BALANCE SHEET

GAAP REVISITED
Separate Entity
Money Measurement
Going Concern
Historical Cost
Conservatism
Dual Aspect
SCHEDULE III – PART II
Accounts must be maintained on an accrual basis and according
to double entry book keeping system
Financial Statements must be prepared for every financial year
The Balance Sheet must show figures for the current year and
comparative figures for the previous year
Information required under any head may be given in separate
`Notes to Accounts’
COMPONENT OF BALANCE
SHEET
 Current reporting Previous reporting
Particulars Note No.
period period
1 2 3 4
ASSETS
Non-current assets
• Property, Plant and Equipment
o Capital work-in-progress
o Investment Property
o Goodwill
o Other Intangible assets
o Intangible assets under development

o Biological Assets other than bearer plants

• Financial Assets
o Investments
o Trade receivables
o Loans
• Deferred tax assets (net)      
• Other non-current assets
Current assets
• Inventories
• Financial Assets
o Investments
o Trade receivables
o Cash and cash equivalents
o Bank balances other than(iii) above
o Loans
o Others (to be specified)
• Current Tax Assets (Net)
• Other current assets
EQUITY AND LIABILITIES

EQUITY
• Equity Share capital

• Other Equity

LIABILITIES

Non-current liabilities
• Financial Liabilities
o Borrowings
o Trade payables

o Other financial liabilities (other than those specified in item (b), to be specified)

• Provisions
     
• Deferred tax liabilities (Net)

• Other non-current liabilities

Current liabilities

• Financial Liabilities
o Borrowings
o Trade payables

o Other financial liabilities (other than those specified in item (c)

• Other current liabilities

• Provisions
• Current Tax Liabilities (Net)

Total Equity and Liabilities      

ASSETS - CLASSIFICATION
Non-current and current assets
an asset shall be classified as current when it satisfies any of the
following criteria:
 it is expected to be realized in, or is intended for sale or
consumption in, the company’s normal operating cycle;
 it is held primarily for the purpose of being traded;
 it is expected to be realized within twelve months after the
reporting date; or
 it is cash or cash equivalent unless it is restricted from being
exchanged or used to settle a liability for at least twelve months
after the reporting date.
NON-CURRENT ASSETS
Property, plant and equipment

Capital work-in-progress

Investment property

Goodwill

Other intangible assets

Intangible assets under development

Biological assets other than bearer plants

Financial assets

Investments

Trade Receivables

Loans

Other

Deferred Tax Assets (net)

Other non-current assets

PROPERTY, PLANT &
EQUIPMENT
May be shown either at cost less accumulated depreciation
and impairment losses or alternatively at revalued amount
less the accumulated depreciation and accumulated
impairment loss
 The cost comprise purchase price and any attributable cost of
bringing the asset to its working condition for its intended use.
 Capitalize borrowing cost up-to the point the asset us ready for its
intended use
 Import duties, taxes, delivery & handling costs, site preparations,
installation cost, professional fees, start up & commissioning, test
runs
PROPERTY, PLANT &
EQUIPMENT
Show, to the extent possible, under the
following headings
 Land
 Buildings.
 Plant and Equipment.
 Furniture and Fixtures.
 Vehicles.
 Office equipment.
 Bearer Plants.
 Others (specify nature)
CAPITAL WORK IN
PROGRESS
Expenditure incurred on acquiring or constructing
tangible assets which are not yet ready for intended use.
 Advances given to the supplier for acquisition of fixed assets are
not included under this heading.
 Once the asset is ready for its intended use, the amount
accumulated under this head is transferred to the carrying amount
of the PPE.
INVESTMENT PROPERTY
Land or building or both which is held to earn rentals or capital
appreciation or both.
Property held for use in production or supply of goods or
services or for administrative purposes or for sale in the
ordinary course of business not classified as investment
property.
Reconciliation of the gross and net carrying amounts of each
class of property needs to be presented showing additions,
disposals, acquisitions through business combinations and
other adjustments and the related depreciation and impairment
losses or reversals.
GOODWILL
Reconciliation of the gross and net carrying amount of goodwill at
the beginning and end of the reporting period showing additions,
impairments, disposals and other adjustments
OTHER INTANGIBLE
ASSETS
Identifiable, non-monetary assets without physical substance
Acquired intangible assets are recorded at their cost of
acquisition
Self-generated goodwill/brand value is not recognized
Research cost – inventing or creating a new product, method or
system – is not capitalized
Development cost – converting the result of research into a
marketable product – can be capitalized
Expenses that provide future economic benefits but no
intangible assets is created – treat as expense when incurred
e.g. start up costs, launching new product, training etc.
OTHER INTANGIBLE
ASSETS
Brands /trademarks
Computer software
Mastheads and publishing titles
Mining rights
Copyrights, patents and other intellectual property rights,
services and operating rights
Recipes, formulae, models, designs and prototypes
Licenses and franchise
Others (specify nature)
INTANGIBLE ASSETS UNDER
DEVELOPMENT

Expenditure incurred on development of intangible assets which are

yet to be finished are accumulated
Once the development of an intangible asset is completed the amount
accumulated under this head is transferred to gross carrying amount
of the relevant intangible asset.
NON-CURRENT
FINANCIAL ASSETS
Financial assets generally mean cash, financial
instruments of another entity (equity instruments, debt
instruments) and a contractual right to receive cash or
other financial assets.
 Non-current investments,
 Non-current trade receivables,
 Non-current loans and
 Other non-current financial assets.
NON-CURRENT
INVESTMENTS
Investment in acquiring securities issued by another enterprise.
Either for controlling the other enterprise or simply for making a
return either as periodical returns or by capital gains
Intention to hold investments for a long period of time (usually
exceeding 12 months) they are classified as non-current investments.
 Investments in Equity Instruments;
 Investment in Preference Shares;
 Investments in Government or trust securities;
 Investments in debentures or bonds;
 Investments in Mutual Funds;
 Investments in partnership firms; or
 Other investments (specify nature).
NON-CURRENT
INVESTMENTS
Trade investments and other investments
 Investment property;
 Investments in Equity Instruments;
 Investments in preference shares
 Investments in Government or trust securities;
 Investments in debentures or bonds;
 Investments in Mutual Funds;
 Investments in partnership firms
 Other non-current investments (specify nature)
NON-CURRENT
INVESTMENTS
Initially recognized at cost. Cost includes acquisition
charges like brokerage and fees and taxes and duties.
Subsequent measurement either at the historical cost
(amortized cost) or fair value.
The impact of fair value measurement recognized either
through profit or loss (Fair Value Through Profit or Loss)
or through other comprehensive income (Fair Value
Through Other Comprehensive Income).
NON-CURRENT TRADE
RECEIVABLES
Outstanding from customers on the balance sheet date towards
goods sold or services rendered
 Trade receivables which are expected to be realized after 12 months from
the balance sheet date are classifies as non-current.

Classified as:
 Secured, considered good;
 Unsecured considered good; and
 Doubtful

Provision made towards bad and doubtful debts disclosed under

the relevant heads
NON-CURRENT LOANS
Money extended by an enterprise to another as loan which is
repayable in future.
Loans expected to be realized after 12 months are classified as non-
current loans. This also includes security deposits given by the
enterprise for various purposes during the ordinary course of
business.
Classified as:
 Security Deposits;
 Loans to related parties (giving details thereof)
 Other loans (specify nature)
NON-CURRENT LOANS
Aggregate value of loans and advances is broken down in
three sub-headings:
 Secured; considered good
 Unsecured; considered good; and
 Doubtful
Shown at their gross value less provision for bad and
doubtful loans made.
OTHER NON-CURRENT FINANCIAL
ASSETS

Non-current financial assets other than investments, trade

receivables and loans are classified under this heading.
 Amounts due under contractual rights,
 Dues in respect of insurance claims,
 Receivables on account of sale of property, plant and equipment,
 contractually reimbursable expenses, etc.
 Bank deposits with more than 12 months maturity
 Non-current portion of finance lease receivables
DEFERRED ASSETS

Relevant Accounting Standard – Ind AS 12

Due to difference between taxable income (as per
Income Tax Act) and accounting profit
 Permanent Difference
 Don’t reverse subsequently
 Expenses disallowed, exempt income
 Timing Difference
 Reversed in the subsequent period
 Expenses allowed on payment basis, depreciation
DEFERRED TAX
LIABILITY/ASSETS
Cause Effect Accounting
Accounting Tax on Accounting Create
Income > Taxable Income > Tax Deferred Tax
Income payable as per Liability
Income Tax Act
Accounting Tax on Accounting Create
Income < Taxable Income < Tax Deferred Tax
Income payable as per Asset
Income Tax Act
OTHER NON-CURRENT
ASSETS
Residual category for non-current asset. Any asset which is non-
current and non-finance is nature and has not been classified in the
above sub-headings will get disclosed under this heading. Other non-
current assets are classified as:
 Capital Advances;
 Advances other than capital advances
 Others (specify nature)

Advances other than capital advances are further classified as

 Security Deposits;
 Advances to related parties (giving details thereof);and
 Other advances (specify nature).
CURRENT ASSETS
Inventories
Financial assets
 Investments
 Trade Receivables
 Cash and Cash Equivalents
 Bank Balances other than (iii) above
 Loans
 Others (to be specified)

Current Tax Assets (net)

Other current assets
 INVENTORIES
Goods held by an enterprise for the purpose of consumption in the
production process or which are currently in the production cycle
or are being held for sale in the ordinary course of business.
 Raw materials;
 Work-in-progress;
 Finished goods;
 Stock-in-trade (in respect of goods acquired for trading);
 Stores and spares;
 Loose tools;
 Others (specify nature).
INVENTORIES

Initially recognized at cost. The cost for this

purpose includes the cost of acquiring the
inventory and appropriate conversion cost.
After initial recognition at cost, inventories are
carried in the balance sheet at `the lower of cost
or net realizable value’ following conservatism
principle.
CURRENT FINANCIAL
ASSETS
Financial assets generally mean cash, financial
instruments of another entity (equity instruments, debt
instruments) and a contractual right to receive cash or
other financial assets.
 Current investments,
 Current trade receivables,
 Cash and Cash Equivalents
 Bank Balances, other than cash and cash equivalents
 Current loans and
 Other Current financial assets.
CURRENT INVESTMENTS

Investments in instruments which are highly

liquid and convertible into cash quickly.
Intended to be sold within twelve months or
within the company’s operating cycle.
Also include investments which have a remaining
maturity of less than twelve months or within the
company’s operating cycle.
CURRENT INVESTMENTS

To be classified as
Investments in Equity Instruments;
Investment in Preference Shares;
Investments in Government or trust securities;
Investments in debentures or bonds;
Investments in Mutual Funds;
Investments in partnership firms; or
Other investments (specify nature).
CURRENT INVESTMENTS
Initially recognized at cost. Cost includes acquisition
charges like brokerage and fees and taxes and duties.
Subsequent measurement either at the historical cost
(amortized cost) or fair value.
The impact of fair value measurement recognized either
through profit or loss (Fair Value Through Profit or Loss)
or through other comprehensive income (Fair Value
Through Other Comprehensive Income).
CURRENT TRADE
RECEIVABLES
Outstanding from customers on the balance sheet date towards
goods sold or services rendered
 Trade receivables which are expected to be realized within 12 months
from the balance sheet date or within the operating cycle are classified or
current.

Classified as:
 Secured, considered good;
 Unsecured considered good; and
 Doubtful

Provision made towards bad and doubtful debts disclosed under

the relevant heads
CASH AND CASH
EQUIVALENTS
Include cash on hand and demand deposits with banks.
Cash Equivalents are short term, highly liquid
investments that are readily convertible into known
amounts of cash and which are subject to an insignificant
risk of changes in value.
An investment would normally qualify as a cash
equivalent only when it has a short maturity of, say, three
months or less from the date of acquisition.
CASH AND CASH
EQUIVALENTS
Includes term deposits with banks that have an original maturity of
three months or less.
Further classified as:
 Balances with banks (of the nature of cash and cash equivalents);
 Cheques, drafts on hand;
 Cash on hand;
 Others (specify nature).
 OTHER BANK BALANCES
Bank balances other than cash and cash equivalents
Disclosures with regard to cash and bank balances:
 Earmarked balances with banks (for e.g., for unpaid dividend);
 Balances with banks to the extent held as margin money or security
against the borrowings, guarantees, other commitments;
 Repatriation restrictions, if any, in respect of cash and bank balances.

Deposits with maturity period exceeding twelve months should not

be shown under this heading rather under other non-current financial
assets.
CURRENT LOANS
Money extended by an enterprise to another as loan which is
repayable in future.
Loans expected to be realized within 12 months or in the normal
operating cycle of the company are classified as current loans. This
also includes security deposits given by the enterprise for various
purposes during the ordinary course of business.
Classified as:
 Security Deposits;
 Loans to related parties (giving details thereof)
 Other loans (specify nature)
CURRENT LOANS
Aggregate value of loans and advances is broken down in
three sub-headings:
 Secured; considered good
 Unsecured; considered good; and
 Doubtful
Shown at their gross value less provision for bad and
doubtful loans made.
OTHER CURRENT FINANCIAL
ASSETS

Current financial assets other than investments, trade

receivables, cash & cash equivalents and loans are
classified under this heading.
 Amounts due under contractual rights,
 Dues in respect of insurance claims,
 Receivables on account of sale of property, plant and equipment,
 contractually reimbursable expenses, etc.
 Current portion of finance lease receivables
CURRENT TAX ASSETS

Companies are required to pay advance tax on the

estimated taxable income for the year.
It may happen that the amount of tax already paid
in respect of current and prior periods exceeds the
amount of tax due for those periods. The excess
tax so paid is recognized as an asset. The excess
tax paid is computed for each assessment period
separately.
OTHER CURRENT ASSETS
Residual category for current asset. Any asset which is current and
non-finance is nature and has not been classified in the above sub-
headings will get disclosed under this heading. Other non-current
assets are classified as:
 Capital Advances;
 Advances other than capital advances
 Others (specify nature)

Advances other than capital advances are further classified as

 Security Deposits;
 Advances to related parties (giving details thereof);and
 Other advances (specify nature).
EQUITY AND
LIABILITIES
SHARE CAPITAL

Authorized, Issued, Subscribed, and Called up for each class of

shares
Calls unpaid to be deducted from the Called up capital to arrive at
Paid up Capital
Add: Forfeited Shares (amount paid up)
Terms of redemption/conversion of redeemable preference shares
to be stated with date redemption/conversion
Shares issued for consideration other than cash to be identified
Shares allotted by way of bonus shares to be shown
Sources from which bonus shares have been issued to be specified
Calls unpaid by the Directors to be separately indicated
TYPE OF CAPITAL
Preference Capital
 Preference for payment of dividend at a fixed rate and repayment of Capital

Equity Capital
 Perpetual
 Last preference for dividend and repayment of capital
TYPE OF CAPITAL
Authorized Share Capital – The maximum amount that the company may
raise by issuing capital is mentioned in the Memorandum of Association
Issued Share Capital – Part of Authorized Share Capital that is offered by
the company for subscription
Subscribed Share Capital – Part of the Issued Share Capital that is
subscribed by the shareholders
Called up Share Capital – Part of the Subscribed Share Capital that has
been called up by the Company
Calls in Arrear – call amount not paid by the shareholders
Paid up Capital – Called up share capital minus calls in arrear
Forfeited Shares – amount paid up on the shares forfeited due to non
payment of call money
OTHER EQUITY
Includes all items other than equity shares that are attributable to the holders of equity
instruments of an entity. The followings are disclosed as Other Equity:
 Share application money pending allotment;
 Equity component of compound financial instrument;
 Reserves and Surplus;
 Debt instruments through other comprehensive income;
 Equity instruments through other comprehensive income;
 Effective portion of Cash Flow Hedges;
 Revaluation Surplus;
 Exchange difference on translating the Financial Statements of a foreign
corporation;
 Other items of Other Comprehensive Income;
 Money received against share warrants.
LIABILITIES
A present obligation of the entity arising from past events, the
settlement of which is expected to result in an outflow from the entity
of resources embodying economic benefits.
Classified as non-current and current
Current Liabilities
 expected to be settled in the company’s normal operating cycle;
 held primarily for the purpose of being traded;
 due to be settled within twelve months after the reporting date; or
 the company does not have an unconditional right to defer settlement of the
liability for at least twelve months after the reporting date.
LIABILITIES
CLASSIFICATION
NON-CURRENT
FINANCIAL LIABILITIES
Contractual obligation to deliver cash or another financial asset to an
entity;
Exchange of assets or financial liabilities with another entity under
conditions that are potentially unfavourable to the entity;
A contract which will be settled with entity’s own equity instruments
and is
 a derivative that will or may be settled other than by exchange of a fixed
amount of cash or another financial asset for a fixed number of the entity’s
own equity instruments; or
 a non-derivative for which the entity is or may be obliged to receive a
variable number of its own equity instruments.
NON-CURRENT
FINANCIAL LIABILITIES
Financial liabilities that are expected to settled after 12 months
Non-contractual obligations (e.g. statutory dues, tax payable) not
classified under this heading
Further classified as:
 Borrowings
 Trade Payables
 Other Financial Liabilities
NON-CURRENT
BORROWINGS
Bonds or debentures;
Term loans;
 from banks;
 from other parties;

Deferred payment liabilities;

Deposits;
Loans from related parties;
Long term maturities of finance lease obligations;
 Liability component of compound financial instruments;
Other loans (specify nature)
 
NON-CURRENT TRADE
PAYABLES
Dues in respect of goods and services purchased
in the normal course of business.
Payables of any other nature (statutory dues,
payables for purchase of capital goods etc.) are
not included under this heading.
Trade payables which are non-current in nature
are disclosed under this heading.
NON-CURRENT
PROVISIONS
Existing obligation due to past events but the amount of liability is
uncertain and has to be estimated
Provision for liabilities of non-current nature
Further classified:
 provision for employee benefits’
 ‘others’; specifying the nature.
DEFERRED TAX
LIABILITIES
Due to timing difference between the taxable income and reported
income.
A timing difference is likely to be reversed in future.
Due to timing difference an enterprise has paid lower taxes in the
current year which will result in increased tax liability in the future
years
OTHER NON-CURRENT
LIABILITIES
Residual category of non-current liabilities.
Further classified as
 advances
 Others
Examples
 Amounts received against goods to be sold or services to be
provided,
 Security deposits from customers or vendors,
 Statutory dues payable,
 Legal claims outstanding,
 Interest payable on unpaid amount to supplier
CURRENT LIABILITIES
Classified as:
 Current Financial Liabilities
 Other current liabilities
 Current Provisions
 Current Tax Liabilities
CURRENT FINANCIAL
LIABILITIES
Financial liabilities that are in the nature of current liabilities
Non-contractual obligations (e.g. statutory dues, tax payable) not
classified under this heading
Further classified as:
 Current borrowings
 Current trade payables
 Other current financial liabilities
CURRENT BORROWINGS
Loans repayable on demand
 from banks;
 from other parties.

Loans from related parties;

Deposits;
Other loans (specify nature).
Further sub-classified as secured and unsecured
specifying the nature of security in each case.
CURRENT TRADE
PAYABLES
Dues in respect of goods and services purchased
in the normal course of business.
Payables of any other nature (statutory dues,
payables for purchase of capital goods etc.) are
not included under this heading.
Trade payables which are current in nature are
disclosed under this heading.
OTHER CURRENT
FINANCIAL LIABILITIES
Current maturities of long-term debt;
Current maturities of finance lease obligations;
Interest accrued;
Unpaid dividends;
Application money received for allotment of securities to the
extent refundable and interest accrued thereon;
Unpaid matured deposits and interest accrued thereon;
 Unpaid matured debentures and interest accrued thereon;
Others (specify nature).
CURRENT PROVISIONS
Existing obligation due to past events but the amount of liability is
uncertain and has to be estimated
Provision for liabilities of current nature
Further classified:
 provision for employee benefits’
 ‘others’; specifying the nature.
OTHER CURRENT
LIABILITIES
Residual category of current liabilities.
Further classified as
 Revenue received in advance
 Other advances
 Others

Examples
 Amounts received against goods to be sold or services to be provided,
 Security deposits from customers or vendors,
 Statutory dues payable,
 Legal claims outstanding,
 Interest payable on unpaid amount to supplier
CURRENT TAX
LIABILITIES
Towards expected tax payable on the taxable income for the year
using applicable tax rates at the Balance Sheet date.
Also includes any adjustment to taxes in respect of previous years.
Interest income/ expenses and penalties, if any, related to income tax.
Off Balance Sheet
Liabilities
CONTINGENT LIABILITIES
Contingency
 A condition or situation, the ultimate outcome of which, gain or loss, will be known
or determined only on the occurrence, or nonoccurrence, of one or more uncertain
future events.
 Restricted to conditions or situations at the balance sheet date
 The estimates of the outcome and of the financial effect of contingencies are
determined by the judgment of the management of the enterprise.
 CONTINGENT LIABILITIES
Claims against the company not acknowledged as debt;
Guarantees;
Other money for which the company is contingently liable
Commitments shall be classified as:
 Estimated amount of contracts remaining to be executed on capital
account and not provided for;
 Uncalled liability on shares and other investments partly paid
 Other commitments