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 :

1. Bills payable
2. Loose Tools
3. Copyrights

Hint:

Familiarize yourself with the major heads and sub-heads of Schedule III (Balance Sheet \& P\). Key classifications: - Liabilities: Shareholders' Funds, Non-Current Liab., Current Liab. - Assets: Non-Current Assets, Current Assets. - Specific items like Bills Payable fall under Trade Payables (Current Liab.). Loose Tools are typically under Inventories (Current Assets). Copyrights are Intangible Assets (Non-Current Assets).

Answer 1

Classification of items per Schedule III, Part-I of the Companies Act, 2013:

(i) Bills Payable:
Major Head: Current Liabilities
Sub-Head: Trade Payables

(ii) Loose Tools:
Major Head: Non-Current Assets
Sub-Head: Property, Plant and Equipment (PPE)

(iii) Copyrights:
Major Head: Non-Current Assets
Sub-Head: Intangible Assets

Explanation:

Bills Payable: These are short-term debts owed to suppliers for received goods or services. As they are typically due within one year (or the operating cycle), they are categorized as Current Liabilities, specifically under the Trade Payables sub-head.

Loose Tools: Although utilized in operations, loose tools are treated as fixed assets because they have a lifespan exceeding one accounting period and are not intended for immediate resale.

Copyrights: A copyright provides exclusive rights for creative works. Lacking physical form and offering long-term advantages, these are classified as Intangible Assets within Non-Current Assets.