Capital committments and msmed disclosures in notes to accou

This query is : Resolved

Querist : Anonymous

Querist : Anonymous (Querist)

14 June 2014 Dear Experts/ members,

Would you please share share your expertise whether disclosures of MSMED and Cpital commitments is applicable for all level of the entities??

Further, please share the specimens to disclose above policies in NTAcs...

Thanks,

Querist : Anonymous

Querist : Anonymous (Querist)

16 June 2014 Pls. respond / provide your valuable inputs on this urgent request..

Querist : Anonymous

Querist : Anonymous (Querist)

20 June 2014 could anyone, Please suggest on these disclosures..??

Aashok Kumar Sharma

Aashok Kumar Sharma (Expert)
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18 July 2024 Disclosures related to Micro, Small, and Medium Enterprises (MSMEs) and capital commitments in the notes to accounts are typically required as per the applicable accounting standards and regulatory requirements. Here’s an overview of these disclosures:

### 1. MSME Disclosures:

**Applicability:**
- As per the Micro, Small and Medium Enterprises Development (MSMED) Act, 2006 in India, certain disclosures are mandatory for companies.
- These disclosures are applicable to entities that have transacted with MSMEs for the purchase of goods or services, where payments to MSMEs exceed specified thresholds.

**Details to be Disclosed:**
- The amount due and unpaid to MSMEs at the end of each accounting year.
- The interest paid by the buyer to MSMEs on the delayed payments.

**Format of Disclosure:**
- **Amount Due:** "The amount of dues to Micro and Small enterprises as at the end of the accounting period is Rs. [amount]."
- **Interest Paid:** "The amount of interest paid to Micro and Small enterprises in terms of section 16 of the Micro, Small and Medium Enterprises Development Act, 2006 is Rs. [amount]."

### 2. Capital Commitments Disclosures:

**Applicability:**
- Capital commitments disclosures are required for entities that have committed to significant future expenditures, such as for the purchase of property, plant, and equipment (PP&E) or other major contracts.

**Details to be Disclosed:**
- The nature and purpose of the commitments.
- The total contractual commitments for capital expenditures as at the end of the reporting period.

**Format of Disclosure:**
- **Nature and Purpose:** "The Company has committed to capital expenditures totaling Rs. [amount], primarily for [brief description of projects or purposes]."
- **Total Commitments:** "As at [end of reporting period], the Company's total contractual commitments for capital expenditures amounted to Rs. [amount]."

### Specimens for Disclosures:

Here are examples of how these disclosures might appear in the Notes to Accounts:

**Example of MSME Disclosure:**
"The Company has identified Micro and Small enterprises (‘MSEs’) from the available information in accordance with the 'Micro, Small and Medium Enterprises Development Act, 2006'. Based on the information available with the Company, the outstanding dues to such enterprises, as at [end of reporting period], is Rs. [amount]. The interest paid/payable on such dues is Rs. [amount]."

**Example of Capital Commitments Disclosure:**
"The Company has committed to capital expenditures amounting to Rs. [amount] as at [end of reporting period]. These commitments primarily relate to [brief description of projects or purposes]."

### Conclusion:

These disclosures are essential for providing transparency about the Company's financial obligations and commitments. They ensure compliance with regulatory requirements and help stakeholders understand the financial health and future obligations of the entity. The format and specific details may vary based on the jurisdiction and specific accounting standards applicable to the entity.

For precise guidance tailored to your jurisdiction and specific circumstances, it's advisable to consult with a qualified accountant or professional familiar with local regulatory requirements and accounting standards.

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