Â 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. Â A little awareness is provided regarding the principal difference between the old and new format.
The New Schedule VI has two parts (Part I â€“ Balance sheet & Part II â€“ 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
- 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
- â€œEquity and Liabilitiesâ€ will be written instead of â€œSources of fundsâ€.
- Under â€œShare Capitalâ€, a sub â€“ head will be included â€œshares held more than 5% in the company along with the number of sharesâ€.
- â€œDebit Balance of P&L A/c or Accumulated Lossesâ€ will be shown as a negative figure under â€œSurplusâ€.
- Liabilities will be classified under two heads â€œCurrent liabilitiesâ€ and â€œNon Current liabilitiesâ€.
- The head â€œProvisionsâ€ will be segregated into Short Term Provisions and Long Term Provisions.
- â€œAssetsâ€ will be written instead of â€œApplication of Fundsâ€.
- Total assets to be classified into â€œFixed assetsâ€ and â€œCurrent assetsâ€.
- â€œTrade Receivablesâ€, will be written instead of â€œSundry Debtorsâ€.
- â€œCash and Cash Equivalentsâ€, will be written instead of â€œCash and Bank Balancesâ€.
- â€œMiscellaneous expenditureâ€ is now to be shown separately under â€œOther Current Assetsâ€.
Changes in Profit & Loss A/c
- Net gain / loss on foreign currency translation and transaction to be shown separately under the head â€œOther Incomeâ€.
- 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
Implication of revised Schedule VI
- It is an initiative towards convergence to IFRS (International Financial Reporting Standards) and familiarizing companies with the concept of INDâ€“AS / IFRS
- Concept of â€œSchedulesâ€ 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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