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    Session - 3 (Vertical Format)

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    Manan Agarwal
    This document discusses vertical financial statements, including the types of expenses in a statement of profit and loss, specific issues like other operating revenue, other income, and exceptional items. It provides examples of other operating revenue like scrap sales and grants. Other income examples include investment gains and interest. Exceptional items are material and non-recurring, like restructuring costs. The document also outlines the key differences between horizontal and vertical financial statement formats, such as the treatment of preference share capital and dividend.

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    Session - 3 (Vertical Format)

    Uploaded by

    Manan Agarwal
    14 views45 pages
    This document discusses vertical financial statements, including the types of expenses in a statement of profit and loss, specific issues like other operating revenue, other income, and exceptional items. It provides examples of other operating revenue like scrap sales and grants. Other income examples include investment gains and interest. Exceptional items are material and non-recurring, like restructuring costs. The document also outlines the key differences between horizontal and vertical financial statement formats, such as the treatment of preference share capital and dividend.

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    Session - 3 (Vertical Format) (1)

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    This document discusses vertical financial statements, including the types of expenses in a statement of profit and loss, specific issues like other operating revenue, other income, and exceptional items. It provides examples of other operating revenue like scrap sales and grants. Other income examples include investment gains and interest. Exceptional items are material and non-recurring, like restructuring costs. The document also outlines the key differences between horizontal and vertical financial statement formats, such as the treatment of preference share capital and dividend.

    Copyright:

    © All Rights Reserved
    Download as PPTX, PDF, TXT or read online from Scribd
    Download as pptx, pdf, or txt
    14 views45 pages

    Session - 3 (Vertical Format)

    Uploaded by

    Manan Agarwal
    This document discusses vertical financial statements, including the types of expenses in a statement of profit and loss, specific issues like other operating revenue, other income, and exceptional items. It provides examples of other operating revenue like scrap sales and grants. Other income examples include investment gains and interest. Exceptional items are material and non-recurring, like restructuring costs. The document also outlines the key differences between horizontal and vertical financial statement formats, such as the treatment of preference share capital and dividend.

    Copyright:

    © All Rights Reserved
    Download as PPTX, PDF, TXT or read online from Scribd
    Download as pptx, pdf, or txt
    of 45

    Session 3 – Vertical Financial Statements

    Types of Expenses in General


    • Purchases of Stock-in-trade
    • Manufacturing expenses
    • Selling and Distribution expenses
    • Administrative and Establishment expenses
    Specific issues in statement of P&L
    • Other Operating Revenue
    • Other Income: Non Operating
    • Exceptional Items
    Other operating revenue
    • Revenue arising from a company’s operating activities and incidental
    thereto, i.e. either its principal or ancillary revenue-generating
    activities, but which is not revenue arising from sale of products or
    rendering of services.

    • E.g. Sale of Manufacturing scrap, Annual service fee, export


    incentives, government grants and technical know-how fee earned.
    Other Income: Non-Operating
    E.g. – Gain on sale of Investments (in a non-finance company)
    Profit on sale of property, Plant and Equipment
    Dividend and interest from investing activities etc.
    Exceptional Items
    • Those items that in management’s judgement are material items which derive
    from events or transactions that fall within the ordinary activities of the business
    of a company and,
    • Which individually or, if of a similar type, in aggregate, need to be disclosed by
    virtue of their size or incidence.

    • Exceptional items are not expected to be recurring.


    • They are separately disclosed on the face of the statement of Profit and Loss.

    • E.g – VRS Spending, gains/loss on sale of a business unit, loss due to fire or natural
    calamities, loss due to pandemic like COVID, insurance claims, impact of major
    litigations etc.
    Vertical Balance Sheet
    Vertical Statement of Profit and Loss
    Few changes in Vertical format
    • Non-convertible part of Redeemable preference share capital now be treated as
    borrowings.

    • Miscellaneous expenditure not w/o and debit balance in “Statement of Profit and Loss”
    have now to be shown as deductions from RE/general reserves/other reserves under the
    head other equity. Thus, other equity can be negative due to these figures.

    • Dividend on non-convertible preference shares will be treated as a part of finance cost.

    • Allocations and appropriations of profit now be shown under the head “Retained
    Earnings” and other relevant sub-heads of “Reserves and surpluses”.

    • Ind AS do not allow to treat the proposed final dividend as a liability in the Balance Sheet
    as a payment thereof is contingent on shareholder’s approval.
    • ILLUSTRATION 8
    • SOLUTION TO ILLUSTRATION 8.1 B & C
    • VERTICAL FINANCIAL STATEMENTS OF SHASHAANK
    INDUSTRIES LTD.

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