Question

Classify the following items under major heads and sub-heads (if any) in the Balance Sheet of a company as per Schedule-III, Part-I of the Companies Act, 2013:

(i) Outstanding Salary

(ii) Capital work-in-progress

(iii) Stores and Spare parts

Hint:

Decide for each item whether it is due or used within 12 months. Then pick the major head and the matching sub-head from Schedule III, Part I.

Answer 1

Step 1: Understanding the Question:
Schedule III, Part I of the Companies Act, 2013 gives the format of the Balance Sheet of a company.
Every item is placed under a major head, and then under a sub-head where the Schedule gives one.
Here we place three items one by one.

Step 2: Key Rule:
The major heads are Shareholders Funds, Non-Current Liabilities, Current Liabilities, Non-Current Assets and Current Assets.
An item is current if it is due, or will turn into cash or be used, within 12 months or the operating cycle.
Otherwise it is non-current.

Step 3: Classify Outstanding salary.
Outstanding salary is salary that has become due but is still unpaid on the balance sheet date. It is paid in the next month or so, so it is a current liability. It is an expense payable, not a trade payable, so the sub-head is Other Current Liabilities.
So the major head is Current Liabilities and the sub-head is Other Current Liabilities.

Step 4: Classify Capital work in progress.
Capital work in progress is the cost spent so far on a fixed asset that is not yet ready for use. The asset will serve the business for many years, so it is non-current. Schedule III places it under Property, Plant and Equipment and Intangible Assets.
So the major head is Non-Current Assets and the sub-head is Property, Plant and Equipment and Intangible Assets.

Step 5: Classify Stores and spare parts.
Stores and spare parts are items kept in the store to run and repair the plant. They are used up in the normal course of business, so they are current assets. Schedule III lists them under Inventories.
So the major head is Current Assets and the sub-head is Inventories.

Step 6: Present the answer in a table.

Item	Major head	Sub-head
Outstanding salary	Current Liabilities	Other Current Liabilities
Capital work in progress	Non-Current Assets	Property, Plant and Equipment and Intangible Assets
Stores and spare parts	Current Assets	Inventories

Each correct major head and sub-head earns half a mark, so the six parts carry 3 marks.

Final Answer:
Outstanding salary: Current Liabilities, Other Current Liabilities; Capital work in progress: Non-Current Assets, Property, Plant and Equipment and Intangible Assets; Stores and spare parts: Current Assets, Inventories.