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Financial Statements of a Company 1.3
A trade investment is an investment made by the company in another
company for the furtherance of its own business. It is
non-current investment when it is invested to be held for more than
12 months or for a period that is more than the period of Operating
Cycle from the date of Balance Sheet.
(c) Deferred Tax Assets (Net) It is the amount of tax on the temporary difference between the accounting
income and taxable income. It is only a book entry and not an actual
asset. It arises when accounting income is less than the taxable income.
It is determined for each difference in accounting and taxable income
and totalled and shown in the Balance Sheet at net amount.
(d) Long-term Loans and Long-term Loans and Advances are loans and advances
Advances given by the company that are repayable or adjustable after
12 months or after the period of Operating Cycle from the date
of Balance Sheet.
(e) Other Non-Current All non-current assets that are not shown or classified under
Assets the above heads are Other Non-current Assets.
7. Current Assets Current assets are those assets which are:
(a) expected to be realised in or intended for sale or consumption in
normal Operating Cycle of the company; or
(b) held primarily for the purposes of trading; or
(c) expected to be realised within 12 months from the reporting date or
closing date. (Reporting date is the date for which financial
statements are prepared.); or
(d) Cash and Cash Equivalent unless it is restricted from being
exchanged or used to settle a liability for at least
12 months after the reporting date.
Current Assets are classified into Current Investments; Inventories; Trade Receivables; Cash and Cash
Equivalents; Short-term Loans and Advances; and Other Current Assets.
(a) Current Investments Current Investments are those investments that are invested to be
held for a period of less than 12 months or within the period of
Operating Cycle from the date of Balance Sheet.
(b) Inventories Inventories (stock) is a tangible asset held:
(i) for the purpose of sale in the normal course of business; or
(ii) for the purpose of using it in the production of goods meant for
sale or service to be rendered.
In case of trading company, it comprises of stock of goods
traded in.
In case of a manufacturing company, it comprises of raw materials,
work-in-progress and finished goods.
Inventories are valued at lower of cost or net realisable
value, i.e., market price.
(c) Trade Receivables Trade receivables are the amounts receivable within 12 months from
the reporting date or within the period of Operating Cycle for sale
of goods or services rendered in the normal course of business. It
includes Bills Receivable and Sundry Debtors.
(d) Cash and Cash It includes cash in hand and balance with bank.
Equivalents
(e) Short-term Loans and Short-term Loans and Advances are loans and advances
Advances given by the company that are receivable or adjustable within
12 months or within the period of Operating Cycle from the date
of Balance Sheet.
(f) Other Current Assets All other current assets that are not shown or classified under the
above heads are shown as Other Current Assets.