Schedule VI of Companies Act stipulates the format in which every company should prepare and present its Balance Sheet and Profit & Loss account. These stipulations ensure comprehensive presentation of the financial performance and position of a company. This enables a fair comparison of the company’s performance against its own historical performance, as well as comparison with other companies.

Changes to Schedule VI were brought about by MCA in March 2011. A concise description of these changes is presented herein.

1.Classification: These comprise of a set of changes dealing with how facts are recorded in the financial reports. The table below shows the major changes in classification of assets and liabilities

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, Intangible Assets Under Development added

No such category existed previously

Liabilities are classified under Current and Non-current. Constituents of Current and Non-current liabilities modified

There was no classification as Non-Current Liabilities. Earlier the liabilities were classified into Share Holders Funds, Loan Funds, Deferred Tax Liability and Current Liability.

2. Representation: 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 Surplus head. In case the value under Surplus is still negative, this needs to be adjusted with the balance against Reserves and Surplus.

In case the value under Surplus is still negative after the above adjustments, it needs to be represented as a negative value under Liabilities.

Debit balance in the Profit & Loss account shall be shown under ASSETS side after deduction from uncommitted reserves (if any)

Share Application Money Pending Allotment need to be shown separately under shareholders funds and not under Reserves and surplus

Share application money pending allotment was included in the Reserves and Surplus.

Nomenclature: Schedule VI has also been modified to include changes in nomenclature.

  • The headings in the Balance Sheet are now Equities, Liabilities and Assets. The earlier nomenclature was Sources of funds and Application of funds.
  • Cash and Cash Equivalents has replaced the element Cash and Bank Balance. Cash and Cash Equivalents is a wider term that includes cash, bank balance, money market funds, other short-term deposits etc.
  • Trade receivables and Trade payables is used in the place of Sundry debtors and Sundry Creditors respectively.

Visual: The latest changes to Schedule VI permit only the vertical format for preparation of Balance Sheet, Profit & Loss, and Cash Flow Statements.

The changes described above have been incorporated with a view to keep the reporting norms updated with current trends.

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