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      Question

      A company took a term loan of Rs.50 lakh from the bank

      in December 2025. If the loan has to be repaid in 5 equal yearly instalments starting from December 2026, which of the following correctly describes how this loan will be presented in the Financial Statements of the company as on 31st March 2026 according to Schedule III?
      A Long term borrowings Rs.50 lakh Correct Answer Incorrect Answer
      B Other-Long term borrowings Rs.50 lakh Correct Answer Incorrect Answer
      C Other current liabilities Rs.10 lakh; Other-Long term borrowings Rs.40 lakh Correct Answer Incorrect Answer
      D Other current liabilities Rs.10 lakh; Long term borrowings Rs.40 lakh Correct Answer Incorrect Answer
      E Short term borrowings Rs.10 lakh; Long term borrowings Rs.40 lakh Correct Answer Incorrect Answer

      Solution

      In the given case, instalments due in December 2026 will be shown under the head 'short term borrowings' as current maturities of loan from bank as per the amendment to Schedule III vide MCA notification dated 24th March 2021. Therefore, in the balance sheet as on 31 March, 2025, Rs.40 lakh (Rs.10 lakh x 4 instalments) will be shown under the heading 'Long term Borrowings' and Rs.10 lakh will be shown under the heading ' short term borrowings.'

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