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

Let's classify the items according to 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: Represents short-term obligations to suppliers or vendors for goods or services received. Since they are typically due within a year (or the operating cycle), they are classified as Current Liabilities. Trade Payables is the specific sub-head for these obligations.

Loose Tools: While used in operations, loose tools are considered part of the company's fixed assets as they are used over multiple accounting periods and aren't meant for immediate sale.

Copyrights: A copyright grants the holder exclusive rights to reproduce, distribute, and display creative works. Because they lack physical substance and provide long-term benefits, they are classified as Intangible Assets under Non-Current Assets.