ASSETS SIDE Fixed Assets :

Schedule VI requires the company to classify the fixed assets as far as possible under the following heads

a. Goodwill b. Land c. Buildings d. Leaseholds e. Railway sidings f. Plant and Machinery g. Furniture and Fittings h. Development of Property

i. Patents, Trade Marks and Designs j. Livestock

k. Vehicles etc.

Under each of the above heads, original cost and the additions thereto or the deductions therefrom during the year and the total depreciation written off or provided upto the end of the year should be stated.

In the practical circumstances, in the vertical form of balance sheet, the fixed assets are presented as below :

a. Gross Block (which indicates accumulated original cost) b. Less : Depreciation (which indicates accumulated depreciation) c. Net Block (which indicates Gross Block less Depreciation) d. Capital Work-in-Progress.

Note : Capital work-in-progress indicates the fixed assets under construction or under installation. After the construction of fixed assets is complete or the fixed assets are installed, they are capitalised under the suitable head. No depreciation will be provided by the company on capital work-in-progress.

Usually details of original cost, additions, deductions, depreciation etc. are shown in a separate schedule.

Financial Statements 3 5 Investments :

Investments indicate the assets held by a company for earning income by way of dividend, interest etc. or for capital appreciation or for other benefits to the investing company.

Investments are required to be distinguished as below : a. Investments in Government or Trust securities.

b. Investments in shares, debentures or bonds showing separately shares fully paid up and partly paid up and also distinguishing different classes of shares. Similar details should be given in case of investment in subsidiary companies.

c. Immovable Properties

d. Investment in capital of Partnership Firm.

e. Balance of unutilised monies raised by issue.

Notes :

a. It is necessary to indicate the nature of investment and mode of valuation, for example cost or market value.

b. It is required to disclose –

i) Aggregate amount of company’s quoted investments and the market value thereof ii) Aggregate amount of company’s unquoted investments. Quoted investments means an investment which is traded on a recognised stock exchange and unquoted investment means otherwise.

Current Assets, Loans and Advances : A. Current Assets

Cash and other assets which are expected to be converted into cash or consumed in the production of goods or rendering the services in the normal course of business are defined as current assets.

Current Assets are required to be classified as : a. Interest accrued on investments

b. Stores and spare parts c. Loose tools

d. Stock-in-Trade (This in turn may consist of stock of raw materials and stock of finished goods)

e. Work-in-Progress f. Sundry Debtors

i) Debts outstanding for a period exceeding six months ii) Other Debts

Less : Provision g. Cash balance on hand h. Bank Balances

i) With Scheduled Bank ii) With others

Notes :

a. Mode of valuation of stock-in-trade and work-in-progress should be specified.

b. Sundry debtors are required to be disclosed based on security in the following manner.

i) Debts considered good and in respect of which the company is fully secured.

ii) Debts considered good for which the company holds no security other than the debtor’s personal security.

iii) Debts considered bad or doubtful.

Further following details are also required to be disclosed in case of debtors : i) Debts due by directors or other officers of the company or any of them either

jointly or severally with any other person.

ii) Debts due by firms in which any director is a partner or debts due by a private company in which a director is a director or member.

iii) Maximum amount due by directors or other officers of the company at any time during the year is required to be shown by way of a note.

iv) Debts due from the companies under the same management as defined in Section 370(1B) of the Companies Act, 1956 are required to be shown separately along with the names of these companies.

c. In case of bank balances, following details are required to be given :

i) Balance lying with Scheduled Bank in current account, call account or deposit account. It should be noted here that a Scheduled Bank is defined in Section 2(e) of the Reserve Bank Act, 1934.

Financial Statements 3 7 ii) Balances lying with banks other than Scheduled Banks in current account,

call account or deposit account. It is further required to state the names of all such banks and the maximum amount outstanding at any time during the year from each such bank.

iii) Nature of interest of the directors or the relatives of the directors in the non-scheduled bank is also required to be stated.

B. Loans and Advances :

The Loans and Advances may not always be in the form of current assets. However, for the purpose of Schedule VI they are clubbed with current assets.

The Loans and Advances are classified as : a. Advances and loans to subsidiaries.

b. Advances and loans to partnership firms in which the company or any of its subsidiaries is a partner.

c. Bills of exchange.

d. Advances recoverable in cash or in kind or for value to be received e.g. Rates, Taxes, Insurance etc.

e. Balances with customs, port trust etc. (where payable on demand)

Disclosure requirements applicable to sundry debtors equally apply to Loans and Advances.

a. Loans and advances are required to be classified as i) Outstanding for a period exceeding six months ii) Other Loans and Advances

b. Provision for bad and doubtful advances is required to be reduced from the balance of loans and advances.

c. Advances due by directors or other officers of the company or any of them either jointly or severally with any other person are required to be disclosed separately.

d. Advances due by firms in which any director is a partner or debts due by a private company in which a director is a director or member is required to be disclosed separately.

e. Maximum amount due by directors or other officers of the company at any time during the year is required to be shown by way of a note.

f. Advances due from the companies under the same management as defined in Section 370(1B) of the Companies Act, 1956 are required to be shown separately alongwith the names of these companies.