Shares and debentures in the balance sheet

The essentials

A company's balance sheet is prepared in the format of Schedule III of the Companies Act, 2013. Share capital appears under Shareholders' Funds on the Equity and Liabilities side, and the details are given in the Notes to Accounts. Debentures, being long-term borrowings, appear under Non-current Liabilities.

Key points

• Note on share capital shows: Authorised capital, Issued capital, and Subscribed capital split into "subscribed and fully paid-up" and "subscribed but not fully paid-up".
• Calls in arrears are deducted from subscribed but not fully paid capital.
• Balance in Share Forfeiture Account (on shares not reissued) is added to subscribed capital.
• Securities Premium and Capital Reserve appear under Reserves and Surplus.
• Calls in advance appear under Other Current Liabilities.
• Debentures: Long-term Borrowings; the part repayable within twelve months is shown as current maturities under Other Current Liabilities.
• Interest accrued on debentures appears under Other Current Liabilities.

Exam tips

Be ready to classify items quickly: "under which major heading and sub-heading?" is a frequent question type.

Common mistakes

• Showing Securities Premium under Share Capital.
• Showing calls in advance as part of share capital.