Question

Under which major heads and sub-heads (if any) will the following items be shown in the Balance Sheet of a company as per Schedule III, Part I of the Companies Act, 2013?
Trademarks
Calls-in-advance
Livestock

Hint:

To classify balance sheet items, always refer to Schedule III of the Companies Act. Intangibles like trademarks go under intangible assets, advances received before due dates fall under current liabilities, and operational physical assets like livestock fall under tangible assets.

Answer 1

Trademarks:
Trademarks are a form of intangible asset that provides exclusive rights to the company for using a particular symbol, name, or logo.
As per Schedule III of the Companies Act, 2013, trademarks are classified under the major head:
Non-Current Assets ⇒ Fixed Assets ⇒ Intangible Assets
This is because trademarks provide future economic benefits over more than 12 months and do not have a physical form.
Calls-in-advance:
Calls-in-advance refer to the amount received by the company from shareholders before it is actually due.
Since it represents an obligation to either allot shares or adjust against future calls, it is considered a liability.
As per Schedule III, it is shown under:
Equity and Liabilities ⇒ Current Liabilities ⇒ Other Current Liabilities
It is not part of share capital and must be shown separately in the notes to accounts.
Livestock:
Livestock, though a tangible item, is generally treated as a Biological Asset if measured at fair value. However, under Companies Act, it is shown under fixed assets.
As per Schedule III, it is classified under:
Non-Current Assets ⇒ Fixed Assets ⇒ Tangible Assets
This classification holds when the livestock is held for business use and not for immediate sale.
% Final Classification Table \begin{center} \begin{tabular}{|c|l|l|} \hline Item & Major Head & Sub-head
\hline Trademarks & Non-Current Assets & Intangible Assets
Calls-in-advance & Current Liabilities & Other Current Liabilities
Livestock & Non-Current Assets & Tangible Assets
\hline \end{tabular} \end{center}