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CMA Intermediate · Corporate Accounting and Auditing · Statement of Profit and Loss and Balance Sheet (Schedule III of Companies Act, 2013)

A company's trial balance shows 'Capital work-in-progress' Rs 3,00,000, 'Advances for purchase of machinery' Rs 50,000, 'Investments in subsidiary (long term)' Rs 2,00,000 and 'Advance tax paid' Rs 1,00,000. Under the Schedule III format, which classification is correct?

Capital work-in-progress belongs in non-current assets, and a long-term investment in a subsidiary is a non-current investment. Advance tax paid and capital advances are assets, so they cannot be classified as liabilities or current investments.

  1. ACapital work-in-progress under Non-current assets (Property, Plant and Equipment group); investment under Non-current investmentsCorrect
  2. BCapital work-in-progress under Current assets; investment under Current investments
  3. CAdvance tax paid under Equity and Liabilities
  4. DAdvances for machinery under Current liabilities

Explanation

Capital work-in-progress is shown in non-current assets, and a long-term investment in a subsidiary is a non-current investment. Advance tax is an asset, not a liability, and advances for machinery are capital advances within non-current assets.

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