Question

Classify the following items under major heads and sub-heads (if any) in the Balance Sheet of the company as per Schedule-III, Part-I of the Companies Act, 2013 :
(i) Computer software
(ii) Outstanding salary
(iii) Work in progress

Hint:

Always refer to Schedule III of Companies Act, 2013 for proper classification. Misclassification leads to incorrect financial analysis.

Answer 1

Computer Software: Categorized under Intangible Assets within Non-Current Assets.
Outstanding Salary: Classified under Other Current Liabilities in Current Liabilities.
Work in Progress: Presented under Inventories in Current Assets as “Work-in-Progress.”Clarification:
- Computer software is intangible due to its lack of physical form, yet it offers future economic advantages.
- Outstanding salary represents an expense incurred but not yet settled by the balance sheet date, hence it is treated as a liability.
- Work in progress denotes goods that are partially completed and are thus categorized within inventories.