Ministry of Corporate Affairs issued a notice dated February 09, 2016 invited for comments on Revised Schedule III applicable to a company required to comply with Ind AS.

Internationally IAS 1 – Presentation of Financial Statements prescribes the minimum set of requirements for IFRS compliant financial statements. However, it does not prescribe the exact order of presentation of items or formate for financial statement. It gives options to select order of presentation on the basis of company’s assessment and judgement.

In India, Schedule III to the Companies Act, 2013 governs the exact form and presentation of financial statements. It sets out the minimum requirements for disclosure on the face of the Financial Statements, i.e., Balance Sheet, Statement of Changes in Equity for the period, the Statement of Profit and Loss for the period and Notes. Cash flow statement will be prepared in compliance with Ind AS 7 – Statement of Cash Flows.

Changes / additional requirements as per IndAS compliant Schedule III in comparison to IAS – 1 (IFRS):

♠ Presentation of assets and liabilities :

Ind AS Compliant Schedule III does not allow presentation of assets and liabilities in the order of liquidity. It mandates order of presentation as per below :


i) Non-current Assets

ii) Current Assets



(1) Equity share capital

(2) Other Equity


(1) Non-current liabilities

(2) Current liabilities

♠ Financial assets and financial liabilities :

Financial assets and financial liabilities are grouped together under current/non-current assets and liabilities as per below :

a) Non-current Financial assets : Investments, Trade receivables, Loans and others

b) Current Financial assets : Investments, Trade receivables, cash and cash Equivalents, Bank balances other than included in cash and cash equivalents, Loans and others

c) Non-current Financial liabilities : Borrowings, Trade Payables and Other financial liabilities

d) Current Financial liabilities : Sub-grouping same as Non-current Financial liabilities

♠ Current Taxes :

Net Balance of Current Taxes shall be classified as Current only. No need to apply current/non-current classification to balance of taxes. As per Ind AS 12 – Income taxes, current tax is the amount of income taxes payable (recoverable) in respect of the taxable profit (tax loss) for a period. Hence, all types of taxes other than income taxes will be disclosed as other assets / liabilities.

♠ Statement of changes in equity :

Some of the items of Other Comprehensive Income (OCI) that will not be reclassified to profit and loss account e.g. remeasurment of net defined benefit plans (Ind AS 19), fair value changes relating to own credit risk (Ind AS 109) and share of Other Comprehensive Income in Associates and Joint Ventures shall be recognised as a part of retained earnings with a separate disclosure in Notes.

However, Equity Instruments that are fair valued through OCI as per option elected in Ind AS 109 are continued to be recognized separately under Items of Other OCI. On disposal of such investment, it will be transferred to Retained Earnings within statement of changes in equity.

♠ Capital advances :

Capital advances are classified as a part of other non-current assets. No requirement to assess for current/non-current classification based on assessment of likely settlement.

Fixed deposits with Banks :

There are 3 different classifications available for Bank Balances (including fixed deposits) based on its maturity.

  1. Cash and cash equivalents : Short term fixed deposits say 3 months from the date of inception or original maturity within 3 months.
  2. Current financial assets : Fixed Deposits maturing within 12 months from the balance sheet date and not included in cash and cash equivalents
  3. Non-current financial assets : Fixed Deposits with more than 12 months maturity from the balance sheet date

♠ Financial Guarantees :

Under disclosure of Contingent Liabilities and Commitments, disclosure of financial guarantees is not required. Generally, financial guarantees are offered by the parent company on the borrowings made by the subsidiaries.

♠ Presentation of statement of profit and loss :

Ind AS Compliant Schedule III mandates presentation of expenses based on “Nature of expenses” method. Applying the ‘Function of expense’ or ‘Cost of sales’ Method is not allowed.

♠ Additional disclosure requirement in consolidated financial statements(CFS) :

Additional disclosure is required in CFS to identify contributions of parent, subsidiaries, JV and associates to consolidated net assets, consolidated profit or loss, consolidated OCI and consolidated Total comprehensive income. This is similar as exiting Schedule III requirements.

Disclosure requirements which were prescribed under existing Schedule III but not brought to IndAS compliant Schedule III:

♠ Investment classification – Trade / Non-trade :

Sub-classification of investment in Trade investment and Non-trade investment is not longer applicable.

♠ Interest accrued on borrowings :

Interest accrued and due on borrowings / Interest accrued but not due on borrowings – no need to separate from the borrowings. Ind AS 109 prescribes to carry borrowings at amortised cost hence separating portion of interest accrued on borrowings does not provide any useful information to the readers of financial statements.

♠ Sale of products :

Under existing Schedule III, revenue from sale of products is disclosed net of excise duty with separate disclosure of excise duty.

Ind AS Compliant Schedule III prescribes disclosure revenue from sale of products including excise duty. Such excise duty shall appropriately be classified under cost of material consumed / other expenses.

♠ Separate disclosure of expenditure on different heads :

Existing Schedule III prescribed disclosure of expenditure on Consumption of stores and spare parts; Power and fuel; Rent; Repairs to buildings; Repairs to machinery; Insurance; Rates and taxes, excluding, taxes on income; Miscellaneous expenses.

Ind AS Compliant Schedule III prescribes separate disclosure of any item of income or expenditure which exceeds one per cent of the revenue from operations or Rs.10,00,000, whichever is higher, in addition to the consideration of ‘materiality’.

Hope this article will be useful to understand the additional requirements of Ind AS Compliant Schedule III.

*Note : Ind AS compliant schedule III means exposure draft of Schedule III issued by MCA applicable to company required to comply with Ind AS.

(Authored by  CA. Parag Sorathiya, who can be reached at

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