6.

VARIOUS EXPENSES

Expenditure incurred on each of the following items should be shown separately :

a ) consumption of stores and spare parts
b ) power and fuel
c ) rent
d ) repairs to buildings
e ) repairs to machinery
f ) insurance, and
g ) rates and taxes other than on income.

6.8

MISCELLANEOUS EXPENSES

Miscellanous expenses of the company are to be shown separately. In case an item exceeds 1% of
the total revenue of the company or Rs. 5000, whichever is higher , such an item is to be shown as a
separate and distinct item. In other words , such an item cannot be cludded together with other
items and shown under Miscellanous Expenses.

6.9

SALARIES AND WAGES

These expenses should be shown be classified as

a ) salaries , wages and bonus
b ) contribution to provident and other funds, and
c ) workmen and staff welfare expenses.

6.10

DEPRECIATION

(A) Disclosure : The amount provided for depreciation , renewals, or diminution in the value of fixed
assets is to be disclosed separately. In case such a provision is not made by means of a depreciation
charges, the method adopted for making such provision should be disclosed . In case no provision is
made for depreciation, the fact that no provision has been made should be stated and the quantum
of arrears of depreciation computed in accordance with section 205(2) of the Act should be
disclosed in a note.
(B) Provisions of Schedule XIV :

(1) Rates : Schedule XIV, which has been inserted by the companies (Amendment) Act, 1988,
specifies the rates of depreciation for various categories of assets. The schedule prescribes
depreciation rates on both the written-down value basis and the straight line basis.
(2) Types of Assets : Schedule XIV divides the various depreciable assets into four broad categories :
a) buildings, b) plant and machinery, c) furniture and fittings, and d) ships.
(3) Pro-rata on Additions / Sales : It has been specifically provided that case any addition is made to
any assets during the financial year, depreciation should be calculated on a pro- rata basis from the
datae of such addition. Similarly, where any asset is sold, discarded, demolished or destoryed during
the financial year, depreciation should be provided only up to the date on which the asset is sold,
discarded, demolished or destroyed .
(4) Shifts : Schedule XIV also provides separate depreciation rate for single shift, double shift and
triple shift working.
(5) Disclosure : Schedule XIV requires the disclosure of the following information in accounts :
a) depreciation methods used, and
b) depreciation rates or useful lives of the assests, if they are different from the principal rates
specified in the schedule.

6.11

INTEREST

The amount of interest on the companys debentures and on other loans for fixed periods is to be
stated. The amount of interest, if any, paid or payable to the managing director and the manager
should be separately stated.

6.12 PROVISIONS
The total if material, of provisions aganist any specific liability, contingency or commitment existing
at the date of the balance sheet is to be shown in the Profit and Loss Account. If any amounts that
are no longer required have been withdrawn from such provisions, the same should also be
disclosed. Provisions for losses of subsidiary companies should be separately stated.

6.13

INCOME AND LOSSES FROM INVESTMENTS

The amount of income from investments should be shown separately, distinguishing between trade
investment and other investments. If gross income is shown, the amount of income tax deducted
should be stated separately. Dividends from subsidiary companies should be shown separately.

Profits or losses on investments are required to be disclosed, showing distinctly the extent of the
profits or losses earned or incurred on account of membership of a partnership frim. As and when
the profits accrue, the company should disclose them.
[Note : Even Interest from Sinking Fund Investments should be credited to the P & L A/c, as required
under Schedule VI. It should not be directly credited to the Sinking Fund A/c , as is done usually:]

6.14

OTHER INCOME

Miscellaneous income should be separately stated. Other income by way of interest, etc. Should also
be shown separately . in case gross income is stated, the amount of income tax deducted, if any ,
should also be separately shown.

6.15

PROFITS / LOSSES ON UNUSUAL TRANSACTIONS