CHANGES IN THE REVISED SCHEDULE VI OF THE COMPANIES ACT, 1956
September 18, 2019
Revised Schedule VI is applicable on all companies except insurance or banking company, or any company engaged in the generation or supply of electricity. The highlights of the changes in the revised Schedule VI in comparison to the earlier Schedule VI are discussed below.
- The latest changes to Schedule VI permit only the vertical format for preparation of Balance Sheet, Profit & Loss, and Cash Flow Statements.
- Classification:Â These changes pertain to the categorization of the Assets and Liabilities in the Schedule VI.
| Revised Schedule VI Classification | Earlier Schedule VI Classification |
| Asset Classification under two categories, Current Assets and Non-current Assets | No such classification existed previously |
| Fixed Assets are classified into Tangible and Intangible assets | No such classification existed previously |
| New category of Fixed assets, âIntangible Assets Under Developmentâ added | No such category existed previously |
| Liabilities are classified under âCurrentâ and âNon-currentâ. Constituents of Current and Non-current liabilities modified | There was no classification as Non-Current Liabilities. Earlier the liabilities were classified into Share Holdersâ Funds, Loan Funds, Deferred Tax Liability and Current Liability. |
3. Â Representation:Â These changes pertain to how facts are represented in the financial report.
| Revised Schedule VI Representation | Earlier Schedule VI Representation |
| Debit balance in the Profit & Loss Account is to be adjusted with values shown under the âSurplusâ head.In case the value under âSurplusâ is still negative, this needs to be adjusted with the balance against âReserves and Surplusâ. In case the value under âSurplusâ is still negative after the above adjustments, it needs to be represented as a negative value under âLiabilitiesâ. | Debit balance in the Profit & Loss account shall be shown under âASSETSâ side after deduction from uncommitted reserves (if any) |
| âShare Application Money Pending Allotmentâ need to be shown separately under share holderâs funds and not under âReserves and surplusâ | âShare application money pending allotmentâ was included in the âReserves and surplusâ. |
| Finance Lease obligations are to be grouped under the head Non-Current Liabilities. | Finance Lease obligations are included in Current Liabilities. |
| Current & non-current investments are to be disclosed separately under current assets & non-current assets respectively. | Investments both current & and non-current investments to be disclosed under the head investments |
| Deferred Tax asset/liabilities to be disclosed under non-current assets/liabilities as the case may be. | Deferred tax assets/liabilities to be disclosed separately. |
| Any item of income/ expense which exceeds âone percentâ of the revenue from operations or âRs 1 lakhâ whichever is higher to be disclosed separately | Any item under which expense exceed one percent of the total revenue of the company or âRs 5 thousandâ whichever is higher shall be disclosed separately. |
4. Â Nomenclature:Â Schedule VI has also been modified to include changes in nomenclature and inclusion of additional information.
| Headings in the Balance Sheet | The headings in the Balance Sheet are now âEquity and Liabilitiesâ and âAssetsâ. This has replaced âSources of Fundsâ and âApplication of fundsâ. |
| Share capital | Company would need to show in sub-head a shares held more than 5% in company along with number of shares |
| Cash and Cash Equivalents | âCash and Cash Equivalentsâ has replaced the element âCash and Bank Balanceâ.Cash and Cash Equivalents is a wider term that includes cash, bank balance, money market funds, other short term deposits etc. |
| âTrade receivablesâ & âTrade payablesâ | âTrade receivablesâ and âTrade payablesâ is used in the place of âSundry debtorsâ and âSundry Creditorsâ respectively |
5. Â Rounding Off Requirement
| TURNOVER | ROUNDING OFF |
| Less than one hundred crore rupees | To the nearest hundreds , thousands,lakhs or millions or decimals thereof |
| One hundred crore rupees or more | To the nearest lakh, millions or crores or decimals thereof |
| Note: Once a unit of measurement is used, it should be used uniformly in subsequent financial statements. | |
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