CDE Private Limited, a manufacturing company, had made investment in shares of some blue-chip companies. Additionally, it had temporarily deposited…

Misstatement refers to a difference between the amount, classification, presentation, or disclosure of a reported financial statement item and the amount, classification, presentation, or disclosure that is required for the item to be in accordance with the applicable financial reporting framework. In the given situation, there is a difference in amount to be recorded as well as in disclosure of a financial statement item from what is required in accordance with applicable financial reporting framework. The company should have recorded gross amount of dividend and interest amounting to 2.00 lakhs and - 3.00 lakhs respectively in its financial statements in accordance with AS 13. Therefore, amount recorded under head "Other income” should have been for 10lakhs (2 lakhs+3 lakhs+5 lakhs). Further, in accordance with disclosure requirements of Schedule III of the Companies Act, 2013, other income shall be classified in the above situation as: Interest Income of 3lakhsDividend Income of 2lakhsNet gain on sale of investments of 5lakhs Few examples of misstatements are: Charging of an item of capital expenditure to revenue or vice-versa.Difference in disclosure of a financial statement item vis-à-vis its requirement in applicable financial reporting framework.Selection or application of inappropriate accounting policies.Difference in accounting estimate of a financial statement item vis-à-vis its appropriateness in applicable financial reporting framework.Intentional booking of fake expenses in statement of profit and loss.Overstating of receivables in the financial statements by not writing off irrecoverable debts.Overstating or understating inventories.