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BB0017: Financial Reporting Assignment Set I Note: Each question carries 10 Marks. Answer all the questions. Q.1.

. What are the disclosure requirements for share capital. Disclosure requirements for share capital In India a company may or may not be registered with share capital. A company limited by guarantee need not have a share capital. But in the case of a company, having a share capital, the memorandum of the company must state the amount of the capital with which it is registered and the division thereof into type of shares and the amount of each share. Share capital is the first item shown on the liability side of the balance sheet of a company. It is further divided into (a) Authorised Capital (the maximum amount of capital which a company can raise by the issue of shares); (b) Subscribed Capital (part of the Authorised Capital which has been issued and subscribed by the public); (c) Paid-up Capital (the amount of capital which has been called up and actually paid by the shareholders). Statutory disclosure requirements of Schedule VI Part 3 of the Schedule VI to the Companies Act 1956 requires the following particulars to be disclosed regarding share capital: (a) Authorised .. shares of Rs. ..each For completed assignment visit Q.2 What are the expenditures that are shown under capital work in progress. Expenditures that are shown under capital work in progress The expenditure incurred on installation of plant and machinery and other assets, which is yet to be capitalised is shown under the head capital work-in-progress'. The expenditure incurred during construction (net of Income) as allocated and distributed to work-in-progress awaiting capitalisation is also included under the head 'Capital-work-in-progress. However, the Institute of Chartered Accountants of India in its 'Guidance note on Terms used in Financial Statements' has defined 'Capital work in progress as 'expenditure on capital assets which are in the process of Construction or completion.' The Companies Act including Schedule VI does not contain any specific disclosure requirement regarding capital work in progress. The Institute of Chartered Accountants of India has studied this subject, which is covered in its study on 'Expenditure during construction period'. The expenditure on various

projects/works/schemes is booked to the respective works/jobs and is grouped under the followed sub-heads: i) Expenditure during construction awaiting allocation. ii) Work-in-progress. iii) Capital equipments awaiting erection, installation, commissioning and adjustments. iv) Construction Stores & Spares. v) Advances. vi) Others. Issues involved: Three major issues arise regarding disclosure of capital work in progress in the financial statements: i) Manner of disclosure of advances to contractors in respect of construction or fabrication of plants and machinery or others assets during the construction/fabrication period; ii) Manner of disclosure of capitalised indirect revenue expenditure during the construction period to ensure compliance with disclosure requirements of Part II of Schedule VI of Companies Act, 1956; and iii) Depreciation of Fixed Assets used in construction period. Each of the above issue is discussed in the following paragraphs. For completed assignment visit Q.3 What are the statutory disclosure requirements for reserves and surplus. Disclosure of Reserves and Surplus Part III of Schedule VI of the Companies Act 1956 has negatively defined Reserve as under: The expression reserve shall not include any amount written off or retained by way of providing for depreciation, renewals or diminution in value of assets or retained by way of providing for any known liability of which the amount cannot be determined with substantial accuracy In other words, reserve refer to amount set aside out of profits of the company or other surpluses of the company which are neither meant to meet any loss in respect of depreciation, renewals, or diminution in the value of assets nor meant to meet any known liability. Statutory disclosure Requirements of Schedule VI

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