26 th Regional Conference of WIRC. Revised Schedule VI. CA N. Venkatram 16th December, 2011

Transcription

1 26 th Regional Conference of WIRC Revised Schedule VI CA N. Venkatram 16th December, 2011

2 Agenda Background and Applicability Structure of Revised Schedule VI Points and Issues Comparison with the Existing Schedule VI 1

3 Background and Applicability Original Notification for Schedule VI, issued on 21 st March, Recent notification of changes issued on 28 th February, Primarily necessitated by the proposed convergence to IFRS Exposure Draft on Guidance Note to Revised Schedule VI to the Companies Act, 1956 issued by ICAI 2

4 Background and applicability Revised Schedule VI not applicable to Insurance, Banking, Electricity Companies or companies which are required to prepare financial statements in a format prescribed by another statute Early adoption not permitted except when complete set of financial statements are prepared for any of the interim period Condensed financial statements will be prepared based on old Schedule VI format For IPOs/FPOs made during FY12 i.e. before 31 st Mar 2012, in order to comply with SEBI (ICDR) Regulations, the old Schedule VI format can be used. 3

5 Structure of Revised Schedule VI 1

6 Structure of Revised Schedule VI General Instructions Part I Form of the Balance Sheet General Instructions for preparation of Balance Sheet Part II Form of Statement of Profit and Loss General Instructions for preparation of Statement of Profit and Loss 1

7 Structure of Existing Schedule VI Part I Form of the Balance Sheet Option between A. Horizontal Form and B. Vertical Form General Instructions for preparation of Balance Sheet Part II Requirements as to Profit and Loss Account Part III Interpretation for the purpose of Parts I and II of Schedule VI unless the context otherwise requires Part IV Balance Sheet abstract and Company s General business profile 1

8 Basic Principles - Summary The Companies Act and/or Accounting Standards will prevail over the requirement of Schedule VI Disclosures as required by Accounting Standards and/or the Companies Act will additionally be made Balance disclosure with need. Additional sub-totals permitted. Cross referencing of Notes required Schedules dispensed with Rounding off simplified. 7

9 Format Balance Sheet (Rupees in ) Particulars Note No. Current Reporting period Previous Reporting period I EQUITY AND LIABILITIES (1) Shareholders funds (a) Share Capital (b) Reserves and surplus (c) Money received against share warrants (2) Share application money pending allotment (3) Non-current liabilities (a) Long-term borrowings (b) Deferred tax liabilities (Net) (c) Other Long term liabilities (d) Long-term provisions 8

10 Format Balance Sheet (Rupees in ) Particulars Note No. Current Reporting period Previous Reporting period I EQUITY AND LIABILITIES (4) Current Liabilities (a) Short-term borrowings (b) Trade payables (c) Other current liabilities (d) Short-term provisions TOTAL 9

11 Format Balance Sheet (Rupees in ) Particulars Note No. Current Reporting period Previous Reporting period II ASSETS (1) Non-current assets (a) Fixed assets (i) Tangible assets (ii) Intangible assets (iii) Capital work-in-progress (iv) Intangible assets under development (b) Non-current investments (c) Deferred tax assets (net) (d) Long-term loans and advances (e) Other non-current assets 10

12 Format Balance Sheet II Particulars ASSETS (2) Current assets (a) Current investments (b) Inventories (c) Trade receivables (d) Cash and cash equivalents (e) Short-term loans and advances (f) Other current assets TOTAL Note No. See accompanying notes to financial statements Current Reporting period (Rupees in ) Previous Reporting period 11

13 Balance Sheet Major Changes Concept of Current Assets/ Liabilities: Expected to realize in or is intended for sale or consumption in the normal operating cycle Held primarily for the purpose of being traded Expected to be realized within 12 months after the reporting date Cash and cash equivalents, unless there are restrictions from being exchanged or used to settle a liability for at least 12 months after the reporting date. 12

14 Balance Sheet Major Changes Concept of Current Assets/ Liabilities: Normal operating cycle: An operating cycle is the time between the acquisition of assets for processing and their realization in cash or cash equivalents. Where the normal operating cycle cannot be identified, it is assumed to have a duration of 12 months. In the case of current liabilities, the company must not have an unconditional right to defer settlement of liability for at least 12 months after the reporting date. Option of counterparty to settle by issue of equity not to be considered. 13

15 Balance Sheet Major Changes Heading changed to Equities and Liabilities from Sources of Funds ; and to Assets from Application of Funds New Line Items - Liabilities: Money received against Share Warrants Share Application Money pending allotment Trade Payables Separate headings for classifying Non-current and Current Liabilities 14

16 Balance Sheet Major Changes Other changes in disclosures: Share Capital: 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. Number of shares held by each shareholder in excess of 5 % together with their names. 15

17 Balance Sheet Major Changes Share Application Money pending allotment: Terms and conditions; Number of shares proposed to be issued; The amount of premium, if any; The period before which shares are to be allotted; Whether the company has sufficient authorized share capital to cover the share capital amount on allotment of shares Interest accrued on amount due for refund The period for which the share application money has been pending beyond the period for allotment alongwith the reasons thereof for such share application money being pending. Disclose under equity or liability, as applicable 16

18 Balance Sheet Major Changes Reserves and Surplus: Surplus i.e. balance in Statement of Profit and Loss, disclosing allocations and appropriations such as dividend, bonus shares and transfer to/from reserves etc. o P&L Appropriation account to be disclosed under Reserves and Surplus. Debit balance of P&L A/c to be shown as a negative figure under the head Surplus. 17

19 Balance Sheet Major Changes (contd) Long-term and Short-term borrowings: Loans and advances from related parties. Period and amount of continuing default as on the balance sheet date in repayment of loans and interest, shall be specified separately in each case. Exposure Draft of the Guidance Note to Revised ScheduleVI: Company need not disclose information for defaults other than repayment of loan and interest e.g. compliance with loan covenants Exposure Draft of the Guidance Note to Revised ScheduleVI: Current maturity of long-term borrowings should not be classified as short-term borrowing, they have to be classified under Other Current Liabilities. 18

20 Balance Sheet Major Changes Long-term and Short-term provisions: Provision for employee benefits Other (specify nature) Other Current liabilities: Current maturities of long-term debt Current maturities of finance lease obligations Interest accrued but not due on borrowings Interest accrued and due on borrowings Income received in advance Unpaid dividend 19

21 Balance Sheet Major Changes Other Current liabilities: Application money received for allotment of securities and due for refund and interest accrued thereon. Unpaid matured deposits and interest accrued thereon Acceptances included under trade payables Other payables (specify nature) 20

22 Balance Sheet Major Changes New Line Items/ terms - Assets: Separate headings for classifying non-current and current assets. Intangible assets under development Trade receivables Cash and cash equivalents 21

23 Balance Sheet Major Changes Tangible and Intangible Assets: Movement between opening and closing balances to be given. Details of reduction by way of reduction of capital, revaluation etc. to be given by way of a note. 22

24 Balance Sheet Major Changes (contd) Non-current investments: Includes Investment Property Under each classification, details shall be given of names of the bodies corporate, indicating separately whether they are: (i) subsidiaries (ii) associates, (iii) joint ventures, or (iv) controlled special purpose entities The nature and extent of the investment so made in each such body corporate (showing separately investments which are partly-paid). Exposure Draft of the Guidance Note to Revised Schedule VI: If a debenture is to be redeemed partly within 12 months and balance after 12 months, the amount to be redeemed within 12 months should be disclosed as current and balance should be shown as non-current. 23

25 Balance Sheet Major Changes Long-term loans and advances: Capital Advances; Security Deposits; Loans and advances to related parties (giving details thereof); Other loans and advances (specify nature). 24

26 Balance Sheet Major Changes Inventories: Raw materials; Work-in-progress; Finished goods; Stock-in-trade (in respect of goods acquired for trading); Stores and spares; Loose tools; Others (specify nature). Goods-in-transit shall be disclosed under the relevant sub-head of inventories. 25

27 Balance Sheet Major Changes Others: 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 preference shares shall also be disclosed separately. Exposure Draft of the Guidance Note to Revised Schedule VI: states that since Accounting Standards overrides Revised Schedule VI, in complying with AS 4 Contingencies and Events Occurring after the Balance Sheet Date, proposed dividend will have to be provided for. 26

28 Format Statement of Profit and Loss (Rupees in ) Particulars Note No. Current Reporting period Previous Reporting period I Revenue from operations II Other income III Total Revenue ( I + II ) IV Expenses: Cost of material consumed Purchases of Stock-in-Trade Changes in inventories of finished goods work- in-progress and Stock-in-Trade Employee benefit expense Finance costs Depreciation and amortization expense Other expense Total expenses 27

29 Format Statement of Profit and Loss (Rupees in ) Particulars Note No. Current Reporting period Previous Reporting period V Profit before exceptional and extraordinary items and tax (III IV) VI Exceptional Items VII Profit before extraordinary items and tax (V VI) VIII Extraordinary items IX Profit before tax (VII VIII) X Tax expense: (1) Current tax (2) Deferred tax XI Profit /(Loss) for the period from continuing operations (VII VIII) XII Profit/(loss) from discontinuing operations XIII Tax expense of discontinuing operations 28

30 Format Statement of Profit and Loss (Rupees in ) Particulars Note No. Current Reporting period Previous Reporting period XIV XV Profit / (loss) from Discontinuing operations (after tax) (XII-XIII) Profit / (loss) for the period (XI + XIV) XVI Earnings per equity share : (1) Basic (2) Diluted See accompanying notes to the financial statements 29

31 Statement of Profit and Loss Account Major Changes Profit and Loss: Now termed as Profit and Loss Statement for the year ended. Format specified in new Schedule. Disclose by nature of expense. Exceptional and extraordinary items need to be disclosed separately on the face of the Statement of Profit and Loss. Prior period items should be disclosed in the notes. 30

32 Statement of Profit and Loss Account Major changes Profit and Loss: Profit / loss before and after tax from discontinuing operations and the tax expense from discontinuing operations need to be disclosed separately on the face of the Statement of Profit and Loss. The items to be disclosed under Revenue from Operations have been specifically indicated for both finance companies and others. 31

33 Statement of Profit and Loss Account Major changes Profit and Loss: Employee Benefits expense should be disclosed separately as: Salaries and wages Contribution to provident and other funds Expense on ESOP and ESPP Staff welfare expenses 32

34 Statement of Profit and Loss Account Major changes Profit and Loss: Payments to auditor as: a. Auditor b. For taxation matters c. For company law matters d. For management services e. For other services f. For reimbursement of expenses 33

35 Statement of Profit and Loss Account Major changes Profit and Loss: Any item of income or expenditure which exceeds one percent of the revenue from operations or Rs. 100,000 whichever is higher should be disclosed separately. Broad heads shall be decided taking into account the concept of materiality and presentation of true and fair view of financial statements. 34

36 Disclosures no longer required Balance sheet Investments purchased and sold during the year Investments, sundry debtors and loans and advance pertaining to companies under the same management Break up of Bank Balances between Scheduled and Other banks, break up between current account, call account and deposit accounts, Details of names, amount, maximum amounts with non-scheduled bank Profit and Loss Account Commission, brokerage and non-trade discounts 35

37 Disclosures no longer required Notes Disclosure of Managerial remuneration and computation of net profits for calculation of commission Information on licensed capacity, installed capacity and actual production Part IV of Schedule VI (containing Balance Sheet abstract and Company s General Business Profile) 36

38 Points and Issues 1

39 Points and Issues Implementation Issues: Substantial efforts required by companies to recast and auditors to audit previous reporting period s figures Challenges faced whilst preparing consolidated financial statements as per revised Schedule VI for entities which have a large number of subsidiaries, associates and joint ventures in such a short duration 38

40 Points and Issues Share Capital Disclosure of shareholding of each shareholder holding more than 5% of share Challenges in getting information from Depository Participants, GDR / ADR custodians Share warrants Reserves and Surplus (Para 6B) Lack of clarity whether proposed dividend needs to be provided for. Exposure Draft of the Guidance Note to Revised Schedule VI: states that AS 4 overrides the requirements of Revised Schedule VI and hence proposed dividend should be provided in financial statements. 39

41 Points and Issues Long-term borrowing (Para 6C) Lack of clarity whether the long-term borrowings will get covered for the purposes of determining limits u/s 293(1)(d) Lack of clarity whether Advances and Deposits need to be treated as borrowings Interest accrued and due on secured loans Bonds issued with options to the holder to convert into shares Preference shares Breach of debt covenants 40

42 Points and Issues Fixed Assets (Para 6I) Assets under lease shall be separately specified under each class of asset. Leasehold Land Fixed Assets or Advances? Intangible assets under development Exposure Draft of the Guidance Note to Revised Schedule VI: Theterm underlease shouldbetakentomeanassets: givenonoperatinglease in thecase oflessor and assets held under finance lease in the case of lessee. 41

43 Points and Issues Non-Current Investments (Para 6K) Clarification required for nature and definition of Controlled Special Purpose Entity Detailed disclosures relating to investment in partnership firms Provision for diminution in value of long-term investments Investments to be disposed off within 12 months Exposure Draft of the Guidance Note to Revised Schedule VI: Value of each long term investment should be carried and disclosed at cost less provision for other than temporary diminution in the value thereof with a specific disclosure of the provision netted off for each long term investment. 42

44 Points and Issues Long-term Loans and Advance (Para 6L) Capital Advance to be considered as a Long-term Advance and not Capital Work-In-Progress Advance Tax whether to consider as current or non-current asset based on expectation MAT recoverable Exposure Draft of the Guidance Note to Revised Schedule VI: Capital advances should be treated as non-current assets irrespective of when the fixed assets are expected to be received and should not be classified as Shortterm/ current. Exposure Draft of the Guidance Note to Revised Schedule VI: Amount of allowance for bad and doubtful loans and advances should be disclosed separately for each category of loans and advances. 43

45 Points and Issues Long-term Loans and Advance (Para 6L) Exposure Draft of the Guidance Note to Revised Schedule VI: No specific disclosure requirement for the unamortized portion of expense items such as share issue expenses, ancillary borrowing cost and discount or premium relating to borrowings. ED suggests that such amounts can be disclosed under the head Other Current / Non-current assets depending on whether the amount will be amortized in the next 12 months or thereafter. 44

46 Points and Issues Trade Receivables Ageing based on due date of invoice and not on issue date of invoice. Will require significant IT system changes Unbilled revenue ( other assets) Inventories Goods in Transit should be included under relevant heads with suitable disclosure Cash and cash equivalents Needs modification 45

47 Points and Issues Contingent Liabilities and Commitments: Exposure Draft of the Guidance Note to Revised Schedule VI: Para states that 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). Example: Commitments in the nature of : buy-back arrangements; to fund subsidiaries and associates; non-disposal of investments in subsidiaries and undertakings; derivative related commitments 46

48 Points and Issues Revenue from Operations : Need to be disclosed separately as revenue from: Sale of products Sale of services Other operating revenues What constitutes Other Income? Exposure Draft of the Guidance Note to Revised Schedule VI: Sale of Fixed Assets is not an operating activity of a company and hence profit on sale of fixed assets should be classified as Other Income. Similarly sale of scrap arising from operations for a manufacturing company should be treated as Other Operating Income since the same arises on account of the company s main operating activity. 47

49 Points and Issues Other Income : Exposure Draft of the Guidance Note to Revised Schedule VI: Dividend from subsidiary companies should be recognized in accordance with AS 9 Revenue Recognition i.e. only when they have a right to receive the same on or before the Balance Sheet date. In the first year of application of Revised SchVI, dividend income recognized in the immediately preceding year based on the aforesaid requirements of Old Sch VI should not be derecognized for the comparatives presented. Other Non-Operating Income: Exposure Draft of the Guidance Note to Revised Schedule VI: Income disclosed under this head net off expenses directly attributable to such income. However, the expenses so netted off should be separately disclosed. 48

50 Points and Issues Share of Profits/Losses in an LLP: Exposure Draft of the Guidance Note to Revised Schedule VI: Disclosure is to be given for all incomes which account for 10% or more of the total value of income derived from services rendered or supplied. Cost of Materials Consumed: Exposure Draft of the Guidance Note to Revised Schedule VI: Where packing materials are not classified as raw materials the consumption thereof should be disclosed separately. Exposure Draft of the Guidance Note to Revised Schedule VI: In case there has been sale of raw material by the company, care should be taken to exclude the cost of raw material sold from the figure of consumption. 49

51 Points and Issues Changes in Inventories of FG, WIP and Stock in Trade: Exposure Draft of the Guidance Note to Revised Schedule VI: Disclosure required of the difference between opening stock and closing inventories separately for Finished Goods, Work in Progress and Stock in Trade. Contribution to provident and other funds: Exposure Draft of the Guidance Note to Revised Schedule VI: Penalties and other similar amounts paid to the statutory authorities are not strictly in the nature of contribution and should not be disclosed under this head. 50

52 Points and Issues Tax Expense: Exposure Draft of the Guidance Note to Revised Schedule VI: Any interest or 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. Exposure Draft of the Guidance Note to Revised Schedule VI: Penalties levied under Income Tax laws should not be classified as Current Tax. Other tax penalties should be classified under Other Expenses. Exposure Draft of the Guidance Note to Revised Schedule VI: Wealth tax payable by a company on assets liable for wealth tax should not be included within current tax since the same is not a tax on income. Accordingly it should be included in Rates and Taxes under Other Expenses. 51

53 Points and Issues Disclosure of net gains arising on foreign exchange fluctuations whether to be disclosed in Other Operating Revenues or Other Income Exposure Draft of the Guidance Note to Revised Schedule VI: Para 9.1.9: Net foreign exchange gain should be classified as Other Income. Para 10.2:Any gains / losses on account of foreign exchange fluctuations are to be disclosed separately. 52

54 Points and Issues Other Disclosures: Exposure Draft of the Guidance Note to Revised Schedule VI: Manufacturing Companies may disclose the following under broad heads: Consumption of major items of raw materials Goods purchased for trading, if any. Major items of opening and closing stock (this is not specifically required by Revised Schedule VI) Considering the requirement to disclose gross income in case of a service company and sales in case of a company falling in more than one category, disclosure of sale of finished goods should also be made under broad heads. 53

55 Points and Issues Provisions for losses of subsidiary companies: Exposure Draft of the Guidance Note to Revised Schedule VI: Disclosure relating to provision for losses of subsidiary companies should be made separately only where such a provision has been made in respect of the investment in such loss-making subsidiary. 54

56 Points and Issues Status of recent notifications for exemptions from certain disclosures (quantitative etc.). Disclosure under the MSME Act. Exposure Draft of the Guidance Note to Revised Schedule VI: Para 6.8: Though not specifically required by the Revised Schedule VI, disclosures mandated by other Acts or legal requirements will have to be made in the financial statements. 55

57 Comparison between Old and New Schedule VI 1

58 Comparison between the existing Schedule VI Particulars Old Schedule VI Revised Schedule VI Authority Form of Balance Sheet Form of Profit and Loss Account Provisions of Schedule VI will prevail over Accounting Standards Both horizontal and vertical form were allowed No format specified for Profit and Loss Account Provisions of Accounting Standards will prevail over Schedule VI Only vertical form of Balance Sheet has been specified in the revised Schedule VI Form of Profit and Loss Account specified under Part II 57

59 Comparison between the existing Schedule VI Particulars Old Schedule VI Revised Schedule VI Headings in Balance Sheet Profit and Loss Appropriation Account Sources of funds and Application of funds Opening surplus, proposed dividend and transfer to/ from reserves were shown in Profit and Loss Appropriation Account Equities and Liabilities and Assets Transfer from/ to reserves to be shown under the heading Reserves & Surplus only. No requirement of separate Profit and Loss Appropriation Account. 58

60 Comparison (Cont d) Particulars Old Schedule VI Proposed Dividend Quantitative Details Proposed Dividend required to be provided for Quantitative details of Raw materials, purchases, stocks and turnover to be given for each class of goods. Also licensed and installed capacity and production quantity to be given for manufacturing companies Revised Schedule VI Proposed Dividend to be disclosed in notes No quantitative details required. Limited requirements for disclosure for CIF and FOB values etc. 59

61 Comparison (Cont d) Particulars Old Schedule VI Revised Schedule VI Rounding off of Figures appearing in financial statement Turnover of less than Rs. 100 Crs - R/off to the nearest Hundreds, thousands or decimal thereof Turnover of Rs. 100 Crs or more but less than Rs. 500 Crs - R/off to the nearest Hundreds, thousands, lakhs or millions or decimal thereof Turnover of Rs. 500 Crs or more - R/off to the nearest Hundreds, thousands, lakhs, millions or crores, or decimal thereof Turnover of less than Rs. 100 Crs - R/off to the nearest Hundreds, thousands, lakhs or millions or decimal thereof Turnover of Rs. 100 Crs or more - R/off to the nearest lakhs, millions or crores, or decimal thereof 60

62 Comparison (Cont d) Particulars Old Schedule VI Revised Schedule VI Share Capital Unpaid Calls No requirement to disclose separately bonus shares issued during last 5 years. Also no requirement for details of shareholders holding more than 5% of shares Disclosure was required unpaid calls by directors of the company. In addition to the disclosure requirements of old Schedule VI following additional disclosures are also required Number of bonus shares/ shares allotted without payment being received in cash/ shares bought back during last 5 years Names and number of shares held by shareholders holding more than 5 percent of total shares Disclosure will now be required for total unpaid calls by directors and officers of the company. 61

63 Comparison (Cont d) Particulars Old Schedule VI Revised Schedule VI Net Working Capital Fixed Assets Current assets & Liabilities are shown together under application of funds. The net working capital appears on balance sheet. There was no bifurcation required in to tangible & intangible assets. Capital advances used to be shown under the Head Capital Work in Progress under Fixed Assets Assets & Liabilities are to be bifurcated in to current & Non-current and to be shown separately. Hence, net working capital will not be appearing in Balance sheet. Fixed assets to be shown under non-current assets and have to be bifurcated in to Tangible & intangible assets. Capital advances to be shown under the head Long term Loans and Advances 62

64 Comparison (Cont d) Particulars Old Schedule VI Revised Schedule VI Borrowings Short term & long term borrowings are grouped together under the head Loan funds sub-head Secured / Unsecured Deposits Lease deposits are part of loans & advances Long term borrowings to be shown under non-current liabilities and short term borrowings to be shown under current liabilities with separate disclosure of secured / unsecured loans. Period and amount of continuing default as on the balance sheet date in repayment of loans and interest to be separately specified Lease deposits to be disclosed as long term loans & advances under the head non-current assets 63

65 Comparison (Cont d) Particulars Old Schedule VI Revised Schedule VI Investments Both current & noncurrent investments to be disclosed under the head investments Loans & Advances Loans & Advance are disclosed along with current assets Current and non-current investments are to be disclosed separately under current assets & non-current assets respectively. Loans & Advances to be broken up in long term & short term and to be disclosed under non-current & current assets respectively. Deferred Tax Assets / Liabilities Loans & Advance to subsidiaries & others to be disclosed separately. Deferred Tax assets / liabilities to be disclosed separately Loans & Advance from related parties & others to be disclosed separately. Deferred Tax assets / liabilities to be disclosed under non-current assets / liabilities as the case may be. 64

66 Comparison (Cont d) Particulars Old Schedule VI Revised Schedule VI Cash & Bank Balances Bank balance to be bifurcated in scheduled banks & others No such bifurcation required. Bank balances in relation to earmarked balances, held as margin money against borrowings, deposits with more than 12 months maturity, each of these to be shown separately. Profit & Loss (Debit Balance) P&L debit balance to be separately disclosed in the Balance Sheet. Debit balance of Profit and Loss Account to be shown as negative figure under the head Surplus. Therefore, Reserve & Surplus can have a negative balance. 65

67 Comparison (Cont d) Particulars Old Schedule VI Revised Schedule VI Sundry Debtors Other current liabilities Debtors outstanding for more than six months from invoice date to be shown separately No specific mention for separate disclosure of Current maturities of long term debt No specific mention for separate disclosure of Current maturities of finance lease obligation Debtors outstanding for more than six months from the date they became due to be shown separately Current maturities of long term debt to be disclosed under other current liabilities. Current maturities of finance lease obligation to be disclosed. 66

68 Comparison (Cont d) Particulars Old Schedule VI Revised Schedule VI Separate line item Disclosure criteria any item under which expense exceeds one per cent of the total revenue of the company or Rs. 5,000 which ever is higher; shall be disclosed separately any item of income / expense which exceeds one per cent of the revenue from operations or Rs. 1,00,000, which ever is higher; to be disclosed separately 67

69 Comparison (Cont d) Particulars Old Schedule VI Revised Schedule VI Expense classification Finance Cost Foreign exchange gain / loss Function wise & nature wise Finance cost to be classified in fixed loans & other loans Gain / Loss on foreign currency transaction to be shown under finance cost Expenses in Statement of Profit and Loss to be classified based on nature of expenses Finance cost shall be classified as interest expense, other borrowing costs & Gain / Loss on foreign currency transaction & translation Gain / Loss on foreign currency transaction to be separated into finance costs and other expenses 68

70 Comparison (Cont d) Particulars Old Schedule VI Revised Schedule VI Purchases The purchase made and the opening & closing stock, giving break up in respect of each class of goods traded in by the company and indicating the quantities thereof. TDS amount on Interest, royalty received TDS amount was required to be shown for Interest income etc. Goods traded in by the company to be disclosed in broad heads in notes. Disclosure of quantitative details of goods is diluted. Goods-in-transit to be separately disclosed. No requirement of disclosing TDS amounts separately 69

71 Comparison (Cont d) Particulars Old Schedule VI Revised Schedule VI Managerial Remuneration and Commission Payment to directors and detailed calculation under section 198 was required to be disclosed No disclosure requirements for Managerial Remuneration 70

72 Comparison (Cont d) Particulars Old Schedule VI Revised Schedule VI ESOP expenses Part III- Interpretation Part IV- Balance Sheet Abstract No requirement to show separately as part of Employee Benefits expense Terms provision, reserve, capital reserve, quoted investment etc. were defined Details of company registration number, capital raised, Balance Sheet details, products etc. were required to be attached with financials Expense on Employee Stock Option Scheme (ESOP) and Employee Stock Purchase Plan (ESPP) to be shown separately as part of Employee Benefits expense No such specific definitions. No such requirement. 71

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