Capital reserves

Capital Reserve is the reserve which is created out of the profits of the Company generated from its non-operating activities during a period of time and is retained for the purpose of financing the long term project of the Company or write off its capital expense in future or mitigating capital losses, or any other long-term contingencies. Capital reserve has nowhere been specifically defined in the Companies Act, 2013 or anywhere in Accounting Standards. It is not a free reserve. So it cannot be used by the company to declare dividends, to issue bonus shares, to write off accumulated losses and to write off share issue expenses.

Sudha Reddy

CA Final

★ 20K+

17-Feb-21 09:09