Balance Sheet, Problems on Preparation of Statement of Balance sheet & other Comprehensive Income Statement as per Ind-As 1

Ind AS 1, Presentation of Financial Statements, provides guidance on the presentation of financial statements, including the balance sheet (statement of financial position) and the statement of profit and loss (comprehensive income statement) for entities applying Indian Accounting Standards (Ind AS).

Balance Sheet (Statement of Financial Position)

Structure:

  • The balance sheet presents an entity’s financial position as of a specific date, showing its assets, liabilities, and equity.
  • The standard does not prescribe a specific format, but it generally follows the classification between current and non-current assets and liabilities.

Key Components:

1. Assets

    • Current Assets: Assets expected to be realized or consumed within one year.
    • Non-Current Assets: Assets with a longer-term nature (e.g., property, plant, and equipment, intangible assets).

2. Liabilities

    • Current Liabilities: Obligations expected to be settled within one year.
    • Non-Current Liabilities: Obligations with a longer-term maturity.

3. Equity

    • Equity represents the residual interest in the assets of the entity after deducting liabilities.
    • Components may include share capital, retained earnings, and other comprehensive income.

Presentation:

  • Assets and liabilities are generally presented in order of liquidity (how quickly they can be converted to cash or settled).
  • Equity is presented separately, and the components of equity are disclosed.

Comparative Information:

  • The balance sheet should include comparative information for the preceding period, allowing users to analyze changes in financial position.

Statement of Profit and Loss (Comprehensive Income Statement)

Structure:

  • The statement of profit and loss presents the entity’s financial performance over a specified period.
  • It includes the results of operating activities, financing activities, and investing activities.

Key Components:

1. Revenue:

    • Inflows of economic benefits arising from the ordinary operating activities of the entity.

2. Expenses:

    • Outflows or using up of economic benefits incurred to generate revenue.

3. Net Profit or Loss:

    • The difference between revenue and expenses.

4. Other Comprehensive Income (OCI):

    • Items of income and expense that are not recognized in the profit or loss but are shown separately in the statement of profit and loss or in the statement of changes in equity.

Presentation:

  • The statement of profit and loss presents profit or loss and other comprehensive income separately.
  • It may include a subtotal for “profit or loss before other comprehensive income” and the total for “comprehensive income.”

Comparative Information:

  • Comparative information for the preceding period is presented to aid in the analysis of financial performance.

Other Comprehensive Income (OCI) Statement

Structure:

  • Ind AS 1 allows entities to present other comprehensive income in a single statement (Statement of Profit and Loss and Other Comprehensive Income) or in two separate statements (Statement of Profit and Loss followed by the Statement of Other Comprehensive Income).

Components of OCI:

  • OCI includes items such as changes in the fair value of available-for-sale financial instruments, revaluation of property, and actuarial gains and losses on defined benefit plans.

Presentation:

  • OCI is presented net of tax, and the tax effect is disclosed.
  • The total comprehensive income for the period, combining profit or loss and other comprehensive income, is presented.

Comparative Information:

  • Comparative information for the preceding period is presented.

Ind AS 1 emphasizes the importance of clarity and transparency in financial statement presentation. The objective is to provide relevant and reliable information to users for making informed economic decisions. Entities are required to comply with the specific disclosure requirements of Ind AS 1, providing additional information to enhance the understanding of the financial statements.

Presentation Flow under Ind AS 1

Balance Sheet (Statement of Financial Position)

    • Assets
      • Non-Current Assets
      • Current Assets
    • Equity and Liabilities
      • Equity
      • Non-Current Liabilities
      • Current Liabilities

Statement of Profit and Loss

    • Revenue
    • Other Income
    • Expenses
    • Profit Before Tax
    • Tax Expense
    • Profit for the Year

Statement of Other Comprehensive Income

    • Items not reclassified to Profit or Loss
    • Items reclassified to Profit or Loss
    • Total Other Comprehensive Income
    • Total Comprehensive Income

Format of Balance Sheet and Other Comprehensive Income Statement as per Ind AS 1

A. Format of Balance Sheet (Statement of Financial Position) as per Ind AS 1

ABC Limited
Balance Sheet as at 31 March 20XX

ParticularsNote No.Amount (₹)
ASSETS
I. Non-Current Assets
Property, Plant and EquipmentXXX
Capital Work-in-ProgressXXX
Investment PropertyXXX
GoodwillXXX
Other Intangible AssetsXXX
Intangible Assets under DevelopmentXXX
Financial Assets
• InvestmentsXXX
• LoansXXX
• Other Financial AssetsXXX
Deferred Tax Assets (Net)XXX
Other Non-Current AssetsXXX
Total Non-Current AssetsXXX
II. Current Assets
InventoriesXXX
Financial Assets
• InvestmentsXXX
• Trade ReceivablesXXX
• Cash and Cash EquivalentsXXX
• Bank Balances other than Cash EquivalentsXXX
• LoansXXX
• Other Financial AssetsXXX
Current Tax Assets (Net)XXX
Other Current AssetsXXX
Total Current AssetsXXX
TOTAL ASSETSXXX
ParticularsNote No.Amount (₹)
EQUITY AND LIABILITIES
I. Equity
Equity Share CapitalXXX
Other EquityXXX
Total EquityXXX
II. Non-Current Liabilities
Financial Liabilities
• BorrowingsXXX
• Lease LiabilitiesXXX
• Other Financial LiabilitiesXXX
ProvisionsXXX
Deferred Tax Liabilities (Net)XXX
Other Non-Current LiabilitiesXXX
Total Non-Current LiabilitiesXXX
III. Current Liabilities
Financial Liabilities
• BorrowingsXXX
• Trade PayablesXXX
• Lease LiabilitiesXXX
• Other Financial LiabilitiesXXX
Other Current LiabilitiesXXX
ProvisionsXXX
Current Tax Liabilities (Net)XXX
Total Current LiabilitiesXXX
TOTAL EQUITY AND LIABILITIESXXX

B. Format of Statement of Other Comprehensive Income as per Ind AS 1

ABC Limited
Statement of Other Comprehensive Income for the year ended 31 March 20XX

ParticularsAmount (₹)
Profit for the YearXXX
Other Comprehensive Income (OCI)
A. Items that will NOT be reclassified subsequently to Profit or Loss
Revaluation Surplus on Property, Plant and EquipmentXXX
Remeasurement Gain/(Loss) on Defined Benefit PlansXXX
Fair Value Changes in Equity Instruments designated through OCIXXX
Income Tax relating to the above items(XXX)
Total (A)XXX
B. Items that WILL be reclassified subsequently to Profit or Loss
Exchange Differences on Translation of Foreign OperationsXXX
Effective Portion of Cash Flow HedgesXXX
Debt Instruments measured at FVOCIXXX
Income Tax relating to the above items(XXX)
Total (B)XXX
Other Comprehensive Income for the Year (A + B)XXX
Total Comprehensive Income for the Year (Profit for the Year + OCI)XXX

Problems on Preparation of Statement of Balance Sheet & Other Comprehensive Income Statement as per Ind AS 1

Ind AS 1, Presentation of Financial Statements, prescribes the basis for preparing and presenting financial statements to ensure comparability with previous periods and with other entities. The Statement of Financial Position (Balance Sheet) presents the financial position of an entity by classifying assets, liabilities, and equity into current and non-current categories. Along with the Balance Sheet, Ind AS 1 requires the presentation of Other Comprehensive Income (OCI), which includes items of income and expense that are not recognised in profit or loss but directly affect equity. Examples include revaluation surplus, actuarial gains or losses, and foreign currency translation differences. Proper preparation of the Balance Sheet and OCI Statement helps investors, creditors, management, and regulators assess liquidity, solvency, capital structure, and overall financial health. Ind AS 1 also requires adequate disclosures, comparative figures, and consistency in presentation, making financial statements more transparent, reliable, and useful for economic decision-making.

Problem 1 – Preparation of Balance Sheet and OCI Statement

Problem

The following balances relate to ABC Ltd. as on 31 March 2026:

ParticularsAmount (₹)
Equity Share Capital20,00,000
Retained Earnings5,00,000
Property, Plant and Equipment18,00,000
Inventories4,00,000
Trade Receivables3,00,000
Cash and Cash Equivalents2,50,000
Long-term Borrowings6,00,000
Trade Payables2,00,000
Other Current Liabilities1,50,000
Revaluation Surplus (OCI)1,00,000

Solution

Balance Sheet (Extract)

ParticularsAmount (₹)
Non-Current Assets
Property, Plant and Equipment18,00,000
Current Assets
Inventories4,00,000
Trade Receivables3,00,000
Cash and Cash Equivalents2,50,000
Total Assets27,50,000

ParticularsAmount (₹)
Equity Share Capital20,00,000
Retained Earnings5,00,000
Long-term Borrowings6,00,000
Trade Payables2,00,000
Other Current Liabilities1,50,000

Other Comprehensive Income

ParticularsAmount (₹)
Revaluation Surplus1,00,000

Example: The revaluation surplus is reported in OCI and accumulated under Other Equity, not in the Statement of Profit and Loss.

Problem 2 – Preparation of Balance Sheet with Current and Non-Current Classification (Approx. 170 words)

Problem

The following balances are available from XYZ Ltd.:

ParticularsAmount (₹)
Equity Share Capital30,00,000
Securities Premium5,00,000
Property, Plant and Equipment28,00,000
Investment Property4,00,000
Inventories6,00,000
Trade Receivables5,00,000
Cash and Cash Equivalents2,00,000
Long-term Borrowings10,00,000
Trade Payables4,00,000
Deferred Tax Liability1,00,000
Foreign Currency Translation Gain (OCI)80,000

Solution

Balance Sheet (Extract)

ParticularsAmount (₹)
Non-Current Assets
Property, Plant and Equipment28,00,000
Investment Property4,00,000
Current Assets
Inventories6,00,000
Trade Receivables5,00,000
Cash and Cash Equivalents2,00,000

ParticularsAmount (₹)
Equity Share Capital30,00,000
Securities Premium5,00,000
Long-term Borrowings10,00,000
Deferred Tax Liability1,00,000
Trade Payables4,00,000

Other Comprehensive Income

ParticularsAmount (₹)
Foreign Currency Translation Gain80,000

Example: Foreign currency translation gains are recognised in Other Comprehensive Income and accumulated in equity until disposal of the foreign operation.

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