DRAFT ICDS Disclosure in FORM-3CD BY CA NITIN KANWAR. DRAFT ICDS Disclosure in FORM-3CD BY CA NITIN KANWAR

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Allyson Cox
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1 ICDS I ACCOUNTING POLICIES Check Points 1 All significant accounting policies adopted by a person. Financial Statements Points to be fed in 13(f) 1.All.significant accounting policies adopted by a person shall be di sclosed as per the Attached Financial Statements 2. Mercantile method of accounting employed. Expenses and Income are accounted for on accrual basis as per generally accepted accounting principles in India. Interest on refudn of any tax, duty or cess is accounted on receipt basis. 3. There is no change in accounting policy from the previous year. 2 3 Any change in an accounting policy which has a material effect shall be 3CD Clause 13 (b), (c) disclosed. The amount by which any item is affected by such change shall also be disclosed to the extent ascertainable. Where such amount is not ascertainable, wholly or in part, the fact shall be indicated. If a Also, Prudence should change is made in the accounting policies which has no material effect not be followed and for the current previous year but which is reasonably expected to have Expected Losses, a material effect in later previous years, the fact of such change shall Anticipated losses be appropriately disclosed in the previous year in which the change is should not be adopted and also in the previous year in which such change has Accounted for. material effect for the first time. Applicable only if some change is there If the fundamental accounting assumptions of Going Concern, Consistency and Accrual are followed, specific disclosure is not required. If a fundamental accounting assumption is not followed, the fact shall be disclosed.

2 ICDS II VALUATION OF INVENTORIES 1 The accounting policies adopted in measuring inventories including the cost formulae used. Where Standard Costing has been used as a measurement of cost, details of such inventories and a confirmation of the fact that standard cost approximates the actual cost. 3CD Clause 14 (a) 1. Inventories are valued at Cost or NRV whichever is lower : Determination of Method:- -Weighted Average or -First In First Out Techniques of Valuation:- -Specific Identification method or -Standard Coting Method or - Retail Price Method 2 The total carrying amount of inventories and its classification appropriate to a person. 3CD Clause 35 Inventory has been valued as per exclusive method however as per the Guidance Note on Tax Audit (issued by ICAI), even we can value the inventory on Inclusive Method basis, the same will be tax neutral. Total amount of inventory with bifurcation Raw Material WIP Finished Goods Spares (Clause of financial statement may also be referred )

3 ICDS III CONSTRUCTION CONTRACTS 1 The amount of contract revenue recognised as revenue in the period; and the methods used to determine the stage of completion of contracts in progress. Management certificate Total Amount recognized as contract revenue in the current financial year is Rs XX,xxx Proportion of contract cost with respect to estimated contract cost method/surveys of work performed method/physical proportion method has been used to determine the stage of completion of contracts in progress, for calculation of percentage of completion 2 A person shall disclose the following for contracts in progress at the reporting date, Each contract needs to be looked upon. Advance as on BS to be reported Amount to be shown namely: amount of costs incurred and recognized profits less recognized losses up to the reporting date; the amount of advances received; and the amount of retentions.

4 1 ICDS IV REVENUE RECOGNITION In a transaction involving sale of good, total amount not recognised as revenue during the previous year due to lack of reasonably certainty of its ultimate collection along with nature of uncertainty. Not Applicable/The Rs XX,xx amount was not recognized due to lack of reasonable certainty (Reasons to be Given) 2 The amount of revenue from service transactions recognised as revenue during the previous year. Amount of service revenue is to be shown 3 The method used to determine the stage of completion of service transactions in progress. There is no service transaction in progress at the end of the previous year. OR Revenue from service contracts with duration of not more than ninety days has been recognised when the rendering of services under that contract is completed or substantially completed. OR Proportion of contract cost with respect to estimated contract cost method/surveys of work performed method/physical proportion method has been used to determine the stage of completion of contracts in progress, for calculation of percentage of completion OR when services are provided by an indeterminate number of acts over a specific period of time, revenue has been recognised on a straight line basis over the specific period.

5 4 For service transactions in progress at the end of previous year Each contract needs to Amount to be Reported be looked upon. Advance as on BS to be reported amount of costs incurred and recognised profits less recognised losses upto end of previous year; the amount of advances received; and the amount of retentions. ICDS V TANGIBLE FIXED ASSETS 1 Description of asset or block of assets 3CD Clause 18 As per clause 18 of Tax audit report 2 3 Rate of depreciation Actual cost or written down value, as the case may be 4 Additions or deductions during the year with dates; in the case of any addition of an asset, date put to use; including adjustments on account of Central Value Added Tax credit claimed and allowed under the CENVAT Credit Rules, 2004; change in rate of exchange of currency;

6 subsidy or grant or reimbursement, by whatever name called 5 6 Depreciation allowable Written down value at the end of year ICDS VII GOVERNMENT GRANTS 1 Nature and extent of Government grants recognised during the previous year by way of deduction from the actual cost of the asset or assets or from the written down value of block of assets during the previous year. 2 Nature and extent of Government grants recognised during the As per Profit & Loss previous year as income. Account 3 Nature and extent of Government grants not recognised during the previous year by way of deduction from the actual cost of the asset or assets or from the written down value of block of assets and reasons MRL, Fixed asset register/schedule and grants received thereof. Particular s Total amount of Grants For FA recognize d as deduction from FA Nature and Amount to be Reported For FA Nature, Reason and Amount to be Reported not recognise d as deduction from FA Other than FA recognise d as income Nature and Amount to be Reported

7 4 Nature and extent of Government grants not recognised during the MRL & check grants previous year as income and reasons thereof. received from financial ICDS IX BORROWING COSTS 1 The accounting policy adopted for borrowing costs. Proper working should be prepared and maintained Other than FA not recognise d as income Nature, Reason and Amount to be Reported In case of specific borrowing, actual borrowing cost has been capitalized on that asset In case of general borrowing, borrowing cost is being capitalized as per Para 6 of ICDS IX 2 The amount of borrowing costs capitalised during the previous year. Financials Amount needs to be disclosed ICDS X PROVISIONS, CONTINGENT ASSETS AND CONTINGENT LIABILITIES 1 A brief description of the nature of the obligation. The carrying amount at the beginning and end of the previous year. Particular Amount s (with descriptio n) Opening Balance of provisions Additional provisions made during the previous year, including increases to existing provisions. Add: Provision Made during the year

8 Amounts used, that is incurred and charged against the provision, during the previous year. Less: Amount charges against provision Unused amounts reversed during the previous year. Less : Amount reversed during previous years 6 The amount of any expected reimbursement, stating the amount of any Closing asset that has been recognised for that expected reimbursement. balance 7 Following disclosure shall be made in respect of each class of asset and related income recognised as provided in para 11, namely: Particular Amount s (with descriptio n) a brief description of the nature of the asset and related income; Opening Balance the carrying amount of asset at the beginning and end of the previous year; Add: amount added during the year

9 additional amount of asset and related income recognised during the year, including increases to assets and related income already recognised; and Less: Income received against asset amount of asset and related income reversed during the previous year. Less : Amount reversed during previous years DISCLAIMER: Closing balance This Communication/ updates / opinions shall not under any circumstance be construed as any kind of professional advice or opinion and I/we expressly disclaim any and all liability for any harm, loss or damage, including without limitation, indirect, consequential, special, incidental or punitive damages resulting from or caused due to your reliance and actions/inactions on the basis of this communication/ updates / opinions. Any action based on content in this communication / updates / opinions shall be at the sole risk, responsibility and liability of the individual / organisation taking such action.

PRACTICAL IMPLICATIONS

PRACTICAL IMPLICATIONS West Delhi Study Circle of NIRC of ICAI 29 th May 2017 CA. PRAMOD JAIN FCA, FCS, FCMA, LL.B, MIMA, DISA WHO TO FOLLOW ICDS Assessee having PGBP & Other Source income having Method