Annual accounts - Form and contents of ‑Model form of balance sheet other than set out in Part I of Schedule VI - Companies Law - 12/6/60 PR(S),

Circular: No. 12/6/60 PR(S), dated 18 7 1961. Subjects: Annual accounts - Form and contents of ‑Model form of balance sheet other than set out in Part I of Schedule VI Sub‑section (1) of section 211, as amended by section 62 of the Companies (Amendment) Act, 1960, permits Companies to make out their balance sheet in such form, other than the form set out in Part I of Schedule VI, as may be approved by the Central Government either generally or in any particular case. In this connection a form of columnar balance sheet ... prepared in this Department intended to serve as a model in case any company should like to make out its balance sheet in a form other than that set out in Schedule VI is annexed herewith (here printed below). The design and contents of the model form may be kept in view by every company when it seeks the approval of the Central Government under section 211(1 ) to the alternative form of balance sheet that it may desire to adopt. It is not proposed to issue any general order in exercise of the powers vested in the Government under section 211(1). MODEL FOrM OF BALANCE SHEET BALANCE SHEET OF.................................................................................................................. [ here enter the name of the company ] AS AT............................................................................................................................................ [ here enter the date at which the balance sheet is made out ] Instructions in accordance with which assets and liabilities should be made out Description Figures for the current year Figures for the previous year *Terms of redemption or conversion (if any) of any redeemable preference capital to be stated, together with earliest date of redemption or conversion. I. *SHARE CAPITAL Authorised...... shares of Rs......each Particulars of any option on unissued share capital to be speci fied. Issued (distinguishing between the various classes of capital and stating the particulars specified below in respect of each class) ...... shares of Rs. ...... each Particulars of the different classes of preference shares to be given. Subscribed (distinguishing between the various classes of capi tal and stating the particulars specified below, in respect of each class) ...... share of Rs ...... each. Rs. ...... called up ( c ) Of the above shares ...... shares are allotted as fully paid-up pursuant to a contract without payments being received in cash. Specify the source from which bonus shares are issued, e.g., capitalisation of profits or reserves or from share premium account. Of the above shares ...... shares are allotted as fully paid-up by way of bonus shares. Less : Calls unpaid. ( i ) by managing agents or secretaries and treasurers and where the managing agent or secretaries and treasurers are a firm by the partners thereof, and where the managing agent or secretaries and treasurers are a private company by the directors or members of that company ( ii ) by directors ( iii ) by others Any capital profit on reissue of forfeited shares should be transferred to capital reserves. Add : Forfeited shares (amount originally paid-up) *Additions and deductions since last balance sheet to be shown, under each of the specified heads. The word fund in relation to any reserve should be used only where such reserve is specifically represented by earmarked investments. II. *RESERVES AND SURPLUS ( 1 ) Capital reserves ( 2 ) Capital redemption reserve ( 3 ) Shares premium account ( cc ) ( 4 ) Other reserves specifying the nature of each reserve and the amount in respect thereof Less: Debit balance in profit loss account (if any) ( h ) ( 5 ) Surplus, i.e., balance in profit loss account after provid ing for proposed allocations, namely, dividend, bonus or reserves ( 6 ) Proposed additions to reserves ( 7 ) Sinking funds TOTAL SHAREHOLDERS FUNDS EMPLOYMENT OF SHAREHOLDERS FUNDS *Under each head the original cost and the additions thereto and deductions therefrom during the year, and the total depreciation written off or provided up to the end of the year to be stated. In every case where the original cost cannot be ascertained with out unreasonable expense or delay, the valuation shown by the books shall be given. For the purposes of this paragraph such valuation shall be the net amount at which an asset stood in company s books at the commencement of this Act after deduction of the amount previously provided or written of for depreciation or diminution in value, and where any such asset is sold, the amount of sale proceeds shall be shown as deduction. Where sums have been written off on a reduction of capital or a revaluation of assets, every balance sheet (after the first balance sheet), subsequent to reduction or revaluation shall show the reduced figures and with the date of the reduction in place of the original cost. Each balance sheet for the first five years subsequent to the date of the reduction, shall show also the amount of the reduc tion made. Similarly, where sums have been added by writing up the assets, every balance sheet subsequent to such writing up shall show the increased figure with the date of the increase in place of the original cost. Each balance sheet for the first five years subse quent to the date of writing up shall also show the amount of increase made. III. *FIXED ASSETS Distinguishing as far as possible between expenditure upon ( 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, and ( k ) vehicles, etc. IV. INVESTMENTS Showing nature of investments and mode of valuation, for example cost, or market value and distinguishing between- *Aggregate amount of company s quoted investments and also the market value thereof shall be shown. Aggregate amount of compa ny s unquoted investments shall also be shown. ( 1 ) *investment in Government or trust securities, ( 2 ) investment in shares, debentures or bonds (showing separately shares, fully paid-up and also distinguishing the different classes of shares and showing also in similar details investments in shares, debentures or bonds of subsidi ary companies), ( 3 ) immovable properties *Mode of valuation of stock shall be stated and the amount in respect of raw materials shall also be stated separately where practicable. Mode of valuation of works-in-progress shall be stated. In regard to sundry debtors particulars to be given separately of ( a ) debts considered good and in respect of which the company is fully secured; ( b ) debts considered good for which the company holds no security other than the debtor s personal security; and ( c ) debts considered doubtful or bad. Debts due by directors or other officers of the company or any of them either severally or jointly with any other person or debts due by firms or private companies respectively in which any direc tor is a partner or a director or a member to be separately stated. Debts due from other companies under the same management to be disclosed with the names of the companies [ vide sec. 370 ]. FIXED ASSETS V. CURRENT ASSETS, LOANS ADVANCES ( A ) Current assets: ( 1 ) Interest accrued on investments ( 2 ) *Stores and spare parts ( 3 ) Loose tools ( 4 ) *Stock-in-trade ( 5 ) Works-in-progress ( 6 ) Sundry Debtors ( a ) debts outstanding for a period exceeding six months ( b ) other debts Less: Provision The maximum amount due by directors or other officers of the company at any time during the year to be shown by way of note. The provision to be shown under this head should not exceed the amount of debts stated to be considered doubtful or bad and any surplus of such provisions, if already created, should be shown at every closing under Reserves and Surplus (in the Liabilities side) under a separate sub-head Reserve for Doubtful or Bad debts . *The balances lying with bankers on current accounts, call account and deposit accounts shall be shown separately. The above instructions regarding Sundry Debtors apply to Loans and Advances also ( 7 ) *Cash and bank balances ( B ) Loans and advances ( 8 ) Advances and loans to subsidiaries ( 9 ) Bills of exchange ( 10 ) Advances recoverable in cash or in kind or for value to be received, e.g., rates, taxes, insurance, etc. ( 11 ) Balance on current account with managing agents or secre taries treasurers ( 12 ) Balances with customs, port trust, etc., where payable on demand. VI. *MISCELLANEOUS EXPENDITURE [To the extent not written off or adjusted] ( 1 ) Preliminary expenses ( 2 ) Expenses including commissions or broker age on underwriting or subscription of shares or debentures ( 3 ) Discount allowed on the issue of shares or debentures ( 4 ) Interest paid out of capital during construction also stating the (rate of interest) ( 5 ) Development expenditure not adjusted ( 6 ) Other items (specifying nature) *Show here the debit balance of profit and loss account carried forward after deduction of the uncommitted reserves, if any. VII. *PROFIT AND LOSS ACCOUNT CURRENT ASSETS *Loans from directors, the managing agents, secretaries treasurers, manager, should be shown separately. Interest accrued and due on secured loans should be included under the appropriate sub-heads under the head Secured loans *The nature of the security to be specified in each case. Where loans have been guaranteed by managing agents, secretaries and treasurers, managers, and/or directors, a mention thereof shall also be made and also the aggregate amount of such loans under each head. See note ( d ) at foot of Form. Terms of redemption or conversion (if any) of debentures issued to be stated together with earliest date of redemption or conver sion. VIII. *SECURED LOANS ( 1 ) *Debentures ( 2 ) *Loans and advances from banks ( 3 ) *Loans and advances from subsidiaries ( 4 ) *Other loans and advances *Loans from directors, the managing agents, secretaries and treasurers, manager, should be shown separately. Interest accrued and due on unsecured loans should be included under the appropri ate sub-heads under the head Unsecured loans . Where loans have been guaranteed by managing agents, secretaries and treasurers, manager and/or directors, a mention thereof shall also be made and also the aggregate amount of such loans under each head. See note ( d ) at foot of Form IX. *UNSECURED LOANS ( 1 ) Fixed deposits ( 2 ) Loans and advances from subsidiaries ( 3 ) * Short-term loans and advances ( a ) From banks ( b ) From others ( 4 ) Other loans and advances ( a ) From banks ( b ) From others X. *CURRENT LIABILITIES AND PROVISIONS ( A ) Current liabilities ( 1 ) Acceptances ( 2 ) Sundry creditors ( 3 ) Subsidiary companies ( 4 ) Advance payments and unexpired discounts for the portion for which value has still to be given, e.g., in case of the following classes of companies : newspaper, fire insurance theatres, clubs, banking steamship companies, etc. ( 5 ) Unclaimed dividends ( 6 ) Other liabilities (if any) ( 7 ) Interest accrued but not due on loans ( B ) Provisions ( 8 ) Provision for taxation ( 9 ) Proposed dividends ( 10 ) For contingencies ( 11 ) For provident fund scheme ( 12 ) For insurance, pension and similar staff bene-fit schemes ( 13 ) Other provisions CURRENT LIABILITIES NET CURRENT ASSETS (A footnote to the balance sheet may be added to show separate ly) ( 1 ) Claims against the company not acknowledged as debts ( 2 ) Uncalled liability on shares partly paid *The period for which the dividends are in arrears of if there is more than one class of shares, the dividends on each such class are in arrears, shall be stated. The amount shall be stated before deduction of income-tax, except that in the case of tax-free dividends the amount shall be shown free of income-tax and the fact that it is so shown shall be stated. *The amount of any guarantees given by the company on behalf of directors or other officers of the company shall be stated and where practicable the general nature and amount of each such contingent liability, if material, shall also be specified. (3 ) *Arrears of fixed cumulative dividends ( 4 ) Estimated amount of contracts remaining to be executed on capital account and not provided for ( 5 ) Other money (for which the company is contingently liable) TOTAL FIXED AND NET CURRENT ASSETS NOTES GENERAL INSTRUCTIONS FOR PREPARATION OF BALANCE SHEET (a) The information required to be given under any of the items or sub-items in this form, if it cannot be conveniently included in the balance sheet itself, shall be furnished in a separate schedule or schedules to be annexed to and to form part of the balance sheet. This is recommended when items are numerous. (b) Naya paise can also be given in addition to Rupees, if desired. (c) In the case of subsidiary companies, the number of shares held by the holding company as well as by the ultimate holding company and its subsidiaries must be separately stated. The auditor is not required to certify the correctness of such shareholdings as certified by the management. (cc) The item share premium account shall include details of its utilization in the manner provided in section 78 in the year of utilization. (d) Short-term loans will include those which are due for not more than one year as at the date of the balance sheet. (e) Depreciation written off or provided shall be allocated under the different assets heads and deducted in arriving at the value of Fixed Assets. (f) Dividends declared by subsidiary companies after the date of the balance sheet should not be included unless they are in respect of a period which closed on or before the date of the balance sheet. (g) Any reference to benefit expected from contracts to the extent not executed shall not be made in the balance sheet but shall be made in the Board s report. (h) The debit balance in the profit and loss account shall be shown as a deduction from the uncommitted reserves, if any. (i) As regards loans and advances, amounts due by the managing agents or secretaries and treasurers, either severally or jointly with any other persons, to be separately stated; the amounts due from other companies under the same management should also be given with the names of the companies vide section 370; the maximum amount due from every one of these at any time during the year must be shown. (j) Particulars of any redeemed debentures which the company has power to issue should be given. (k) Where any of the company s debentures are held by a nominee or a trustee for the company, the nominal amount of the debentures and the amount at which they are stated in the books of the company shall be stated. (l) A statement of investments (whether shown under Investments or under Current assets as stock‑in‑trade) separately classifying trade investments and other investments should be annexed to the balance sheet showing the names of the bodies corporate, indicating separately the names of the bodies corporate in the same group (with the name of the managing agent or secretaries and treasurers, if any, of every body corporate) in whose shares or debentures investments have been made (including all investments whether existing or not, made subsequent to the date as at which the previous balance sheet was made out ) and the nature and extent of the investment so made in each such body corporate; provided that in the case of an investment company, that is to say, a company whose principal business is the acquisition of shares, stock, debentures or other securities, it shall be sufficient if the statement shows only the investments existing on the date as at which the balance sheet has been made out; provided further that it shall not be necessary to give any particulars in respect of investments made by a managing agency or secretaries, and treasurers company in the managed companies shares or debentures. A trade investment means an investment by a company in the shares or debentures of another company, not being in subsidiary, for the purpose of promoting the trade or business of the first company. (m) If in the opinion of the Board, any of the current assets, loans and advances have no value on realisation in the ordinary course of business at least equal to the amount at which they are stated, the fact that the Board is of that opinion shall be stated. (n) Except in the case of the first balance sheet laid before the company after the commencement of the Act, the corresponding amounts for the immediately preceding financial year for all items shown in the balance sheet shall be also given in the balance sheet. The requirement in this behalf shall in the case of companies preparing quarterly or half‑yearly accounts, etc, relate to the balance sheet for the corresponding date in the previous year. (o) The amounts to be shown under sundry debtors shall include the amounts due in respect of goods sold or services rendered or in respect of other contractual obligations but shall not include the amounts which are in the nature of loans or advances. (p) Current accounts with directors, managing agents secretaries and treasurers, and manager whether they are in credit or debit shall be shown separately.