The revised Schedule VI provides a new format for the preparation and presentation of the financial statement in a more concrete manner. It includes concepts and disclosures from Indian Accounting Standards (IND AS) and is applicable to companies following Indian GAAP.  A little awareness is provided regarding the principal difference between the old and new format.

The New Schedule VI has two parts (Part I – Balance sheet & Part II – Profit & Loss Account) whereas the Old version had four parts (Part I, Part II, Part III, Part IV). Thus the revised format has been segregated into:

• Balance Sheet
• Profit and Loss Account

General changes

• In the previous format, both vertical and horizontal forms of presentation were allowed but in new Schedule VI, only vertical form is allowed.
• Once a unit measurement is used, it is to be used in the entire Financial Statements.

Changes in Balance Sheet

LIABILITIES:

1. “Equity and Liabilities” will be written instead of “Sources of funds”.
2. Under “Share Capital”, a sub – head will be included “shares held more than 5% in the company along with the number of shares”.
3. “Debit Balance of P&L A/c or Accumulated Losses” will be shown as a negative figure under “Surplus”.
4. Liabilities will be classified under two heads “Current liabilities” and “Non Current liabilities”.
5. The head “Provisions” will be segregated into Short Term Provisions and Long Term Provisions.

ASSETS:

1. “Assets” will be written instead of “Application of Funds”.
2. Total assets to be classified into “Fixed assets” and “Current assets”.
3. “Trade Receivables”, will be written instead of “Sundry Debtors”.
4. “Cash and Cash Equivalents”, will be written instead of “Cash and Bank Balances”.
5. “Miscellaneous expenditure” is now to be shown separately under “Other Current Assets”.

Changes in Profit & Loss A/c

1. Net gain / loss on foreign currency translation and transaction to be shown separately under the head “Other Income”.
2. Following shall be disclosed separately:
• Net loss on sale of Investments
• Provision for loss of Subsidiary companies
• Details of exceptional and extraordinary items
• Prior period items
• Net carrying amount of investments
3. Expense on account of employee stock option scheme to be disclose in addition to Employee benefit expense.
4. Any item of expenditure which exceeds 1% of total revenue or Rs.100000 (Rs.5000, as per the old Schedule VI), whichever is higher is to be shown separately under “Miscellaneous expenses”.

Implication of revised Schedule VI

• It is an initiative towards convergence to IFRS (International Financial Reporting Standards) and familiarizing companies with the concept of IND–AS / IFRS
• Concept of “Schedules” is not recognized in New Schedule VI. It is done away with the statutory requirements of the old format.
• Where Accounting Standards does not coincide with the provisions of Schedule VI, Accounting Standards will prevail.
• If facilitates better presentation, disclosures is intended to be more transparent and organized for the users of financial statements.

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