CONTENTS. Preface I-5 Foreword I-7 INTRODUCTION TO THE REVISED SCHEDULE VI TO THE COMPANIES ACT, 1956

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1 CONTENTS Preface I-5 Foreword I-7 1 INTRODUCTION TO THE REVISED SCHEDULE VI TO THE COMPANIES ACT, Presentation principles of corporate financial statements Revised Schedule VI in the framework of non-converged accounting standards Objective of the Book Applicability of the Revised Schedule VI Salient Features of the Revised Schedule VI Notes to Accounts Amendment to line items and sub-line items Rounding Off Policy Major Differences with IFRS Presentation and Disclosures Formats for Interim Financial Report and Other Regulatory Submissions Clauses 41(I)(ea) and 41(I)(eaa) to the Listing Agreement regarding presentation of Balance Sheet items in halfyearly and annual audited results Formats of the Balance Sheet and Statement of Profit and Loss prescribed under the SEBI (Issue of Capital & Disclosure Requirements) Regulations, SEBI Circular on Amendments to the Equity Listing Agreement - Formats for Disclosure of Financial Results 21 Annex 1.1 Annex 1.2 Annex 1.3 IFRSs Compliant Structure of Company Financial Statements : Review of Revised Schedule VI to the Companies Act 22 IFRSs based Financial Statements - Extracts of Financial Statements of British Airways 33 Amendments to the equity Listing Agreement - Formats for disclosures of financial results 42 I-9

2 CONTENTS I-10 2 CURRENT NON-CURRENT CLASSIFICATION 2.1 Introduction Current Assets Current Liabilities Operating Cycle Operating Cycle Analysis by line of business Guide to Computation of Operating Cycle Operating cycle for special type of enterprises Application of operating cycle for current and noncurrent classification of assets and liabilities Date of acquisition of assets and liabilities Current and Non-current Classification of Inventories Trade Receivables and Trade Payables Cash and Cash Equivalents Analysis of other assets and liabilities Issues in Classification of Loans Held for trading financial assets Current and non-current provisions PRESENTATION OF BALANCE SHEET 3.1 Meaning and form of Balance Sheet Legal Requirements Shortcomings of the Existing Schedule VI Revised format of Balance Sheet Shareholders Funds Share Capital Other Issues relating to Share Capital Capital reduction Redeemable preference shares Sweat Equity Loans to ESOP Trust for subscription to shares issued by the enterprise at the beginning of the plan Stock split 148

3 I-11 CONTENTS Calls in Advance Various Equity Terms Explained Reserves and Surplus Securities Premium Reserves Capital Redemption Reserve Debenture Redemption Reserve Revaluation Reserve Share Option Outstanding Account Other reserves Tax reserve Amalgamation reserve Capital reserve Surplus Money received against share warrant Share Application Money Pending Allotment Share Suspense Account Government Grant Non-current Liabilities Long-term and short-term borrowings Defer payment liabilities Deposits Loans and advances from related parties Finance Lease Obligations Other Loans and Advances Deferred tax liabilities and deferred tax assets AS 11 Foreign Currency Monetary Item Translation Difference Account Other long-term liabilities Trade payables Other Current Liabilities Long-term and short-term provisions Tangible Fixed Assets Intangible Assets Capital Work-in-Progress Intangible Assets under Development 212

4 CONTENTS I Capital spares Non-current and current investments Valuation of current investments Non-current investments Investment property Disclosure of investments Controlled Special Purpose Entities Disclosure of investment of partnership firm Long-term and short-term loans and advances Inventories Non-current and Current Trade Receivables Trade receivables backed by bank guarantee whether secured or unsecured Cash and Cash Equivalents Schedule VI requirement Restricted cash Compensating balances Bank overdraft Cash Balance in foreign currency Disclosure of Cash and Cash equivalents Other non-current assets and other current assets Contingent Liabilities and Commitments Guarantees Other Disclosures 264 Annex 3.1 Case Analysis PROFIT AND LOSS STATEMENT 4.1 Introduction Revenue from Operations Excise duty Analysis of Revenue Recognition of Policies Other Operating Revenue Revenue recognition policies of Larsen and Toubro Discount and rebates 303

5 I-13 CONTENTS 4.3 Other Income Dividend from subsidiary company Net gain or loss on sale of investment Exchange Fluctuation gain or loss Share of profit from partnership firm Share of profit from limited liability partnership Share of profit/loss from jointly controlled operations and jointly controlled assets Presentation of Revenue by a Finance Company Expenses, provisions and losses Disclosures of material consumed, goods purchase opening stock and closing stock by broad heads Employee Benefit Expense Finance Costs Depreciation and amortization expenses Other Expenses Prior Period Items Disclosures of earnings and expenditure in foreign currency Disclosure of transfer to reserve and provisions and withdrawal from provisions Information to be presented in the statement of comprehensive income or in the notes : IFRS requirements Classification of Exceptional and Extraordinary Items : A Case Analysis Profit and loss from discontinuing operations Meaning of Discontinuing Operations Schedule VI Presentation of Discontinuing Operations Other Comprehensive Income 344 Annex 4.1 Case Analysis 346 Annex 4.2 Key differences of the Statement of Profit with IFRSs MANAGEMENT DISCUSSION AND ANALYSIS 5.1 Introduction Meaning of Management Commentary 359

6 CONTENTS I Purpose of Management Commentary Principles of Management Commentary Elements of Management Commentary Comparative Position of Management Discussion and Analysis : The SEC requirements Concluding remarks 370 Annex 5.1 Management s discussion and analysis of Infosys Technologies Ltd DISCLOSURES UNDER ACCOUNTING STANDARDS : A CHECKLIST 6.1 The Checklist XBRL AWARENESS 7.1 Meaning of XBRL XBRL Document and Taxonomy Initiative of the IFRS Foundation XBRL activities of the IFRS Foundation Understanding XBRL Information in XIFRS XBRL India MCA Guidance to Creating and Filing Corporate Financial Statements in XBRL Format 418 Annex 7.1 Annex 7.2 Annex 7.3 Companies (Filing of Documents and Forms in Extensible Business Reporting Language) Rules, Frequently asked questions on XBRL filings issued by the Ministry of Corporate Affairs 423 Creation of XBRL document - Extracts of XBRL Filing Manual 431 Annex 7.4 Form No. 23AC - XBRL ASPECTS OF CORPORATE FINANCIAL REPORTING IN INDIA 8.1 Meaning and Objective of Financial Statements Components of Financial Statements Directors Report 450

7 I-15 CONTENTS 8.4 Directors Responsibility Statement Users of Financial Statements Users Information Needs Underlying Assumptions Qualitative Characteristics of Financial Statements Understandability Relevance Reliability Comparability Constraints on relevant and reliable information Elements of Financial Statements Measurement Bases Accounting Standards Compliance with the accounting standards Deviation from the accounting standards Duties of the statutory auditors as regards compliance with accounting standards Requirements of the Listing Agreement 467 Annex 8.1 Companies (Accounting Standards) Rules, Annex 8.2 Extracts of the Listing Agreement relevant to reporting of financial results 474 Annex 8.3 Extracts of the Clause 49 of the Listing Agreement PROGRESS IN IFRS IMPLEMENTATION 9.1 IFRS - The Global Standard Convergence versus Endorsement Approaches EU Endorsement process Condorsement July 2011 SEC Roundtable AICPA Recommends Allowing U.S. Public Companies to Choose IFRS G20 Initiatives IFRS Across the World IFRS Convergence in India Deferral of IFRS Implementation 521

8 CONTENTS I-16 Annex Taxation issues Delayed IFRS : Impact on GDR Issuers 524 Extracts of the Report of the Standing Committee on Finance ( ) 525 APPENDICES APPENDIX I : REVISED SCHEDULE VI 529 APPENDIX II APPENDIX III APPENDIX IV : EXTRACTS OF FINANCIAL STATEMENTS OF RELIANCE INDUSTRIES PREPARED UNDER THE REVISED SCHEDULE VI TO THE COMPANIES ACT 546 : COMMENTARY ON THE KEY ASPECTS OF THE ICAI GUIDANCE NOTE ON REVISED SCHEDULE VI TO THE COMPANIES ACT 585 : A NOTE ON ICAI FREQUENTLY ASKED QUESTIONS (FAQs) ON THE REVISED SCHEDULE VI TO THE COMPANIES ACT 589

INDIAN ACCOUNTING STANDARDS

Index 1- Brief Summary of Introduction of Ind-AS 2- Applicability of INDIAN ACCOUNTING STANDARDS () 3- List of with objective and scope BRIEF SUMMARY OF INTRODUCTION OF IND-AS Indian Accounting Standards