Changes in Schedule VI – Old vs New (Revised)

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Ministry of Corporate Affairs (MCA) had revised Schedule VI of Companies Act, 1956 and notified the same on 1st March 2011.  The refreshed Schedule VI shall apply to all companies from 1st April 2011 onwards.

The revised Schedule VI introduces many new concepts and disclosure requirements and does away with several statutory disclosure requirements of the existing Schedule VI. The New Schedule VI is as per the currently in use non-converged accounting standards as under Companies (Accounting Standards) Rules, 2006.

For your ready reference on how to present the P&L and Balance Sheet – refer our Article on Format of Schedule VI

The following article highlights the major changes brought in by the New Schedule VI

Changes in Revised Schedule VI

Schedule VI Changes in Schedule VI – Old vs New (Revised)

The changes brought in revised format have been segregated in the following manner: -

  1. Balance Sheet
  2. Profit & Loss A/c

General Changes

1. While both Vertical and horizontal forms of presentation were allowed under Old Schedule VI, only vertical form is allowed under Revised Schedule VI.

2. Once a unit measurement is used, it should be used uniformly in the Financial Statements.

Changes in Balance Sheet as per Schedule VI

Liabilities as per Schedule VI

1. Change in nomenclature - “Sources of Funds” has been replaced with “Equity & Liabilities”

2. Money received against Share Warrants has been specifically categorised as sub-head under “Shareholders Funds”

3. Share Capital – Company would need to show in sub-head à Shares held more than 5% in company along with number of shares

4. Under head Reservesand Surplus, new sub-heads have been added i.e. Debenture Redemption Reserve, Revaluation Reserve & Share Option Outstanding Account

3. Debit Balance of P&L A/c shall now be shown as negative figure under head Surplus

4. Share Application Money pending Allotment shall now be shown separately under Shareholders Funds

5. Liabilities will now broadly be classified as

  • Current Liabilities &
  • Non Current Liabilities

5. Deferred payment liabilities and loans & advances from related parties to be shown separately under head “Long term Borrowings”.

6. Provisions to be classified as Short Term Provisions & Long Term Provisions

Assets as per Schedule VI

1. Change in nomenclature - “Application Of Funds” has been replaced with “Assets”

2. Fixed Assets to be further classified as

4. Current Assetsare to be shown under separate head.

5. While calculating “Gross Block” at year end, “Acquisitions through Business Combination” to be included in computation

6. Investments carried at other than cost should be separately stated specifying the basis for valuing them

7. “Sundry Debtors” have now been named “Trade Receivables”

8. “Cash and Bank Balances” have now been termed as “Cash and Cash Equivalents”. Classification under this head has been completely revamped.

7. Inventories – Goods in transit shall be disclosed under the relevant sub-head of inventories

8. Misc expenditure (to the extent not written off or adjusted) shall now not be shown separately under head “Other Current Assets”

9. The amount of Proposed Dividend to be distributed to shareholders (equity and preference) for the period and amount per share to be disclosed separately

Changes in Profit & Loss A/c

1. Under head “Other Income” –  Net gain/loss on foreign currency translation and transaction (other than finance cost) shall be disclosed separately.

2. Employee benefit expense shall disclose additionally expense on account of Employee stock option scheme (ESOP)

3. Following shall now be disclosed separately –

  • Provision for loss of Subsidiary companies
  • Net loss on sale of Investments
  • Details of exceptional and extraordinary items
  • Prior Period items
  • Adjustment to carrying amount of investments

4. A new format has been issued for face reporting of Profit & Loss A/c.

Impact of Revision in Schedule VI

1. The Revised Schedule VI intends to familiarize companies with Ind-AS/IFRS by using certain concepts such as current/non-current classification.

2. The revised Schedule VI has eliminated the concept of schedules and such information will now be provided in the notes to accounts. This is as done when applying IFRS.

3. From now on, the compliance requirements of Act and/or Accounting standards will prevail over schedule VI.

4. Better presentation, disclosure is intended to facilitate better organised data for users of financial statement.

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253416 10150641083380206 857790205 18904786 217781 n1 Changes in Schedule VI – Old vs New (Revised)This article on Schedule VI has been authored by CA Bhavnoor Singh Bhatia who can be contacted at bhavnoor.s.b@gmail.com

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