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HIMANSHU KISHNADWALA
8 AUGUST 2012
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1. Format / disclosures Revised Schedule VI
2. Disclosures as per notified Accounting Standards
(i.e. Companies AS Rules, 2006)
3. Disclosures as per Companies Act, 1956
Buyback of shares (as per sec 77)4. Disclosures as per other Statutes
E.g. MSME Act, RBI notifications for NBFCs
5. Disclosures as per ICAI pronouncements
ICAI announcement for derivatives6. Disclosures as per Clause 32 of listing agreement
Loans/advances to subsidiaries, etc.
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For FY commencing on or after 1st April 2011
First year of applicability FY 2011-12
Cannot be applied earlier on voluntary basis
Corresponding figures for 2010-11 mandatory
Applicable to ALL companies (except those engagedin banking, insurance)
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Concept of schedules eliminated
All information to be given in notes to accounts.
Extensive cross-referencing required
Terms used to carry meaning as defined by the
notified Accounting Standards. If conflict between requirements of the Act and / orAS, requirements of the Act and / or AS will prevailover RS VI.
Only vertical format to be followed Format follows permanency in presentation of
assets / liabilities
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PL now to be called Statement of Profit and Loss
Formats given for both BS and Stt of PL
Option of giving functional classification of expenses in PL
not available
No Appropriation account in Stt of PL All appropriations to be disclosed in Reserves & Surplus
Surplus in Statement of PL
Debit balance of Profit/Loss to be deducted from
Reserves and Surplus Final figure of Reserves & Surplus can even be negative
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Disclosure of additional line items in BS / PL?
Instructions to RS VI mentions that the
requirements mentioned therein are minimum
requirements. Hence additional line items can be
included say, for EBDITA, Net Working Capital, Industry Specific Disclosures?
Industry specific disclosures for NBFCs, also
required to be given as required by the respective
statutes.
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Managerial remuneration and computation thereof;
Details of Licensed capacity, Installed capacity
Quantitative information about actual production,
purchases, sales, consumption, etc.;
Investments purchased/sold during the year; Investments, sundry debtors and loans/advances
pertaining to companies under the same
management;
Maximum amounts due on account of loans andadvances from directors or officers of the company;
Information under Part IV of Schedule VI
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only if opted for
Same unit of measurement in entire Financial Stts
Existing Schedule VI Revised Schedule VI
Turnover < Rs 100 Crores R/off
to the nearest hundreds, thousands
or decimal thereof. Turnover Rs 100 to Rs 500 Crores
R/off to the nearest hundreds,
thousands, lakhs or millions or
decimal thereof.
Turnover > Rs 500 Crores R/off to
the nearest hundreds, thousands,lakhs millions or crores or decimal
thereof.
Turnover < Rs 100 Crores R/off to
the nearest hundreds, thousands,
lakhs or millions or decimal thereof.Turnover > Rs 100 Crores R/off to
the nearest lakhs, millions or crores, or
decimal thereof.
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Section 115JB requires PL account to be preparedunder part II of pre-revised Schedule VI for MAT
purposes
ICAI GN on 44AB suggests to use format
prescribed under governing law For a company having year end other than
Financial Year, which format to be followed for FS?
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Shareholders
Funds
Non Current
Liabilities
Current
Liabilities
Share Capital Long term
borrowings
Short term
borrowings
Reserves and surplus Deferred taxliabilities
Trade Payables
Money received
against share
warrants
Other Long term
liabilities
Other current
liabilities
Long-term
provisions
Short term
provisions
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A liability is classified as Current if it satisfies any
of the following criteria:a) it is expected to be settled in the companys
normal operating cycle;
b) it is held primarily for the purpose ofbeing traded;
c) it is due to be settled within 12 months after the
reporting date; or
d) the company does not have an unconditional
right to defer settlement of the liability forat least
12 months after the reporting date.
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An asset is classified as Current when it satisfies
any of the following criteria:(a) It is expected to be realized in, or is intended for
sale or consumption in the companys normal
operating cycle;
(b) It is held primarily for the purpose of being traded;
(c) It is expected to be realized within 12 months
after the reporting date; or
(d) It is cash or cash equivalent unless it is restricted
from being exchanged or used to settle a liability for
at least 12 months after reporting period date.
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An Operating Cycle (OC)
is the time between theacquisition of assets forprocessing and theirrealization in cash or
cash equivalents.
If an OC cannot be identified, it is assumed to have a
duration of 12 months
If a company is engaged in multiple businesses, the OC
can be different for each line of business
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Different OC for different customers based on different
credit terms? say., PSU and non PSU customers
Can OC differ from year to year?
Whether lead time for procuring raw material should
be included in OC?
Is credit period allowed by supplier reduced in
determination of OC? To determine OC to consider:
o Normal business behaviour
o Industry practice
o Liquidity position ??
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Industry specific OC:
Manufacturing Companies: To determine business-wise Real Estate Companies: Can be determined project-wise
Finance Companies: Difficult to determine to beassumed at 12 months
Service companies: To determine business-wise
Relevance of OC for classification of: Trade receivables / payables OC relevant Supplier/Customer advances OC relevant
Borrowings OC relevant Loans 12 months period Other assets / liabilities 12 months period
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Manufacturing Companies OC considered as 12
months Bajaj Electricals Ltd,
Grasim Industries Ltd
Hindustan Unilever Ltd,
Excel Industries Ltd Ultratech Cement Ltd
Finance Company OC considered as 12 months
M & M Financial Services Ltd
Multi activity company OC different for specificproject / contract / product line / service
Larsen & Toubro Ltd
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Real Estate Industry: Disclosures regarding OC
Oberoi Realty Limited
The Companys normal operating cycle in respect of
operations relating to under construction real estate
projects may vary from project to project depending upon
the size of the project, type of development, project
complexities and related approvals. Operating Cycle for
all completed projects and hospitality business is
based on 12 months period. Assets & Liabilities have
been classified into Current and Non Current based on
Operating Cycle of respective businesses.
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Real Estate Industry: Disclosures regarding OC
Mahindra Lifespace Developers Limited
..
Based on the nature of activity carried out by the
company and the period between the procurement andrealisation in cash and cash equivalents, the Company
has ascertained its operating cycle as 5 years for the
purpose of Current Non Current classification of
assets & liabilities.
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Determining Whether Current or Non-Current?
For Assets: To considerexpectation of receiptFor Liabilities: To considerobligation to pay
Whether accounting policy for classification of items
into Current / Non Current is to be disclosed?
Neither the RS VI nor the GN on RS VI requires suchdisclosure
However, disclosure preferable in case of OC > 12 months
In other cases, though not required, maybe given as it lends
higher transparency to the FS
Classification may have impact on CARO reporting
Whether funds raised on short term basis are used for long
term purposes?CNK 20
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Whether Current or Non-Current?
Payables or Operating liabilities within operating
cycle, but not paid within 12 months.
Technical / minor breach on some covenants of
Term Loans; Slow-moving Raw Materials
Provision for employee benefits like Gratuity and
Leave encashment
Stock of Finished Goods unsold for 15 months
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Whether Current or Non-Current
Loan given to Subsidiary (repayable on demand)
Loan from Holding company (repayable on demand)
Deposits :
Electricity/ Lease deposits
Others
Advance tax (net of provisions)
Provision for tax (net of advance tax)
Audit Fees payable?
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Share Capital
Shares in the company held by each shareholderholding more than 5% shares specifying the number
of shares held.
Whether names to be disclosed based on legal
ownership or beneficial ownership? Section 187C of the Companies Act, 1956.
Name of depository to be given?? (Refer Tata Motors Ltd)
Disclosure for each class of shares as at BS date
Comparative information necessary even if in 2011-12,the amounts are below 5 %
Additional disclosures in line with Ind-AS 1 / IAS 1.
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Presentation of Preference Share Capital for a
company who has adopted AS 30 Whether to bepresented as Share Capital or Liability? RS VI deals only with presentation and disclosure
Accounting is governed by applicable AS.
If a company early adopts AS 30/31/32 it has to decideclassification between the liability/equity of preference
shares based on principles of AS 31.
ICAI GN mentions that only Accounting Standards notified
by Companies (Accounting Standards) Rules, 2006 are tobe followed, reclassification of Preference shares not
possible under RS VI.
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To be disclosed as a separate line-item on the face of
Balance Sheet between Shareholders Funds andNon-current Liabilities.
Share application money not exceeding the issued
capital and to the extent not refundable is to
shown under this line item.
Share application money to the extent Refundable
shall be shown under Other current liabilities.
Inadequacy of Authorised Capital?
Transfer to IEPF after 7 years from the date amount
becomes due for payment?
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Disclosure requirements:
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 tocover the share capital amount on allotment
Interest accrued on amount due for refund Period for which share application money is pending beyond the
period for allotment as mentioned in the share application formalong with the reasons thereof for such share application moneybeing pending is to be disclosed.
Above disclosures to be made for amounts classified underboth Shareholders funds or Current Liabilities
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Disclosure requirements:
Nature of Security to be specified in each case (overalldisclosure not allowed)
Bonds & Debentures (along with rate of interest and
particulars redemption or conversion, as the case may be)
shall be stated in descending order of maturity orconversion date, as the case may be.
Particulars of any redeemable bonds/debentures which
the company has the power to reissue shall be disclosed.
Terms of Repayment of term loans and other loans Period and amount of continuing default as on BS date in
repayment of loans and interest, shall be specified
separately in each case.CNK 27
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How to disclose details of borrowings:
No Standard format prescribed.
Whether to give name / amount of borrowing /
installments due, etc. for each bank or institution?
Disclosure of Continuing Default
Disclosure in RS VI vs. reporting in CARO
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Illustrative disclosures by companies:
Grasim Industries Ltd
Rupee term loan secured by exclusive charge on certain
specific FA of the Co located at.. Quarterly ballooning
repaymentfrom October 20XX, over xx years.
Foreign Currency Loans secured by first pari-passu
charge on fixed assets, both present & future of the Co
located at . Repayable after 5 years, bulletrepaymentin March, 20XX.
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Illustrative disclosures by companies: Reliance Industries Ltd
Maturity Profile and Rate of Interest of Bonds
Maturity Profile of Unsecured Term Loans:
Rate of
InterestMaturity Profile
2015-16 2016-17 2018-19 2026-27 2027-28 2046-47 2096-97
2.86% 1,011 - - - - - -
6.21% - 254 - - - - -
6.34% - - 193 - - - -
Maturity ProfileParticulars 1-2 yrs 2-3 yrs 3-4 yrs Beyond 4 yrs
Term Loans from
Banks
12,920 3,418 5,926 15,005
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Illustrative disclosures by companies: Prism Cement Ltd
Secured Term Loan from Banks and Others
Security Amount as
at
31.03.2012
Repayment Terms
Secured by charge on movable and immovableproperties of the Cement division, both present and
future, subject to prior charges on specific assets in
favour of Cement Division's bankers towards
Working Capital facilities
500 Quarterly in equalinstallments payable over a
period of 4 years.
Secured by first charge on vehicles of HRJ Division
together with all accessories and addition to or inthe vehicles, whether present or future
3.50 EMI over a period of 5
years.
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Illustrative disclosures by companies: Ramco Industries
Term Loan from Banks (Secured) Repayment Schedulegiven separately in the NTA along with other disclosures
Same not cross referenced
Rate ofInterest
Outstandingas on
31.03.2012
Repayment Schedule
2013-14 2014-15 2015-16 2016-
17
13.25% 164.2 131.20 33 - -
12.25% 5000 2500 2500 - -
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Illustrative disclosures by companies: Petronet LNG
Secured by first ranking mortgage and first charge on pari passu basison all movable and immovable properties, both present & future
including Current Assets except on trade receivables on which second
charge is created on pari passu basis.Loan From ROI (as on
31.03.2012)
No of
Installments
Year of
Maturity
Amount
Outstandingas on
31.03.2012
Amount
Outstandingas on
31.03.2011
Indian Banks 11% 20 2017 55,712 117,500
IFC
(Washington)
11.37% 17 2022 23,000 23,000
Total XXXXX XXXXX
Less: Shown in Current Maturities of Long term Debt (XXXX) (XXXX)
Balance shown as above XXXX XXXX
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Illustrative disclosures by companies: UltraTech Cement Ltd
Term Loans from Banks in Foreign Currency Secured by way of firstcharge, having pari passu rights, on the Companys movable and immovable
assets (save and except stocks and book debts), both present and future ,
situated at certain locations, in favour of Cos lenders/trustees.
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Particulars Repayment
Schedule
As at March
31,2012
As at March
31,2011
Hongkong & Shanghai Banking
Corporation Ltd, Singapore
(Japanese Yen 208.80 Crores)
In 3 equal annual
installments beginning
September 2012
93.82 93.82
DBS Bank Ltd, Singapore
(Japanese Yen 184.80 Crores)
January 2014 98.40 98.40
Less: Current Portion of Foreign
Currency Loans shown under
Other Current Liabilities
(XXX) (XXX)
Total XXX XXX
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Disclosure for Defaults
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Under RS VI Under CARO Continuing Default for LT
Borrowings
Default for ST Borrowings
Defaults in repayment of any
dues
Applies to all items ofborrowings like bonds /
debentures, deferred
payment liabilities, finance
lease obligations, etc.
Applies only to dues offinancial institutions, banks
and debentures
No disclosure if default made
good on BS date
Reporting even if default
made good on BS date
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Trade Payable: A payable is classified as trade payable if it
is in respect of amount due on account ofgoods purchasedor services received in the normal course of business.
Under earlier Sch VI, Sundry Creditors (for goods, services,
etc.) included above amounts plus amounts due on account
of contractual obligations. Under RS VI, amounts due under contractual obligations
cannot be included within trade payables e.g.
Contribution to PF, accrued interest, payables for fixed
asset purchases, etc. Such amounts are to be disclosed under Other current
liabilities with a suitable description.
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Fixed Assets
Fixed Assets: Tangible
(a) Land
(b) Buildings
(c) Plant and Equipment
(d) Furniture and Fixtures
(e) Vehicles
(f) Office Equipment
(g) Others (Specify nature)Assets under lease to be separately specified under
each class of asset.CNK 38
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Fixed Assets: Intangible
(a) Goodwill
(b) Brands/trademarks
(c) Computer software
(d) Mastheads and publishing titles
(e) Mining rights
(f) Copyrights and patents and other intellectual
property rights, services and operating rights.
(g) Recipes, formulae, models, designs and prototypes
(h) Licenses and franchise
(i) Others (specify nature)
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Capital Work in Progress
Capital advances not to be included
Capital Advances should be included under Long
Term Loans & Advances
Intangible Assets under Development
This is a new head under Revised Schedule VI
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Other disclosures regarding Tangible and
Intangible Assets are: A Reconciliation of the gross and net carrying
amounts of each class of assets at the beginningand end of the reporting period showing:
Additions Disposals
Acquisitions through business combinations
other adjustments and
the related depreciation and impairment losses /reversals to be disclosed separately.
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Fixed Assets
Particulars Opening Additions Disposals Through
BusinessCombinations
Other
Adjustments
***
Gross
Opening
Depreciation
On Business
Combinations
For
the
year
Total Closing Closing (LY)
*** to include capitalisation of exchange differences (as per AS 11),
borrowing costs for each class of assets
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RS VI requires foll. disclosure of Related Parties (RP):
Long Term / Short Term borrowings from RP Long Term / Short Term Loans and Advances to RP
RS VI requirement is to also give details thereof
AS 18 requires detailed disclosures of RP and transactions
GN on RS VI states details of RP should be as per AS 18
Illustrative disclosures:
Tata Motors Ltd: details of RP given below respective line item
Sundaram Fasteners Ltd: cross reference given to AS 18 disclosures
L & T Ltd: broad details given and cross referencing also done
Cross referencing to disclosures under Clause 32 done in many cases
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Non Current Investments shall be classified as
trade Investment or Other Investments. The term trade investments is defined neither in
Revised Schedule VI nor Accounting Standards.
The term trade investment is normallyunderstood as an investment made by a company
in shares or debentures of another company, to
promote the trade or business of the first company.
Whether investment in subsidiary is to be classified astrade investment or other investment ?
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Following Companies have classified Investment in
Subsidiaries as Trade Investments : TATA Steel
TATA Power
UltraTech Cement Ltd
Following Companies have NOT classified Investment in
Subsidiaries as Trade Investments :
Asian Paints
JSW Steel
Reliance Industries Ltd
Infosys
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As per Revised Schedule VI:
Current investments to be classified if expected to berealised within 12 months of BS date
As per AS 13
Investment that by its nature is readily realisable and
intended to be held for not more than 1 year from the
date of investment.
Investment made in December 2011 and expected to be
realised in February 2013 (i.e. after 14 months) whether
current or non-current as on 31st March 2012?
Since RS VI deals with only presentation, investment will bepresented as current, with additional disclosure that the
same is Long Term as per AS 13.CNK 46
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Disclosure in Tata Power Ltd
Reconciliation for Disclosure as per AS 13Long Term Investments
Non-current Investments xxx
Current portion of Long Term Investments xxx
(included in current investments)
Current Investments
Other current Investments xxx
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Investment in preference shares, convertible into
equity shares within 1 year from the BS date, whetherto be classified as Current or Non Current asset?
An investment expected to be realized within 12months from the reporting date is classified as
Current Asset. Such realization should be in the form cash or cash
equivalents rather than through conversion of oneasset into another non current asset.
Above investment is to be classified as Non CurrentAsset since on conversion it is not cash or cashequivalent.
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Whether classification of Investments in FS has any tax
implications?Disclosure in Directors Report by Tata Invt Corpn Ltd
The directors confirm that all the investments classified as non-
current investments / trade investments as per the revised
Schedule VI of the Companies Act, 1956 have been made withthe intent to hold for long term appreciation, to enhance the
income from dividends and are not held for trade.
Investments in the category of Current Investments intended to
be held for less than one year, which for accounting and otherpurposes are so classified at the time of making the investment,
are indicated separately in the Balance Sheet.CNK 49
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To be classified as both Current and Non Currento Capital account balance: Non currento Current account balance: Current
If the FS of the partnership firm not made up to
same date:o Gap cannot exceed 6 months
o To consider un-audited amounts till BS date;
o The above facts need to be specifically disclosed
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Names of the firms (with the names of all their partners,
total capital and shares of each partner) Additional disclosures in Notes for:
Change in constitution of Firm.
If firms accounts are not made up to the same date as
the date of the companys Balance Sheet Specific disclosure required regarding:
Share of partners in profits of the firm;
The total capital of the partnership firm in which the
company is a partner;
Separate disclosure is required by reference to each
partnership firm in which the company is a partner.
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LLP is a Body Corporate and not a partnership
firm as envisaged under the Partnership Act, 1932. Hence disclosures pertaining to Investments in
Partnership firms, not required for Investment in LLP.
Share of Profit/loss in LLP: Does not automatically accrue to the partners (like a
firm)
LLP can carry forward profits (without transfer to
partners) No entry can be passed in books of company till profits
are transferred to the partners of the LLP
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Trade Receivable: A receivable is classified as trade
receivable if it is in respect of amount due on account ofgoodssold or services rendered in the normal course of business.
To be classified as Current and Non Current.
Aggregate amount of Trade Receivables outstanding for a
period exceeding 6 months from the date they are due for
payment (and not billing date) should be separately stated. To also classify the above as Secured, Unsecured,
good/doubtful of recovery.
Provision for bad and doubtful debts required to be divided into
Current / Non Current.
Is recovery towards OPE to be included as TradeReceivables?
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CCE as per RS VI includes:
Balances with Banks held as margin money or security against borrowings,
guarantees, etc. and
Bank deposits with more than 12 months maturity
As per AS-3
Cash is defined to include cash on hand and demand deposits with
banks.
Cash equivalents are defined as short term, highly liquid
investments (i.e. less than 3 months maturity) that are readily
convertible into known amounts of cash and which are subject to aninsignificant risk of changes in value.
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Apparent Conflict between the requirements of the RevisedSchedule VI and the Accounting Standards.
The conflict should be resolved by changing the caption Cashand Cash equivalents to Cash and bank balances, whichmay have two sub-headings, viz.
Cash and cash equivalents and Other bank balances.
The former should include only the items that constitute CCE asper AS 3 (and not RS VI),
The remaining line-items may be included under the latterheading.
As per FAQs to RS VI, Fixed Deposits with more than 12months are to be classified as Non Current Assets.
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Impact of RS VI on presentation of cash flow statement.
Items appearing in the Cash Flow Statement should bealigned with the nomenclature of the items used in BS.
E.g. a company cannot present trade receivables in the BS
and show movement in Sundry Debtors in Cash Flow
Statement.
However it is not mandatory for a company to present
inflow / outflow from current and non-current components
of various line items separately.
E.g. for borrowings it can be overall
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Under RS VI, there is no line item like Miscellaneous
Expenditure RS VI also does not contain any specific disclosure
requirement for the unamortized portion of expense
items.
Since AS 26 does not apply to share issue expensesand incidental costs of borrowings, how can the
unamortized portion of the above be disclosed?
These need to be classified as other current / non-
current assets, depending on whether the amountwill be amortized in the next 12 months or thereafter.
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RS VI requires separate disclosure of amount of dividends
proposed for the period (in Notes) Existing Schedule VI specifically required proposed
dividend to be disclosed under the head Provisions.
As per AS-4, dividends stated to be in respect of the period
covered by the financial statements, which are proposed or
declared by the enterprise after the Balance Sheet date but
before approval of the financial statements, should be
adjusted.
Since AS 4 will override, RS VI, treatment as under:
Provision to be made in FS for proposed dividend Separate disclosure of the same in Notes
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A Company other than a finance company shall
disclose separately in the notes revenue from: Sale of Products
Sale of services
Other operating revenues
Less: Excise duty
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Whether Revenue should be Gross or Net?
As perGN on terms used in FS, Sales Turnover is definedas: aggregate amount for which sales are effected or
services rendered by an enterprise
Guide to Company Audit mentions Total turnover is the
aggregate amount for which sales are effected, giving the
amount of sales in respect of each class of goods dealt with
by the company and indicating quantities separately
Statement of CARO and Part II of existing Schedule VI
defines turnover as aggregate amount for which sales are
effected by the company. Sales effected would include saleof goods as well as services rendered by the company.
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Whether Revenue should be Gross or Net?
As per GN on Tax Audit, turnover maybe interpreted to
mean the aggregate amount for which sales are effected
or services rendered by an enterprise
Para 10 of AS 9 requires disclosure of Gross Turnover
with separate deduction for Excise Duty.
GN on VAT states VAT is collected from customers on
behalf of VAT authorities and should not be recorded asrevenue of the enterprise
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Whether Revenue should be Gross or Net?
Service Tax
For Service Tax, sec 83 of the Finance Act, 1994, provides
that the provisions of certain sections (like sec 9C, 12A,
etc.) of the Central Excise Act, 1944 shall apply, so far as
may be, in relation to service tax as they may apply to aduty of excise.
Section 12 A of the Central Excise Act, 1944, which
provides that the amount of excise duty shall form part of
the price of the goods sold. On a similar analogy, servicetax would form part of the price of the services provided.
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Whether Revenue should be Gross or Net?
Excise Duty
Since format of RS VI clearly mentions Excise Duty as a
deduction from Sales, the same would be necessary.
Service Tax / VAT
As per GN On RS VI Such taxes are generally collected from the customer on
behalf of government. Depending on whether company is
acting as agent or principal, such taxes should be included
in Sales (i.e. Gross or excluded (i.e. Net).
Statement of Profit and Loss
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The term Other Operating Revenue is not defined
by RS VI. It would include Revenue arising from a companys
operating activities, i.e., either its principal or ancillaryrevenue-generating activities, but which is not
revenue arising from the sale of products or renderingof services.
Whether a particular income constitutes otheroperating revenue or other income is to be decidedbased on the facts of each case and detailedunderstanding of the companys activities.
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A Finance company shall include revenue from
a) Interest andb) Other Financial services
The term finance company is not defined under the
Companies Act, 1956, or Revised Schedule VI. Hence, thesame should be taken to include all companies carrying on
activities which are in the nature of business of non-banking
financial institution as defined undersection 45(1) (f) of the
Reserve Bank of India Act, 1935.
Revenue from Operations in case offinance company
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Other Income
Other Income shall be classified as:
a) Interest Income (in case of a company other than a financecompany);
b) Dividend Income;
c) Net gain / loss on sale of investments;
d) Other non-operating income (net of expenses directlyattributable to such income).
Since (b) and (c) are always considered Other Income,
finance companies can have negligible Revenue from
Operations
This can have implications in taxation and also affect
valuation.
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Whether the following is Other Operating Revenue
or Other Income? A Company engaged in manufacture and sale of
industrial and consumer products also has one realestate arm.
A consumer products company owns a 10 storied
building. The company currently does not need onefloor for its own use and has given the same temporarilyon rent.
Sale of Fixed Assets
Sale of Scrap Interest from customers on delayed payments Foreign Exchange Gains
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Following treated as Other Operating Revenue:
Sale of Carbon credits Dividend from Joint Venture/Subsidiary
Since division operates part of its business through
Subsidiaries /JVs, dividend income is taken as Operating
Income Prism Cements Ltd Insurance Claims and Indirect taxes claimed received
Kansai Nerolac Paints Ltd
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Tata Investments Corporation Ltd has
classified the following as Revenue fromOperations:
Income from Investments
Dividend
Interest on Investments
Fees from Shares lent
Interest on Deposits and Advances
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RS VI requires separate disclosure for dividends from
Subsidiary Companies. Old schedule VI specifically required parentcompanies to recognise dividend declared bysubsidiary companies even if declared after the BSdate if they are related to the same period covered by
financial statements. RS VI does not prescribe any such
accounting/disclosure requirement. Thus Dividend will now be recognised as per AS 9 i.e.
only when they have a right to receive the same on orbefore the balance sheet date.
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Actual Consumption vs. Derived Consumption
In case of a manufacturing or manufacturing and tradingcompany care should be taken to ensure that raw materialconsumed should relate to actual consumption rather thanderived consumption.
Disclosure by Mahindra & Mahindra Ltd:The consumption in value has been ascertained on thebasis of opening stock plus purchases less closing stock andincludes adjustment for excesses and shortages asascertained on physical count and write-off of obsolete andunserviceable raw materials and components.
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Other Commitments
Additional requirement in RS VI Scope of terminology very wide
AS per GN, it would include all expenditure related to
contractual commitments apart from capital commitments
such as commitments arising from long term contracts for
purchase of RM, employee contracts, lease commitments,sales, investments, etc.
Disclosure in L & T Ltd:Other commitments related to sales / procurements made in normal
course of business are not disclosed to avoid excessive details
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Illustrative disclosure of Other Commitments
Under lease obligations Under derivative contracts
Going concern support to group company
PE arrangement between Holding co, subsidiary, associate
Buy back arrangements
Commitment to fund research projects, etc.
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As per AS 21, CFS are presented, to the extent possible, inthe same format as that adopted by the parent for itsseparate financial statements.
Thus disclosures of RS VI will be applicable to CFS
Bifurcation between current / non current
Trade receivables over 6 months from due date of
payment, etc. Disclosure of Minority Interest
Separate line item on the face of the BS afterShareholders Funds.
Mahindra Lifespace developers Ltd Minority Interestclassified as Non Current Liabilities.
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Information pertaining to Subsidiaries required forpreparation of CFS: Break up of assets / liabilities in current and non current (to
also cover related parties); Security details, Terms of repayment of Long term Borrowings; Trade Receivables - ageing analysis from the due date of
payment;
Break up of cash and cash equivalents any restriction / pledgeof fixed deposits, Tenure of deposits;
Details of Capital Advances, etc.; Details of any Other Commitments having financial obligations; Details of expenditure in excess of 1% of revenue from
operation; etc.
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Balance Sheet
Statement of Profit and Loss
Cash Flow Statement
Company Background (preferable)
Significant Accounting Policies
Notes pertaining to items appearing in the BS, PL Other disclosures required as per RS VI
Disclosures required as per notified AS
Disclosures required under other statutes, ICAI, etc.
Note that RS VI applied from 2011-12 and that previous yearfigures are regrouped / reclassified as per requirements ofRS VI.
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Additional procedures for verification/documentation
Audit Documentation (SA 230)o Documents to be taken and arranged in the Audit file as per
classification of items given in RS VI.
Representation to be taken from Management (SA 580)
o Representation Letter to be taken from the management will
undergo a change this year since the company will be preparing its
FS in the format of RS VI for the first time, hence the classification
of items into Current and Non Current by management.
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