of expenses;
iii. in case of NBFCs covered under section 135, amount of expenditure incurred on corporate social
responsibility activities; and
iv. details of items of exceptional nature
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PART III- GENERAL INSTRUCTIONS FOR THE PREPARATION OF CONSOLIDATED
FINANCIAL STATEMENTS
(1) Where a Non-Banking Financial Company (NBFC) is required to prepare Consolidated Financial Statements,
i.e., consolidated balance sheet, consolidated statement of changes in equity and consolidated statement of
profit and loss, the NBFC shall mutatis mutandis follow the requirements of this Schedule as applicable to an
NBFC in the preparation of balance sheet, statement of changes in equity and statement of profit and loss.
However, where the consolidated financial statements contains elements pertaining to NBFCs and other than
NBFCs, mixed basis of presentation may be followed for consolidated financial statements where both kinds
of operations are significant. In addition, the consolidated financial statements shall disclose the information
as per the requirements specified in the applicable Indian Accounting Standards notified under the Companies
(Indian Accounting Standards) Rules 2015, including the following, namely:-
(i) Profit or loss attributable to `non-controlling interest' and to `owners of the parent' in the statement of
profit and loss shall be presented as allocation for the period. Further, `total comprehensive income' for
the period attributable to `non-controlling interest' and to `owners of the parent' shall be presented in the
statement of profit and loss as allocation for the period. The aforesaid disclosures for `total
comprehensive income' shall also be made in the statement of changes in equity. In addition to the
disclosure requirements in the Indian Accounting Standards, the aforesaid disclosures shall also be
made in respect of `other comprehensive income'.
(ii) `Non-controlling interests' in the Balance Sheet and in the Statement of Changes in Equity, within equity,
shall be presented separately from the equity of the `owners of the parent'.
(iii) Investments accounted for using the equity method.
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(2) In Consolidated Financial Statements, the following shall be disclosed by way of additional information:
Name of the Net Assets, i.e., total assets minus total Share in profit or loss Share in other Share in total
entity in the Liabilities comprehensive income comprehensive
Group income
As % of Amount
consolidated As % of Amount As % of Amount As % of Amount
net assets consolidated consolidate total
profit or loss d other comprehe
comprehens nsive
ive income
income
Parent
Subsidiaries
Indian
1.
2.
3.
.
.
Foreign
1.
2.
3.
.
.
Non-controlling
Interests in all
Subsidiaries
Associates
(Investment as
per the equity
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method)
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GN on Division III - Ind AS Schedule III to the Companies Act 2013
Indian
1.
2.
3.
.
.
Foreign 1.
2.
3.
.
.
Joint Ventures(as
per the equity
method)
Indian
1.
2.
3.
.
.
Foreign 1.
2.
3.
.
.
Total
(3) All subsidiaries, associates and joint ventures (whether Indian or foreign) will be covered under consolidated financial statements.
(4) An entity shall disclose the list of subsidiaries or associates or joint ventures which have not been consolidated in the consolidated financial statements along
with the reasons of not consolidating.
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Annexure B
___________________________________________________________
Key Differences in Division I and Ind AS Schedule III to the Companies
Act, 2013
Division I Division III
Division I is applicable to a Division III is applicable to every NBFC to which Ind AS
Company whose Financial apply in preparation of its financial statements .
Statements are not required
to comply Ind AS.
What it includes?
Division I includes Division III includes
1. Balance Sheet 1. Balance Sheet
2. Statement of Profit and 2. Statement of Changes in Equity
Loss 3. Statement of Profit and Loss.
3. Statement of Cash Flow 4. Statement of Cash Flow
4. Notes, comprising a 5. Notes, comprising a summary of significant accounting
summary of significant policies and other explanatory information
accounting policies and other 6. A balance as at the beginning of the earliest
explanatory information comparative period when an entity applies an accounting
policy retrospectively or makes a retrospective
restatement of items in its Financial Statements, or when
it reclassifies items in its Financial Statements.
Statement of Profit and Loss shall include profit or loss for
the period and Other Comprehensive Income for the
period.
3. Materiality
A Company shall disclose by A NBFC shall disclose by way of notes additional
way of notes additional information for any item of `other income' or `other
information any item of expenditure' which exceeds 1 percent of the total
expenditure and income income.
which exceeds one per cent Also disclosure is to be made of all material items i.e. the
of the revenue from items if they could, individually or collectively, influence
GN on Division III - Ind AS Schedule III to the Companies Act 2013
Division I Division III
operations or Rs. 1,00,000 the economic decisions that users make on the Financial
whichever is higher. Statements.
4. Earnings per Share
No separate disclosure is Division III requires separate disclosure of the earning per
required for earning per share for continuing and discontinuing operations.
share for continuing and
discontinuing operations.
5. Extraordinary items
Separate disclosure is There is no separate disclosure of extraordinary items
required. which is in line with IND AS 1.
6. Investments
Under each classification of The head `investments' includes the total investments
investments details shall be including investments at amortised cost, at fair value
given of names of bodies through Other Comprehensive Income, at fair value
corporate indicating through Profit or Loss, and designated at fair value
separately whether such through Profit or Loss both within and outside India.
bodies are Where the NBFC has used a basis other than amortised
1. Subsidiaries cost or fair value, the same may be included in column
2. Associates `Others', with the basis of measurement disclosed as a
3. Joint ventures footnote. The impairment loss allowance as per Ind AS
4. Controlled special purpose 109 should be disclosed as a separate line item under the
entities sub-heads mentioned above.
The following shall also be Investments shall be classified as:
disclosed. (i) Investments in Mutual funds
(a) The basis of valuation (ii) Investments in Government securities
of individual
investment (iii) Investments in Other approved securities
(b) Aggregate amount of (iv) Investments in Debt Securities
quoted investments
(v) Investments in Equity Instruments
and market value
thereof (vi) Investments in Subsidiaries
(c) Aggregate amount of (vii) Investments in Associates
unquoted investments
(viii) Investments in Joint Ventures
(d) Aggregate provision
made for diminution in (ix) Others (Specify)
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Division I Division III
value of investments
7. Trade Receivables
Aggregate amount of Trade As per the amendments to Schedule III, `trade
receivable outstanding for a receivables' should be classified as follows:
period exceeding six months a) Trade receivables considered good (Secured)
from the date they are due b) Trade receivables considered good (Unsecured)
for payment should be
c) Trade receivables which have significant increase in
separately disclosed
credit risk and
d) Trade receivables credit impaired.
A separate disclosure under `receivables' is required
for any debts due from any Limited Liability
Partnership (LLP) in which its director is a partner or
member.
8. Contingent liabilities
Contingent liabilities includes Contingent liabilities pertaining to guarantees excluding
all guarantees financial guarantees.
Further, the following has been removed for Division
III:
W. If, in the opinion of the Board, any of the assets
other than fixed assets and non-current investments
do not have a value on realization in the ordinary
course of business at least equal to the amount at
which they are stated, the fact that the Board is of
that opinion, shall be stated.
9. Finance Cost
Finance cost shall be Finance Cost shall be classified as
classified as (a) Interest on deposits
(a) Interest Expense (b) Interest on borrowings
(b) Other borrowing cost
(c) Applicable net (c) Interest on debt securities
gain/loss on foreign (d) Interest on subordinated liabilities
currency transactions (e) Other interest expense
and translations
10. Revenue
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Division I Division III
Revenue is disclosed as Revenue includes excise duty .
Sales net of Excise duty Also, NBFCs are required to disclose items
comprising `revenue from operations' and `other
comprehensive income' on the face of the statement
of profit and loss.
11. Bank Deposits
Cash and cash equivalents Cash and cash equivalent
Cash and Cash equivalents Cash and Cash equivalents shall be classified as:
shall be classified as:
(a) Balance with banks (of the nature of cash and cash
(a) Balance with banks equivalents)
Bank deposits with more than
12 months maturity should be
classified under Other bank
balances
12. Defined benefit plan
Gains/losses arising on Ind AS Schedule III states that Re-measurement gains/
defined benefit plan is losses on defined benefit plans should form part of
recognized in statement of retained earnings.
profit and loss Ind AS requires that Re-measurement gains/ (losses)
arising on defined benefit plans should be recognized in
the other comprehensive income (OCI) and these gains/
losses cannot subsequently be reclassified to profit or
loss.
However, Ind AS does not contain any specific guidance/
requirement whether such gains/ losses should be
recognized in the retained earnings or should appear as a
separate reserve within the statement of changes in
equity.
13. Liquidity
Where compliance with the Where any Act, Regulation, Guidelines or Circulars
requirements of the Act issued by the relevant regulators from time to time
including Accounting requires disclosures to be made in the standalone
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Standards as applicable to financial statements of an NBFC, the said disclosures
the companies require any shall be made in addition to those required under this
change in treatment or Schedule. The NBFCs preparing financial statements as
disclosure including addition, per this Schedule may change the order of
amendment, substitution or presentation of line items on the face of financial
deletion in the head or sub- statements or order of line items within the schedules
head or any changes, inter in order of liquidity, if appropriate, considering the
se, in the financial operations performed by the NBFC.
statements or statements
forming part thereof, the
same shall be made and the
requirements of 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 under
required Division III to Schedule III.
A. (a) In the case of
manufacturing 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,
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which falls under more than
one of the categories
mentioned in (a), (b) and (c)
above, it shall be sufficient
compliance with the
requirements herein if
purchases, sales and
consumption of raw material
and the gross income from
services rendered is shown
under broad heads.
(e) In the case of other
companies, gross income
derived under broad heads.
B. In the case of all concerns
having works in progress
under broad heads.
C. (a) The aggregate, if
material, of any amounts set
aside or proposed to be set
aside, to reserve, but not
including provisions made to
meet any specific liability,
Contingency or commitments
known to exist at the date as
to which the balance sheet is
made up.
(b) The aggregate, if
material, of any amounts
withdrawn from such
reserves.
D. (a) The aggregate, if
material, of the amounts set
aside to provisions made for
meeting specific liabilities,
contingencies or
commitments.
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(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.
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;
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(b) Expenditure in foreign
currency during the financial
year on account of royalty,
know-how, professional and
consultation fees, interest,
and other matters;
(c) Total value if all imported
raw materials, spare parts
and components consumed
during the financial year and
the total value of all
indigenous raw materials,
spare parts and components
similarly consumed and the
percentage of each to the
total consumption;
(d) The amount remitted
during the year in foreign
currencies on account of
dividends with a specific
mention of the total number
of non-resident shareholders,
the total number of shares
held by them on which the
dividends were due and the
year to which the dividends
related;
(e) Earnings in foreign
exchange classified under
the following heads, namely:
I. Export of goods
calculated on F.O.B.
basis;
II. Royalty, know-how,
professional and
consultation fees;
III. Interest and dividend;
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IV. Other income,
indicating the nature
thereof.
15. Dividend on Preference
Shares
Dividend on redeemable Dividend on redeemable preference shares is now
preference shares was presented as a part of Finance cost.
regarded as an adjustment to
reserves.
16. Prior Period Items
A separate disclosure was There is no concept of Prior period items and any
required for Prior Period retrospective application of accounting policy or
Items. 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 Depending upon the turnover of the company, the figures
of the company, the figures appearing in the Financial Statements shall be rounded
appearing in the Financial off as given in Ind AS Schedule III.
Statements may be rounded
off as given in Non-Ind AS
Schedule III.
18. Investments Names of
Bodies Corporate
Under each classification of The head `investments' includes the total investments
investments details shall be including investments at amortised cost, at fair value
given of names of bodies through Other Comprehensive Income, at fair value
corporate indicating through Profit or Loss, and designated at fair value
separately whether such through Profit or Loss both within and outside India.
bodies are Where the NBFC has used a basis other than amortised
1. Subsidiaries cost or fair value, the same may be included in column
2. Associates `Others', with the basis of measurement disclosed as a
footnote. The impairment loss allowance as per Ind AS
3. Joint ventures
109 should be disclosed as a separate line item under the
4. Control special purpose sub-heads mentioned above.
entities
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Investments shall be classified as:
(x) Investments in Mutual funds
(xi) Investments in Government securities
(xii) Investments in Other approved securities
(xiii) Investments in Debt Securities
(xiv) Investments in Equity Instruments
(xv) Investments in Subsidiaries
(xvi) Investments in Associates
(xvii) Investments in Joint Ventures
Others (Specify)
19. Investment Property
Investment property was Investment Property is disclosed as a separate line item
disclosed as a part of on the face of balance sheet.
Investments . Also the following disclosure needs to be given
A reconciliation of the gross and net carrying
amounts of each class of property at the beginning
and end of the reporting period showing additions,
disposals, acquisitions through business
combinations and other adjustments and the related
depreciation and impairment losses or reversals shall
be disclosed separately.
20. Disclosure in standalone
financial statements
No such explicit Requirement Disclosures required by Act, Regulation, Guidelines or
Circulars issued by the relevant regulators from time
to time shall be made in the standalone financial
statements which shall be made in addition to those
required under this Schedule.
21. Property, Plant and
Equipment and Intangible
Assets
Tangible assets Property, Plant and Equipment
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Classification shall be given Classification shall be given as:
as: (i) Land
(i) Land; (ii) Buildings
(ii) Buildings; (iii) Plant and Equipment
(iii) Plant and Equipment; (iv) Furniture and Fixtures
(iv) Furniture and Fixtures; (v) Vehicles
(v) Vehicles; (vi) Office equipment
(vi) Office equipment; (vii) Bearer Plants
(vii) Others (specify nature) (viii) Others (specify nature)
Clause common to Tangible Clause common to Property, Plant & Equipment and Other
assets and Intangible assets: Intangible Assets:
22. Capital Reduction
Where sums have been No such requirement
written-off on a reduction of
capital or revaluation of
assets or where sums have
been added on revaluation of
assets, every balance sheet
subsequent to date of such
write-off, or addition shall
show the reduced or
increased figures as
applicable and shall by way
of a note also show the
amount of the reduction or
increase as applicable
together with the date thereof
for the first five years
subsequent to the date of
such reduction or increase.
23. Biological Assets other
than bearer plants
Biological assets other than Biological assets other than bearer plants
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Division I Division III
bearer plants Biological assets other than bearer plants need to be
No such requirement disclosed separately on the face of balance sheet.
Further, A reconciliation of the carrying amounts of each
class of assets at the beginning and end of the reporting
period showing additions, disposals, acquisitions through
business combinations and other adjustments shall be
disclosed separately.
24. Loans: Non-current
Long-term loans and As per the amendment to Schedule III, `loans receivables'
advances shall be classified should be classified as follows:
as: (a) Loans receivables considered good - Secured;
(a) Capital Advances ; (b) Loans receivables considered good Unsecured;
(b) Security Deposits; (c) Loans receivables which have significant increase in
(c) Loans and advances credit risk; and
to related parties (d) Loans receivables credit impaired.
(giving details thereof);
(d) Other loans and
advances (specify
nature).
25. Other non-current assets
Other non-current assets There is no line item as Other non-current assets in
shall be classified as: Division III to Schedule III.
(i) Long-term Trade
Receivables (including
trade receivables on
deferred credit terms);
(ii) Others (specify
nature);
(iii) Long-term Trade
Receivables, shall be
sub-classified as:
a. Secured, considered
good;
b. Unsecured, considered
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Division I Division III
good;
c. Doubtful.
Allowance for bad and doubtful
debts shall be disclosed under
the relevant heads separately.
Debts due by directors or
other officers of the
company or any of them
either severally or jointly
with any other persons
or advances to firms or
private companies
respectively in which any
director is a partner or a
director or a member
should be separately
stated.
26. Loans: Current
Short-term loans and There is no line item as Loans: Current in Division III
advances shall be classified to Schedule III.
as:
(a) Loans and advances
to related parties
(giving details thereof);
(b) Others (specify
nature).
27. Other current assets
This is an all-inclusive There is no line item as Other current assets in
heading, which incorporates Division III to Schedule III.
current assets that do not fit
into any other asset
categories.
28. Share capital
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For each class of share For each class of equity share capital (different classes of
capital (different classes of preference shares to be treated separately):
preference shares to be
treated separately): (j) terms of any securities convertible into equity/
(j) terms of any securities preference shares issued along with the earliest date of
convertible into conversion in descending order starting from the farthest
equity/preference shares such date;
issued along with the earliest
date of conversion in
descending order starting
from the farthest such date;
29. Reserves and
Surplus/Other Equity
(i) Reserves and Surplus (i) `Other Reserves' shall be classified in the notes as -
shall be classified as: (a) Capital Reserve;
(a) Capital Reserves; (a) Capital Redemption Reserve;
(b) Capital Redemption (c) Securities Premium Reserve;
Reserve; (b) Debenture Redemption Reserve;
(c) Securities Premium (c) Share Options Outstanding Account
Reserve;
(d) Debenture
(d) Statutory Reserves; and
Redemption Reserve;
(e) Revaluation Reserve;
(e) Others - (specify the nature and purpose of each
(f) Share Options
reserve and the amount in respect thereof);
Outstanding Account;
(Additions and deductions since last balance sheet to be
(g) Other Reserves-
shown under each of the specified heads)
(specify the nature and
(ii) Retained Earnings represents surplus i.e. balance of
purpose of each
reserve and the the relevant column in the Statement of Changes in
amount in respect Equity;
thereof); (iii) A reserve specifically represented by earmarked
(h) Surplus i.e., balance in investments shall disclose the fact that it is so
Statement of Profit and represented;
Loss disclosing (iv) Debit balance of Statement of Profit and Loss shall be
allocations and shown as a negative figure under the head `retained
appropriations such as earnings'. Similarly, the balance of `Other Equity', after
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Division I Division III
dividend, bonus adjusting negative balance of retained earnings, if any,
shares and transfer to/ shall be shown under the head `Other Equity' even if the
from reserves, etc.; resulting figure is in the negative; and
(Additions and deductions (v) Under the sub- head `Other Equity', disclosure shall be
since last balance sheet to made for the nature and amount of each item.
be shown under each of the (vi) Under the sub- head `Other Equity', disclosure
specified heads); shall be made for conditions or restrictions for
(ii) A reserve specifically distribution attached to statutory reserves.
represented by earmarked
investments shall be termed
as a "fund".
(iii) Debit balance of
statement of profit and loss
shall be shown as a negative
figure under the head
"Surplus ". Similarly, the
balance of "Reserves and
Surplus ", after adjusting
negative balance of surplus,
if any, shall be shown under
the head "Reserves and
Surplus " even if the resulting
figure is in the negative.
30. Borrowings: Non-current
Long-term borrowings shall There are no current and non-current classifications in
be classified as: Division III. Borrowings and Debt Securities fall under the
(a)Bonds/debentures; head `Financial Liabilities'.
(b) Term loans:
(A) from banks. Borrowings (Other than Debt Securities) shall be classified
(B) from other parties. as:
(c) Deferred payment
liabilities; (a) Term Loans
(d) Deposits; (i) From banks
(e) Loans and advances from (ii) From other parties
related parties; (b) Deferred payment liabilities
(f) Long term maturities of (c) Loans from related parties
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Division I Division III
finance lease obligations; (d) Finance lease obligations
(g) Other loans and advances (e) Liability component of compound financial
(specify nature). instruments
(f) Loans repayable on demand
Period and amount of (i) From banks
continuing default as on the (ii) From other parties
balance sheet date in (g) Other loans (specify nature)
repayment of loans and The borrowings shall be disclosed at amortised cost and at
interest, shall be specified fair value through profit or loss, and designated at fair value
separately in each case. through profit and loss, both within and outside India.
The head `Debt Securities' under `Financial Liabilities'
includes Liability component of compound financial
instruments as per applicable accounting standards and
Others (Bonds/ Debentures etc.) i.e. debt securities other
than subordinated liabilities; including debt securities at
amortised cost and at fair value, both within and outside
India.
31. Other non-current liabilities
Other Long-term Liabilities There is no line item as `Other non - current liabilities'
shall be classified as: in Division III to Schedule III. Other financial liabilities
(a) Trade payables and other non-financial liabilities are disclosed as
(b) Others line items in the balance sheet.
32. Borrowings: Current
Short-term borrowings shall There are no current and non-current classifications in
be classified as: Division III. Borrowings and Debt Securities fall under the
(a) Loans repayable on head `Financial Liabilities'.
demand;
(A) from banks. Borrowings (Other than Debt Securities) shall be classified
(B) from other parties. as:
(b) Loans and advances
from related parties;
(c) Deposits;
(h) Term Loans
(d) Other loans and (i) From banks
advances (specify nature). (ii) From other parties
(i) Deferred payment liabilities
(j) Loans from related parties
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Division I Division III
(k) Finance lease obligations
(l) Liability component of compound financial
Period and amount of default instruments
as on the balance sheet date (m) Loans repayable on demand
in repayment of loans and (i) From banks
interest, shall be specified (ii) From other parties
separately in each case. (n) Other loans (specify nature)
The borrowings shall be disclosed at amortised cost and at
fair value through profit or loss, and designated at fair value
through profit and loss, both within and outside India.
The head `Debt Securities' under `Financial Liabilities'
includes Liability component of compound financial
instruments as per applicable accounting standards and
Others (Bonds/ Debentures etc.) i.e. debt securities other
than subordinated liabilities; including debt securities at
amortised cost and at fair value, both within and outside
India.
33. Other current liabilities
Other current liabilities There is no line item as `Other current liabilities' in
The amounts shall be Division III to Schedule III. Other financial liabilities
classified as: and other non-financial liabilities are disclosed as
(a) Current maturities of line items in the balance sheet.
long-term debt;
(b) Current maturities of
finance lease
obligations;
(c) Interest accrued but
not due on borrowings;
(d) Interest accrued and
due on borrowings;
(e) Income received in
advance;
(f) Unpaid dividends;
(g) Application money
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Division I Division III
received for allotment
of securities and due
for refund and interest
accrued thereon;
(h) Unpaid matured
deposits and interest
accrued thereon;
(i) Unpaid matured
debentures and
interest accrued
thereon;
(j) Other payables
(specify nature).
34. Non-current assets held
for sale
No such requirement The presentation of liabilities associated with group of
assets classified as held for sale and non-current assets
classified as held for sale shall be in accordance with the
relevant Indian Accounting Standards (Ind ASs).
35. Proposed dividend The amount of dividends proposed to be distributed to
equity and preference shareholders for the period and the
The amount of dividends related amount per share shall be disclosed separately.
proposed to be distributed to Arrears of fixed cumulative dividends on irredeemable
equity and preference preference shares shall also be disclosed separately.
shareholders for the period
and the related amount per As per Ind AS 10 Events after the Reporting Period,
share shall be disclosed proposed dividends should not be recognized as a liability
separately. Arrears of fixed but rather should be disclosed as a separate note. Hence,
cumulative dividends on there is no difference between Indian GAAP and Ind AS.
preference shares shall also
be disclosed separately.
As per AS 4 Contingencies
and Events Occurring After
the Balance Sheet Date
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Division I Division III
(Revised 2016) , proposed
dividends should not be
recognized as a liability but
rather should be disclosed as
a separate note.
36. Share application money
Share application money Share application money pending allotment shall be
includes advances towards classified into equity or liability in accordance with
allotment of share capital . relevant Indian Accounting Standards. Share application
The terms and conditions money to the extent not refundable shall be shown under
including the number of the head Equity and share application money to the
shares proposed to be extent refundable shall be separa tely shown under `Other
issued, the amount of financial liabilities'.
premium, if any, and the
period before which shares
shall be allotted shall be
disclosed. It shall also be
disclosed whether the
company has sufficient
authorised capital to cover
the share capital amount
resulting from allotment of
shares out of such share
application money. Further,
the period for which the
share application money has
been pending beyond the
period for allotment as
mentioned in the document
inviting application for shares
along with the reason for
such share application
money being pending shall
be disclosed. Share
application money not
exceeding the issued capital
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Division I Division III
and to the extent not
refundable shall be shown
under the head Equity and
share application money to
the extent refundable, i.e.,
the amount in excess of
subscription or in case the
requirements of minimum
subscription are not met,
shall be separately shown
under "Other current
liabilities"
37. Classification of
preference shares
No such requirement Preference shares including premium received on issue,
shall be classified and presented as `Equity' or `Liability'
in accordance with the requirements of the relevant
Indian Accounting Standards. Accordingly, the disclosure
and presentation requirements in this regard applicable to
the relevant class of equity or liability shall be applicable
mutatis mutandis to the preference shares. For instance,
plain vanila redeemable preference shares shall be
classified and presented under `liabilities' as
`borrowings' or `subordinated liability' and the
disclosure requirements in this regard applicable to such
borrowings shall be applicable mutatis mutandis to
redeemable preference shares.
38. Compound financial
instruments
No such requirement Compound financial instruments such as convertible
debentures, where split into equity and liability
components, as per the requirements of the relevant
Indian Accounting Standards, shall be classified and
presented under the relevant heads in `Liabilities and
Equity'.
39. Regulatory Deferral
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Division I Division III
Account
No such requirement Regulatory Deferral Account Balances and changes in
such Balances shall be presented in the Balance Sheet
and Statement of Profit and Loss in accordance with the
relevant Indian Accounting Standards.
40. Boards opinion on
realizable value
If, in the opinion of the No such requirement in accordance with Ind AS.
Board, any of the assets
other than fixed assets and
non-current investments do
not have a value on
realisation in the ordinary
course of business at least
equal to the amount at which
they are stated, the fact that
the Board is of that opinion,
shall be stated.
41. Revenue from operations
In respect of a company Revenue from operations shall be separately disclosed on
other than a finance the face of the Statement of Profit and Loss, showing:
company revenue from (a) Interest Income;
operations shall disclose
separately in the notes (b) Dividend Income;
revenue from- (c) Rental Income;
(a) Sale of products; (d) Fees and commission Income;
(b) Sale of services; (e) Net gain on fair value changes;
(c) Other operating
revenues; (f) Net gain on derecognition of financial instruments
under amortised cost category;
Less:
(d) Excise duty (g) Sale of products (including Excise duty);
In respect of a finance (h) Sale of services; and
company, revenue from (i) Others (to be specified)
operations shall include
revenue from-
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Division I Division III
(a) Interest
(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.
42. Other income
Other income shall be `Other Income' shall be classified as:
classified as: (a) Net gain/ (loss) on ineffective portion of hedges;
(a) interest income (in
(b) Net gain/ (loss) on derecognition of property, plant
case of a company
and equipment;
other than a finance
company) (c) Net gain or loss on foreign currency transaction
(b) dividend income and translation (other than considered as finance
cost)(to be specified)
(c) Net gain/loss on sale
of investments (d) Others (to be specified)
(d) other non-operating
income (net of
expenses directly
attributable to such
income)
43. Employee benefit
expense
Employee benefits expense Employee benefits expense shall classified as:
shall classified as: (a) salaries and wages
(i) salaries and wages, (b) contribution to provident and other funds
(ii) contribution to (c) share based payments to employees
provident and other (d) staff welfare expenses
funds
(iii) expense on Employee
Stock Option Scheme
(ESOP) and Employee
Stock Purchase Plan
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Division I Division III
(ESPP)
(iv) staff welfare expenses
44. Adjustments to carrying
amount of investments
A Company shall disclose by No such requirement
way of notes additional
information regarding
aggregate expenditure and
income on adjustments to the
carrying amount of
investments.
45. Payment to auditors
Payments to auditor shall be Payments to auditor shall be classified as:
classified as: (a) auditor
(a) auditor (b) for taxation matters
(b) for taxation matters (c) for company law matters
(c) for company law (d) for management services
matters (d) for other services
(d) for management (e) for reimbursement of expenses
services
(e) for other services
(f) for reimbursement of
expenses
46. Consolidated financial
statements
"Minority interests" in the `Non- controlling interests' in the Balance Sheet and in the
balance sheet within equity Statement of Changes in Equity, within equity, shall be
shall be presented separately presented separately from the equity of the `owners of the
from the equity of the owners parent'.
of the parent. Consolidated financial statements shall also disclose
investments accounted for using the equity method.
47. Retrospective
restatement or
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reclassification
No such requirement When a company applies an accounting policy
retrospectively or makes a restatement of items in the
financial statements or when it reclassifies items in its
financial statements, the company shall attach to the
Balance Sheet, a "Balance Sheet" as at the beginning of
the earliest comparative period presented.
48. Other Comprehensive
Income
No such requirement Other Comprehensive Income shall be classified into:
(A) Items that will not be reclassified to profit or loss:
(i) Changes in revaluation surplus;
(ii) Remeasuremnts of the defined benefit plans;
(iii) Equity Instruments through Other
Comprehensive Income;
(iv) Fair value changes relating to own credit risk of
financial liabilities designated at FVTPL; or
(v) Share of Other Comprehensive Income in
Associates and Joint Ventures, to the extent not to
be classified into profit or loss; and
(vi) Others (specify nature).
Income tax relating to items that will not be reclassified to
profit or loss
(B) Items that will be reclassified to profit or loss:
(i) Exchange differences in translating the financial
statements of a foreign operation;
(ii) Debt Instruments through Other Comprehensive
Income;
(iii) The effective portion of gains and loss on hedging
instruments in a cash flow hedge;
(iv) Share of Other Comprehensive Income in
Associates and Joint Ventures, to the extent to
be classified into profit or loss; and
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Division I Division III
(v) Others (specify nature).
Income tax relating to items that will be reclassified to
profit or loss
Key Differences in Division II and Division III Ind AS Schedule III to the
Companies Act, 2013
S. Division II Division IIII
No
Division II is applicable to a Division III is applicable to every NBFC to which Ind AS
company whose financial apply in preparation of its financial statements.
statements are prepared in
accordance with Ind AS
(other than Non-Banking
Financial Companies
(NBFCs)).
1. In the Balance Sheet, assets In the Balance Sheet, assets are divided under the
are divided under the broad broad head of financial assets and non-financial assets.
head of non-current assets
and current assets
2. Non-current assets includes Financial assets include
(a) Property, Plant and (a) Cash and cash equivalents
Equipment (b) Bank Balance other than (a) above
(b) Capital work-in (c) Derivative financial instruments
progress (d) Receivables
(c) Investment Property (I) Trade Receivables
(d) Goodwill (II) Other Receivables
(e) Other Intangible assets (e) Loans
(f) Intangible assets under (f) Investments
development (g) Other Financial assets (to be specified)
(g) Biological Assets other
than bearer plants
(h) Financial Assets
(i) Investments
(ii) Trade receivables
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(iii) Loans
(iv) Others (to be
specified)
(i) Deferred tax assets
(net)
(j) Other non-current
assets
3. Current assets includes Non-financial Assets includes
(a) Inventories (a) Inventories
(b) Financial Assets (b) Current tax assets (Net)
(i) Investments (c) Deferred tax Assets (Net)
(ii) Trade receivables (d) Investment Property
(iii) Cash and cash (e) Biological assets other than bearer plants
equivalents (f) Property, Plant and Equipment
(iv) Bank balances (g) Capital work-in-progress
other than (iii) (h) Intangible assets under development
above (i) Goodwill
(v) Loans (j) Other Intangible assets
(vi) Others (to be (k) Other non-financial assets (to be specified)
specified)
(c) Current Tax Assets
(Net)
(d) Other current assets
4. In the Balance Sheet, In the Balance Sheet, liabilities are divided under the
liabilities are divided under broad head of financial liabilities and non-financial
the broad head of non- liabilities.
current liabilities and current
liabilities.
5. Non-current liabilities Financial liabilities include
includes (a) Derivative financial instruments
(a) Financial Liabilities (b) Payables
(i) Borrowings (I) Trade Payables
(ii) Trade payables (i) total outstanding dues of micro enterprises
(A) Total and small enterprises
outstanding (ii) total outstanding dues of creditors other than
dues of Small micro enterprises and small enterprises
Enterprises and (II) Other Payables
Micro (i) total outstanding dues of micro enterprises
enterprises and small enterprises
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(B) Total (ii) total outstanding dues of creditors other
outstanding than micro enterprises and small
dues of enterprises
creditors other (c) Debt Securities
than small (d) Borrowings (Other than Debt Securities)
enterprises and (e) Deposits
micro (f) Subordinated Liabilities
enterprises. (g) Other financial liabilities(to be specified)
(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
6. Current liabilities includes Non-financial liabilities includes
(a) Financial Liabilities (a) Current tax liabilities (Net)
(i) Borrowings (b) Provisions
(ii) Trade payables (c) Deferred tax liabilities (Net)
(A) Total (d) Other non-financial liabilities(to be specified)
outstanding
dues of Micro
enterprises and
Small
Enterprises (B)
Total
outstanding
dues of
creditors other
than micro
enterprises and
small
enterprises.
(iii) Other financial
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liabilities (other
than those
specified in item (c)
(b) Other current liabilities
(c) Provisions
(d) Current Tax Liabilities
(Net)
7. Other Financial liabilities Other Financial liabilities shall be classified as-
shall be classified as- (i) Interest accrued;
(i) Current maturities of (ii) Unpaid dividends;
long term debt; (iii) Application money received for allotment of
(ii) Current maturities of securities to the extent refundable and interest
finance lease accrued thereon;
obligations; (iv) Unpaid matured deposits and interest accrued
(iii) Interest accrued; thereon;
(iv) Unpaid dividends; (v) Unpaid matured debentures and interest accrued
(v) Application money thereon;
received for allotment (vi) Margin money (to be specified);and
of securities to the (vii) Others (specify nature)
extent refundable
and interest accrued
thereon;
(vi) Unpaid matured
deposits and interest
accrued thereon;
(vii) Unpaid matured
debentures and
interest accrued
thereon; and
(viii) Others (specify
nature).
8. For each class of equity For each class of equity share capital, an NBFC shall
share capital, no such disclose information that enables users of its financial
disclosure is required. statements to evaluate the NBFC's objectives, policies
and processes for managing capital.
9. Other Reserves' shall be Other Reserves' shall be classified in the notes as:
classified in the notes as- (a) Capital Redemption Reserve;
(a) Capital Redemption (b) Debenture Redemption Reserve;
Reserve; (c) Share Options Outstanding Account;
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(b) Debenture Redemption (d) Statutory Reserves; and
Reserve; (e) Others (specify the nature and purpose of each
(c) Share Options reserve and the amount in respect thereof);
Outstanding Account; and (Additions and deductions since last balance sheet to
(d) Others (specify the be shown under each of the specified heads)
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)
10. A separate disclosure is No such separate disclosure needed.
required in the Revenue
from operations in the notes
(a) sale of products
(including Excise
Duty);
(b) sale of services; and
(c) other operating
revenues.
11. Revenue from operations Revenue from operations in the statement of profit and
and other income is shown loss shall be classified as:-
on the face of statement of (i) Interest Income
profit and loss as total (ii) Dividend Income
income. (iii) Rental Income
(iv) Fees and commission Income
(v) Net gain on fair value changes
(vi) Net gain on de-recognition of financial
instruments under amortised cost category
(vii) Sale of products(including Excise Duty)
(viii) Sale of services
(ix) Others (to be specified)
12. Expenses in the statement of Expenses in the statement of profit and loss shall be
profit and loss shall be classified as:-
classified as:- (i) Finance Costs
(i) Cost of materials (ii) Fees and commission expense
consumed; (iii) Net loss on fair value changes
(ii) Purchases of Stock- (iv) Net loss on de-recognition of financial
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in-Trade; instruments under amortised cost category
(iii) Changes in (v) Impairment on financial instruments
inventories of (vi) Cost of materials consumed
finished goods; (vii) Purchases of Stock-in-trade
(iv) Stock-in-Trade; (viii) Changes in Inventories of finished goods,
(v) work-in progress; stock-in trade and work-in- progress
(vi) Employee benefits (ix) Employee Benefits Expenses
expense; (x) Depreciation, amortization and impairment
(vii) Finance costs ; (xi) Others expenses (to be specified)
(viii) Depreciation and
amortization
expense;
(ix) Other expenses.
13. A Company shall disclose by A Company shall disclose by way of notes, additional
way of notes, additional information regarding any item of income or
information regarding any expenditure which exceeds one per cent of the revenue
item of income or from operations.
expenditure which exceeds
one per cent of the revenue
from operations or
Rs.10,00,000, whichever is
higher.
14. Other income shall be Other income mentions the details regarding the
classified as- following:
(a) interest Income ; (a) Net gain/(loss) on ineffective portion of hedges
(b) dividend Income; and (b) Net gain/(loss) on de-recognition of property, plant
(c) other non-operating and equipment
income (net of (c) Net gain or loss on foreign currency transaction and
expenses directly translation (other than considered as finance cost)(
attributable to such to be specified)
income). (d) Others ( to be specified, depending upon the
percentage of the total income)
15. Since, consolidated financial In cases of consolidated financial statements that
statements does not contain contains elements pertaining to NBFCs and other than
elements pertaining to NBFCs, mixed basis of presentation may be followed
NBFC's, no such disclosure for consolidated financial statements where both kinds
needed of operations are significant.
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16. No such disclosure required A separate disclosure under `receivables' is required for
under `receivables' any debts due from any Limited Liability Partnership
(LLP) in which its director is a partner or member.
17. Companies are required to NBFCs are required to disclose items comprising
disclose items comprising `revenue from operations' and `other comprehensive
`revenue from operations' income' on the face of the statement of profit and loss.
and `other comprehensive
income' as part of the notes.
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Exposure Draft of Revised Guidance Note on Division III to Schedule III to the
Companies Act, 2013 for NBSC that is required to comply with Ind AS by Corporate
Laws & Corporate Governance Committee ICAI
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
GN on Division III - Ind AS Schedule III to the Companies Act 2013
Statements or report shall also be disclosed in the Board's report in the
relevant financial year in which such revision is being made.
4. Section 135 - Corporate Social Responsibility
(2) The Board's report under sub-section (3) of section 134 shall disclose
the composition of the Corporate Social Responsibility Committee.
5. Section 182 - Prohibitions and restrictions regarding political
contributions (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 profit and loss account the total
amount or amounts contributed by it to the Fund referred to in sub -section (1)
during the financial year to which the amount relates.
7. Section 186 - Loan and investment by company
( 4) The company shall disclose to the members in the Financial
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
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representations.
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Exposure Draft of Revised Guidance Note on Division III to Schedule III to the
Companies Act, 2013 for NBSC that is required to comply with Ind AS by Corporate
Laws & Corporate Governance Committee ICAI
Annexure D
___________________________________________________________
List of Indian Accounting Standards notified as on date:
Ind AS Description
Ind AS 101 First-time Adoption of Indian Accounting Standards
Ind AS 102 Share-based Payment
Ind AS 103 Business Combinations
Ind AS 104 Insurance Contracts
Ind AS 105 Non-current Assets Held for Sale and Discontinued
Operations
Ind AS 106 Exploration for and Evaluation of Mineral Resources
Ind AS 107 Financial Instruments: Disclosures
Ind AS 108 Operating Segments
Ind AS 109 Financial Instruments
Ind AS 110 Consolidated Financial Statements
Ind AS 111 Joint Arrangements
Ind AS 112 Disclosure of Interests in Other Entities
Ind AS 113 Fair Value Measurement
Ind AS 114 Regulatory Deferral Accounts
Ind AS 115 Revenue from Contracts with Customers
Ind AS 1 Presentation of Financial Statements
Ind AS 2 Inventories
Ind AS 7 Statement of Cash Flows
Ind AS 8 Accounting Policies, Changes in Accounting Estimates and
Errors
Ind AS 10 Events after the Reporting Period
Ind AS 11 Construction Contracts
GN on Division III - Ind AS Schedule III to the Companies Act 2013
Ind AS 12 Income Taxes
Ind AS 16 Property, Plant and Equipment
Ind AS 17 Leases
Ind AS 19 Employee Benefits
Ind AS 20 Accounting for Government Grants and Disclosure of
Government Assistance
Ind AS 21 The Effects of Changes in Foreign Exchange Rates
Ind AS 23 Borrowing Costs
Ind AS 24 Related Party Disclosures
Ind AS 27 Separate Financial Statements
Ind AS 28 Investments in Associates and Joint Ventures
Ind AS 29 Financial Reporting in Hyperinflationary Economies
Ind AS 32 Financial Instruments: Presentation
Ind AS 33 Earnings per Share
Ind AS 34 Interim Financial Reporting
Ind AS 36 Impairment of Assets
Ind AS 37 Provisions, Contingent Liabilities and Contingent Assets
Ind AS 38 Intangible Assets
Ind AS 40 Investment Property
Ind AS 41 Agriculture
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Annexure E
General Circular No. 39/2014 dated: 14 th 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
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Glossary
Act The Companies Act, 2013
Ind AS Schedule III Division II to Ind AS Schedule III
Ind AS Indian Accounting Standards
Companies Ind AS Companies Ind AS Rules, 2015 as amended from
Rules time to time
Ind AS Framework Framework for the preparation and presentation
of Financial Statements in accordance with Indian
Accounting Standards
Non Ind AS Accounting Standards
Companies AS Rules Companies Accounting Standards Rules, 2006 as
amended from time to time
FVTPL Fair Value through Profit or Loss
FVOCI Fair Value through other Comprehensive Income
SEBI Securities and Exchange Board of India
SEBI (LODR) SEBI (Listing Obligations and Disclosure
Requirements) Regulations, 2015
GAAP Generally Accepted Accounting Principles
MSMED The Micro, Small and Medium Enterprises
Development Act, 2006
CENVAT Central Value Added Tax
GST Goods and Services Tax
MAT Minimum Alternate Tax
CFS / SFS Consolidated Financial Statements / Standalone
Financial Statements
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