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Notes to accounts How to show in FS help me

15 April 2023

dear Chartered knowledgeable persons,

reserves and surplus typically how to show in financial statement what is the procedure and how to make an working in notes to accounts???

what are the items I have to shown in this area which figure I should have to take could you please explain me

please with example

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11 Replies

Yasaswi Gomes new (Finance ) (4514 Points)
Replied 16 April 2023

Dr bank/assets

Cr. Revaluation reserve. Actually revaluation upwards or surplus occurs due to assets and sale of assets. So entries will change accordingly.

Go to section 3 companies acts, you'll find better instructions there.

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sabyasachi mukherjee (27574 Points)
Replied 17 April 2023

This is a journal entry . it's wrong

Yasaswi Gomes new (Finance ) (4514 Points)
Replied 17 April 2023

Journal entries used for depiction are never wrong. That is what happens during a revaluation upwards. I have clearly mentioned that entries will vary as per the transaction.

Yasaswi Gomes new (Finance ) (4514 Points)
Replied 17 April 2023

Mr Sanjay, Sabyasachi is correct in a way. AS calls it revaluation and surplus account and indas calls it just a revaluation reserve. So no need for the bank in Dr. Entry. Because I've imagined that gain on disposal over the carrying amount is a surplus to the bank and surplus added to surplus accounts. Now you people must sort out if you want metamorphose indas or get confused for the rest of your lives. It's only revaluation reserve in indas and everything is accounted into it. See how easy life can be?

Yasaswi Gomes new (Finance ) (4514 Points)
Replied 17 April 2023

Now subsection 3 of the companies act 2013 suggests that expression "surplus in profit and loss account" so a disposal can have a surplus and hence first entries are not wrong.

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Yasaswi Gomes new (Finance ) (4514 Points)
Replied 17 April 2023

The bank entry is wrong, because the surplus is for revaluation and gain cannot be classified as surplus. When you dispose the asset any revaluation surplus is transferred to revenue reserves called retained earnings. Even in indas all the revaluation gain is transferred to retained earnings. So the terminology differs and so

Asset is 100 revalued to 200

Dr. Asset 100

Cr. Surplus 100

And transfer the surplus to revaluation reserve

Dr. Surplus

Cr. Reserves account

When you sell the same asset for 200

Dr. Bank 200

Cr. Asset 100

Cr. Gain on sale 100.

There is no law apart from section 129 which clearly says surplus comes from sales apart from the depreciation surplus. On disposal existing surplus from reserves will be transferred to retained earnings and some surplus part related to cost and revaluation depreciation will be transferred to surplus account.

Yasaswi Gomes new (Finance ) (4514 Points)
Replied 17 April 2023

Now the bank is correct because an article from tax guru is suggesting capital reserves is created for profit on sale of fixed assets.

Dr. Bank

Cr. Capital reserves.

That's all Sanjay. These are just complaiances and it is considered as other reserves in the section 129 of companies act. No one create reserves because it's all don't when the company started. So these things are not at all important apart from maintaining statutory required reserves like eg drr.

sabyasachi mukherjee (27574 Points)
Replied 17 April 2023

You are requested to mention disclosure requirements as per schedule Iii part 1

Yasaswi Gomes new (Finance ) (4514 Points)
Replied 17 April 2023

Sorry for getting carried away. That's one thing I don't know. I'll reply back later on.

Yasaswi Gomes new (Finance ) (4514 Points)
Replied 17 April 2023

Disclosures: as standard disclosure are given higher importance than companies act disclosures unless the company is in liquidation, you have to follow those disclosures. All other are generic disclosures in schedule 3 part a.