Explain the important aspects of Balance Sheet as per Revised Schedule VI.

BALANCE SHEET
  1. Vertical Form : Only vertical form of balance sheet is allowed – with significance changes vis–a–vis the structure of existing Schedule VI.
    • Shareholders' funds to be shown after deduction of debit balance of profit and loss account Reserves and surplus and shareholders' funds could thus be a negative figure.
    • Miscellaneous expenditure can no longer be shown as a separate broad heading under 'Assets'.
  2. Current/Non-current : All assets and liabilities to be classified into current and non–current categories. This provides useful information by distinguishing assets/liabilities continuously circulating as working capital from those used in long–term operations.
  3. Criteria : Basic criteria of the distinction are :
    • Is the item a constituent of the normal operating cycle.
    • Is the item expected to be realised/settled within 12 months of the reporting date.
  4. Change in System : Current/non–current distinction will have major impact on classification of accounting information and account heads. Hence changes would be required in accounting systems and procedures.
  5. Disclosure : New and significant disclosures required regarding ownership of the company including all shareholdings above five percent.
  6. Share Options : Share options outstanding account recognised as a part of reserves and surplus. 
  7. Default on borrowing : Detailed disclosures required regarding defaults on borrowings.
  8. Current/Non-current : All liabilities to be classified into current and non–current. Non current liabilities include long–term borrowings, long–term maturities of finance lease obligations, long–term trade payables and long–term provisions. Current liabilities include current maturities of long–term debt and of finance lease obligations, all borrowings repayable on demand, unpaid matured deposits/debentures, and short–term provisions.
  9. Separate Disclosure of Intangible Assets : Intangible fixed assets to be disclosed separately.
  10. Investment : 'Investments' no longer a broad head–to be included under non–current and current assets categories.
  11. Clubbing of Loans : Long–term loans and advances given not to be clubbed with current assets.
  12. Cash : Cash and cash equivalents to be disclosed separately.
  13. Contingent Liabilities : Contingent liabilities distinguished from commitments. Disclosure of commitments not confined to capital commitments.

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