Details of Contingent Liability to be shown in Balance Sheet
As per Schedule VI the following liabilities should be shown as footnotes in balance sheet
1. Claims Against the Company Not Acknowledged as Debts: All claims which the company does not acknowledge as debts should be disclosed. Claims against the company by the labour union for additional wages, compensation, etc. come under this category.
2. Uncalled Liability on Shares Partly Paid: A company may hold as investment the partly paid-up shares of some other companies. In such a case, an obligation to pay the calls will arise as and when a call is made.
3. Arrears of Fixed Cumulative Dividends: The arrears of dividends on cumulative dividends are payable before any dividend on equity shares can be declared. Amount of such arrears and the period for which the dividends are in arrears should be disclosed. If there is more than one class of such shares, the arrears of dividends on each class of shares should be stated. Besides the arrears of dividends, the amount of the income tax paid in respect of the arrears of dividend should also be separately disclosed.
4. Estimated Amount of Contracts Remaining to be Executed on Capital Account and Not Provided For: This includes all outstanding commitments on capital account. The disclosure of this figure may be useful to a reader of the balance sheet who wishes to have an indication of the immediate plans of the company relating to expansion, renovation, etc.
5. Other Moneys for Which the Company is Contingently Liable: The guarantees given by the company on behalf of directors or other officers of the company or the guarantees given regarding the payment of bills of exchange, etc. are some of the examples of this type of contingent liability.