Expected Theory Questions on Revised Schedule VI for CA Final

1. Is the revised Schedule VI, based on Ind AS converged with IFRS?

Ind AS were notified on 25-02-2011 and the revised Schedule VI was notified on 28-02-2011. This gave an impression that the revised Schedule VI has been brought in to bring the presentation of financial statements in line with the Ind AS. However, given the fact that Ind AS are not yet effective, one cannot say that revised Schedule VI is based on Ind AS. MCA website also clarified this point by saying that the revised Schedule VI has nothing to do with the Ind AS converged with IFRS. However, at the same time, it is also true that there are some terms (eg, business combinations, controlled special purpose entity, etc) that have been used in revised Schedule VI, are based on Ind AS.

 2. Whether the revised Schedule VI will be applicable to consolidated financial statements as well?

The revised Schedule VI is silent on the applicability to the consolidated financial Statements. However, given the fact that under AS-21 on “Consolidated Financial Statements” requires that the consolidated financial statements are prepared in the format as adopted for the parent’s standalone financial statements (to the extent possible), it would be prudent to say that the revised Schedule VI will be applicable to the consolidated financial statements as well.

3. What are important changes of Format of Balance Sheet under Revised Schedule VI?

  • Only a vertical form of Balance Sheet is permitted.
  • The amount of Shareholders’ funds is required to be shown after deduction of debit balance of Profit and Loss Account. As a result, shareholders’ funds figure can be negative.
  • Separate head for “Miscellaneous Expenditure to the extent not written off or adjusted” has been discontinued.
  • Current and non-current classification of assets and liabilities required on the lines of Ind AS and IFRS.
  • Concept of operating cycle has been introduced in the Revised Schedule VI.
  • Separate head has been prescribed for:
    • money received against share warrants,
    • intangible assets,
    • intangible assets under development,
    • cash and cash equivalents.

4. What are the important changes in of Format of Statement of Profit and Loss under Revised Schedule VI?

  • The format of Statement of Profit and Loss has been prescribed.
  • Only a vertical format of the Statement of Profit and Loss is permitted.
  • Classification of expenses by nature needs to be given.
  • Profit or loss from discontinuing operations needs to be shown separately on the face of the Statement of Profit and Loss. Earlier this requirement was based on accounting standard and not Schedule VI.
  • Quantitative disclosures relating to turnover, raw materials, purchases, installed capacity, actual production, details of managerial remuneration dispensed with.

'Expected Theory Questions on Revised Schedule VI for CA Final' has 1 comment

  1. October 25, 2012 @ 3:26 am Nandita

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