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In continuation of earlier article on topic “Specific Issues in Revised Schedule VI”, I am now here to discuss certain issues on Assets Side of Balance Sheet.

Here we have a residual head named as “Other Non – Current Assets” and “Other Current Assets”. I will also discuss specifically some items for the purpose of “Other Loans and Advances”. Schedule VI prescribes following subhead for presentation.

In case of “Other Non – Current Assets”:-

a. Long Term Trade Receivables;

b. Others (Specify Nature)

In case of “Other Current Assets”:-

Schedule VI says that “This is an all inclusive heading, which incorporates current assets that do not fit into any other asset categories.”

1. Statutory Dues receivable

Many business entities have outstanding receivables on account of refund or excess payment or subsidy or withholding tax. However not all receivables are in the nature of amount paid in excess of what assessed.

When we read term “Loans and Advances”, it is normally understood as something advanced to other party and will be received after some time. Repayment may not be necessarily in cash, it may be in kind too.

Statutory dues can be in form of Advance Tax, or tax withhold by some other party. It appears logical to show advance tax under other loans and advances and withholding tax under other current assets.

2. Deferred Revenue Expenses

A term we commonly name as Preliminary Expenses. Although after implementation of AS 26, any such expense does not qualify for recognition since it is unable to create an “Asset”.

Still many small business entities follow older tradition since they can avoid time consuming computation of AS 22 in respect of deferred tax liability. Section 35D allows such expenditure in 5 equal installments.

3. Advances to trade suppliers

It can be shown as separate item under sub – head “Other Loans and Advances”. Sometimes debit balance is created not because of actual advance but due to irregular payments, still loans and advances seem proper category.

One thing pertinent to note here is in case of advances for capital expenditure, specific subhead in already given by Schedule VI.

4. Dues from other parties

Apart from above discussed items, there may be any other kind of receivable, for say, insurance claims, or receivable under any other contractual obligations. These should be shown in “Other Current/Non Current Assets”.

5. Amalgamation Adjustment A/c

This was a query asked from me in my earlier article. I had wrongly opined to classify it as “Other Non Current Asset” if the related statutory reserve is required to be maintained for more than 12 months. Otherwise, it should be shown under “Other Current Asset”.

A view was placed on discussion that whether this can be shown as deduction from related statutory reserves under head Reserves & Surplus. While further analyzing I came to understanding that creating an “Asset” is not proper since it does not qualify the definition given under framework for the preparation and presentation of financial statements. Hence it is proper to show it as deduction.

Published by

CA Sourabh Agarwal
(Chartered Accountant)
Category Accounts   Report

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