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Financial Year 2008-09 6. (iii) Loans and advances from related parties; (v) Other loans and advances (specify nature). 3) Loans and advances to related parties (giving details thereof); 4) Other loans and advances (specify nature). 1) Capital Reserves;2) Capital Redemption Reserve; by earmarked investments shall be termed as a “fund”. Further, Schedule III of Companies Act, 2013 defines that an operating cycle is the time between the acquisition of assets for processing and their realization in cash or cash equivalents. If the actual remuneration is more than maximum allowable remuneration (i.e. Can you give your write ups for fundamental analysis as per schedule III balance sheet and P/L, that is formulas used for balance sheet and profit and loss? Query No. Regulation2(s)of LODR “net worth” means the aggregate value of the paid-up share capital and all reserves created out of the profits and securities premium account , after deducting the aggregate value of the accumulated losses, deferred expenditure and miscellaneous expenditure not written off, as per the audited balance sheet, but does not include reserves created out … Further, in the new Schedule III detailed instructions have been given for preparation of consolidated financial statements as consolidation of accounts of subsidiary companies is now made mandatory in section 129. 1) Current maturities of long-term debt;2) Current maturities of finance lease obligations; 1) Provision for employee benefits2) Others (specify nature). 3) Aggregate amount of unquoted investments; 4) Aggregate provision made for diminution in value of investments. (CA Surendra Agrawal (M.COM,LLB,ACA) PH-9313336776 – Email- ca.surendra@gmail.comAuthor can be contacted by those who wants to Complete CA Final Audit in 18 Days). within 11 months. (vi) Under the main heading of Non-Current Assets, Fixed Assets are further classified as under: I. Tangible assets II. Section 129 of companies act 2013, provides for preparation of financial statements. i. 1) The basis of valuation of individual investments2) Aggregate amount of quoted investments and market value thereof; shall be disclosed under the relevant sub-head of inventories, Aggregate amount of Trade Receivables outstanding for a period exceeding six months from the date they are due for payment. These include legal, accounting, and share issue expenses incurred for formation of enterprise. What are provisions relating to financial statements under the New companies act 2013 1. However, when the normal operating cycle cannot be identified, it is assumed to have duration of 12 months. Share application money includes advances towards allotment of share capital. The number of shares issued, subscribed and fully paid, and subscribed but not fully paid. (d)The company does not have an unconditional right to defer settlement of the liability for least twelve months after the reporting cm Terms of a liability that could, at the option the counterparty, result in its settlement by the issue of equity instruments do not affect its classification. d.      A reconciliation of the number of shares outstanding at the beginning and at the end of the reporting period. Aggregate number and class of shares allotted as fully paid-up by way of bonus shares. of section 617 of the Companies Act, 1956. (v) The holding period in respect of unfinished goods is 30 days. 3) All disclosures required by Companies Act to be made in notes to accounts. In regard to investments in the capital of partnership firms, the names of the firms (with the names of all their partners, total capital and the shares of each partner) shall be given. 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. In case of subsequent increase in authorized share capital, stamp duty paid is treated as capital expenditure and disallowed under Income tax act. which the company has power to reissue shall be disclosed, Terms of repayment of term loans and other loans, Period and amount of continuing default as on the balance sheet date in repayment of loans and interest(separately in each case). Item such as preliminary expenses, cost of issue of debentures are examples that may be classified under this head. 1) Investment property;2) Investments in Equity Instruments; should be separately stated specifying the basis for valuation thereof; 1) Aggregate amount of quoted investments and market value thereof;2) Aggregate amount of unquoted investments; 1) Capital Advances;2) Security Deposits; 1) Secured, considered good;2) Unsecured, considered good; shall be disclosed under the relevant heads separately. 10 2. Note: —this part of Schedule sets out the minimum requirements for on the face of the Balance Sheet, and the Statement of Profit and Loss (hereinafter referred to as —Financial Statements || for the purpose of this Schedule) and Notes. 3) Interest accrued but not due on borrowings; 4) Interest accrued and due on borrowings; 7) Application money received for allotment of securities and due for refund and interest accrued thereon. 195 would not arise and the X Company cannot be denied deduction of such expenses. Query No. Keeping in view the above, the CWIP shall be shown under Fixed Assets as Capital Work in Progress. the company does not have an unconditional right to defer settlement of the liability for at least twelve months after the reporting date. Q.3 H Ltd. engaged in the business of manufacturing lotus wine. One of them is the concept of matching costs with the revenue or benefits derived from such costs. where duty draw back receivable on exports should be disclose? It should be the net balance of Deferred Tax Asset after adjusting the balance of deferred tax liability. Revenue Expenditure. liability other than Current liability shall be classified as Non-Current. 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. Professional Course, GST Annual Return It is due to be settled within twelve months after the reporting date; or’. secured and unsecured(Nature of security shall be specified separately in each case), Period and amount of continuing default as on the balance sheet date in repayment of loans and interest (separately in each case). But Deferred tax assets and deferred tax liabilities, both, cannot be shown in balance sheet because only the net Balance of Deferred Tax Liability or Asset is to be shown. 1) Loans repayable on demand;(i) from banks. e.      The rights, preferences and restrictions attaching to each class of shares including restrictions on the distribution of dividends and the repayment of capital. It is also provided that the financial statements shall be prepared in the form provided in new schedule III of Companies Act, 2013. All Rights Reserved. under Sec. Method 2: By Computing differences in WDV as per IT and companies act. Therefore it need not be put to those 4 tests given in the definition of current assets. In order to submit a comment to this post, please write this code along with your comment: c3d859cc208e2827a302498c4bf4bc04. (a) Operating cycle of Kay Ltd. will be computed as under: Raw material stock holding period + Work-in-progress holding period + Packing Materials holding period+ finished goods holding period + Debtors collection period = 1 + 1 + 3 + 1 + 2 = 8 months Classification of liability to suppliers: Schedule III provides that: —A liability shall be classified as current when it satisfies any of the following criteria: i. 11 months approx. after 18 months. shall be stated in descending order of maturity or conversion, starting from farthest redemption or conversion date, as the case may be. It is also provided that if the company has interest in any associate company or a joint venture the accounts of that company as well as joint venture shall be consolidated. It is held primarily for the purpose of being traded; iii. Due to this reason H Ltd. has prepared its financial statements considering its operating cycle as 18 months and accordingly classified the raw material purchased and held in stock for less than 18 months as current asset. 8. After incorporation of SPV Ltd., the State Government by an order dated 04.03.2009, had accorded sanction to release R2.00 crore to A Ltd. for making payment to different agencies towards expenditure incurred … 1. 1) Claims against the company not acknowledged as debt; 2) Guarantees;3) Other money for which the company is contingently liable. 11 .The Central Government has power to exempt any companies from complying with any of the requirements made under the section. showing additions, disposals, acquisitions through business combinations and other adjustments and the related depreciation and impairment losses/reversals shall be disclosed separately. g.       Shares in the company held by each shareholder holding more than 5 per cent, shares specifying the number of shares held. When the benefit of expenditure is not likely to be available for more than one year, it is treated as revenue expenditure. h.      Shares reserved for issue under options and contracts/commitments for the sale of shares/disinvestment, including the terms and amounts. 2. (k) In case of Companies covered under section 135, amount of expenditure incurred on corporate social responsibility activities; (l) Details of items of exceptional and extraordinary nature; (m) Prior period items; (ii) (a) In the case of manufacturing companies,— (1) Raw materials under broad heads. it is very helpful for students to understand about Balance Sheet. (c) Changes in inventories of finished goods, work-in progress and stock-in-trade, (f) Depreciation and amortisation expense. plz tell me advice. 1. it has. ... Revenue under each of the above heads shall be disclosed separately by way of notes. 8: Segment Reporting. There are (a) to (l) number of points for the notes regarding Share Capital. Debit balance of statement of profit & Loss should be shown as a negative figure under the head Surplus’. 20% of the total share capital of the company or has control on the business decision under an agreement. As per Schedule III of Companies Act, 2013, one of the criteria for classification of an asset as a current asset is that the asset is expected to be realised in the company’s operating cycle or is intended for sale or consumption in the company’s normal operating cycle. Intangible assets. k.       Calls unpaid (showing aggregate value of calls unpaid by directors and officers). 9. It provides that the financial statements shall give a true and fair view of the state of affairs of the company and shall comply with the accounting standards notified under new section 133. it is due to be settled within twelve months after the reporting date and there is no option to defer it. Usually, the benefit is consumed in the period in which it is incurred except in the case of deferred revenue expense. l.         Forfeited shares (amount originally paid-up). It will be easier to understand the meaning of deferred revenue expenditure if you know the word deferred, which means “Holding something back for a later time”, or “postpone”.. As this is refundable and not pending for allotment, hence it is not a part of equity. Thus, all liabilities that do not arise in the last fortnight of the accounting period will be —Non – Current. (ii) Sales realization from Debtors usually takes 60 days from date of credit invoice. The aggregate amount of such loans under each head shall be disclosed. Q.2 The Balance Sheet of G Ltd as at 31st March 13 is as under. Under SSAP 4 an entity can either recognise the deferred portion of the grant within liabilities as deferred income, or it can offset the grant against the cost of the related asset. ): If the   Creditors are settled in 330 days i.e. Professional Course, Online Excel Course : 15 April 2013 Page 1 of 34 1. Your are not logged in . b. is such that, although the benefit arising there from may extend over several accounting periods, the same cannot be clearly and definitively assigned over time since the same is intangible in nature. The amount of Capital advances included in CWIP shall be disclosed under the sub heading Long term loans and advances under the heading Non-CurrentAssets. The Schedule III to the Companies Act, 2013 (2013 Act) became applicable to all companies for the preparation of financial statements for financial years beginning on or from 1 April 2014. Rs 1.23 Crores), then the Company has to obtain the prior permission of Central Government. Related Provisions The relevant provisions of the Income Tax Act 1967 (ITA 1967) and the relevant Exceptions to General rules: Terms of a liability that could, at the option of the counter party, result in its settlement by the issue of equity instruments and do not affect its classification. shall be disclosed under the relevant heads separately, which incorporates current assets that do not fit into any other asset categories. 4) Stock-in-trade (in respect of goods acquired for trading); 1) Estimated amount of contracts remaining to be executed on capital account and not provided for; 2) Uncalled liability on shares and other investments partly paid; Profit and Loss statement for the year ended…………. 1. (vii) Deferred Tax Asset shall be shown under Non-Current Asset. 9: Treatment of tax expense on deemed income under section 56(2)(viia) of the Income-tax Act, 1961 arising on purchase of investments. under the Companies Act, 2013. The heading Shareholders ‘funds is given in the question missing in the balance sheet. It is incurred to run the business. The Companies Act, 2013 passed by the Parliament has received the assent of the President of India on 29th August, 2013. ii. (iii) Schedule III of Companies Act, 2013 requires that Employee Stock Option outstanding should be disclosed under the heading Reserves and Surplus. 10. Q.1 KAY Ltd. is in the process of finalizing its accounts for year ended 31st March,2014andfurnishes the following information: (I) Finished goods normally are held for 30 days before sale. Query No. Comment on the presentation in terms of revised Schedule III and Accounting Standards issued by NFRA. Join our newsletter to stay updated on Taxation and Corporate Law. iii. EG: Disclosure under Companies Act : Donation to Political parties should be shown separately though it is not required as per Revised Schedule VI as the same is required under Section 293A of the Companies Act. if suplier is giving 12.5 credit this is non currents liability and non current assets.Then why this is 18 months current assets. 40(a)(ia) of the Income Tax Act,1961 emphasis on that expenditure covered under mentioned TDS sections paid to resident and debited Profit & Loss Account will not be allowed as deduction while computing the income under the head “Profit and Gains of Hence, in the case it will be treated as current liability. Nov 2012 Audit Question Intangible assets under development. What are provisions relating to financial statements under the New companies act 2013. It is expected to be settled in the company’s normal operating cycle; ii. 25 July 2018 As per section 2(57) of the Companies Act 2013, Net worth include , the aggregate value of paid up share capital, free reserves and securities premium amount, credit and debit balance of PNL after deducting all miscellaneous expenditures, deferred revenue expenditure but does not include reserves created on revaluation of assets or on amalgamation Share application money not exceeding the issued capital and to the extent not refundable shall be shown under the head Equity and share application money to the extent refundable, i.e., the amount in excess of subscription or in case the requirements of minimum subscription are not met, shall be separately shown under “Other current liabilities”; 8) Unpaid matured deposits and interest accrued thereon; 9) Unpaid matured debentures and interest accrued thereon; 6) Copyrights, and patents and other intellectual property rights, services and operating rights; 7) Recipes, formulae, models, designs and prototypes; 4) Investments in Government or trust securities; 8) Other non-current investments (specify nature). Plz clarify provisions regarding treatment of Discount on issue of shares/debentures. Accordingly, a buyer would not recognize income on the date of sale under this paradigm when it assumes a deferred revenue liability for the same reason it would not recognize income when it assumes any other type of fixed or contingent liability: like a loan, the assumption of a deferred revenue liability is not an accretion to wealth. In regard to investments in the capital of partnership firms, the names of the firms (with the names of all their partners, total capital and the shares of each partner) shall be given. Schedule III of the 2013 Act deals with instructions for prepation of Balance Sheet and Profit and Loss of account of a company under section 129 of the 2013 act. Where bonds/debentures are redeemable by instalments, the date of maturity for this purpose must be reckoned as the date on which the first instalment becomes due. This satisfies the third condition i.e. • Revenue expenditure –allowable • Capital expenditure –not allowable. The balance of Rs. b)      Information about items that do not qualify for recognition in those statements. under Section 135 of the Companies Act 2013 and Rules thereon 1. i. Deferred Revenue Expenditure. As per section 135 of Companies Act 2013, mandatory CSR spending of 2% of net profit is required by the following companies: Net worth > Rs 500 crores, or Turnover > Rs 1000 crores, or Net profit > Rs 5 crores, or a foreign company defined u/s 2(42) having its branch office or project office in India which fulfills the criteria under pts. (eg; Legal consultant expenses, Registrar of companies fees, stamp duty etc), Capitalisation of Deferred Revenue Expenditure. (ii) Reserve & Surplus is showing zero balance, which is not correct in the given case. 3. Fact that assessee has deferred the expenditure in the books of account is irrelevant. Copyright © TaxGuru. 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. 4. 4. It must be understood that expenditure is a wider term and includes expenses. The process of manufacturing this wine takes around 18 months. ally act as the agent of of financial statements is like their owners (their employers). THE issue before the Bench is - Whether when Revenue had issued notice against the assesssee for reopening of assessment on the ground that deduction under Section 10B had resulted in underassessment of the assessee’s income, and the deduction on account of deferred revenue expenditure being expenditure on technical know-how, was inadmissible and should have been … iv. Hence all liabilities except those that arise in the last fortnight of the accounting period will be—Current as this will have to be settled within 12 months of the reporting date. Therefore, the contention of the company’s management that the operating cycle of the product lotus wine is 18 months and notl2 months is correct. 1) Long-term Trade Receivables (including trade receivables on deferred credit terms);2) Others (specify nature); (i) Secured, considered good;(ii) Unsecured, considered good; 1) Investments in Equity Instruments;2) Investment in Preference Shares; details shall be given of names of the bodies corporate indicating separately whether such bodies are:(i) subsidiaries. Shall be shown as a negative figure under the head “Surplus”. j. Maintained by V2Technosys.com, 5. III. a. Although it is a part of Equity and Liabilities yet it must be shown under head Shareholders ‘funds. Required fields are marked *, Notice: It seems you have Javascript disabled in your Browser. (iv) Share application money refundable shall be shown under the sub-heading Other Current Liabilities. 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. The remaining portion of the expenditure is carried forward and is known as capital expenditure or or deferred revenue expenditure and is shown as an asset in the balance sheet. An issue has been raised as to what should be the treatment of the expenditure incurred on intangible items, which were treated as deferred revenue expenditure and ordinarily spread over a period of 3 to 5 years before AS 26 became mandatory and which do not meet the definition of an ‘asset’ as per AS 26. Nice and informative article. Comment on the accuracy of the decision and the treatment of asset by H Ltd. As per Schedule III of Companies Act, 2013.

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