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A capital reserve is created by transferring a portion of a company's profits or retained earnings into a separate account designated for specific future purposes, such as expansion or debt repayment. This transfer is typically done through a board resolution and is often reflected in the company's financial statements. Capital reserves can also arise from the revaluation of assets or gains from the sale of fixed assets. Unlike revenue reserves, capital reserves are not intended for distribution as dividends.
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Is capital reserve a free reserve?
capital reserve is not a free reserve
Define capital reserve?
Capital reserve is the amount created to increase in market value of assets at the time of revaluation of assets.
Why is capital redemption reserve created?
No
What is the use of capital redemption reserve?
A capital redemption reserve is a reserve created by a company to hold funds that are set aside for the purpose of redeeming or buying back its own shares. This reserve is typically established when a company repurchases its shares or when it reduces its share capital, ensuring that the company's capital remains intact and that shareholders are protected. The funds in this reserve cannot be distributed as dividends, as they are meant to maintain financial stability and comply with legal requirements regarding capital maintenance. Overall, it serves to enhance shareholder confidence and reinforce the company's financial structure.
What is working capital in a Bank?
Total of Share capital, reserves and other funds and deposits is working capital of the bank but less revaluation reserve.
Is capital reserve a free reserve?
capital reserve is not a free reserve
Is revaluation reserve a capital reserve?
Yes...revaluation reserve is a part of capital reserve.
What is the difference between capital reserve and reserve capital?
Capital reserve is a reserve created to deal with general, unspecified contingencies such as inflation. It is a fund set aside for the specific purpose and can not be distributed for other uses. Normally it is legally not distributable as dividends to shareholdersReserve Capital is the part of the Authorised capital which is not yet called up
Difference between Debenture Redemption Reserve and Capital redumption Reserve?
The Capital Redemption Reserve is a fund that secures a creditor. Debenture Redemption Reserve is for the purpose of security payments only.
Define capital reserve?
Capital reserve is the amount created to increase in market value of assets at the time of revaluation of assets.
Define redemption of debentures out of capital?
When debentures are redeemed out of capital, no transfer is made to general reserve or debenture redemption reserve account. In this method it is assumed that the company has sufficient funds to redeem the debentures. So the profits are not utilised to replace the debentures.It affects adversely to the Working Capital of the company.
How the accounting entry should be made when the creditor convert the loan to equity?
Debit Loan and credit Capital Reserve
Can revaluation reserve be use for bonus issue?
Yes it can use any of the capital reserves for the purpose, like Share Premium Account, Capital Redemption Reserve & Revaluation Reserve...
What are free reserves under companies act 1956?
investment allowance reserve, capital reserve received in cash, security premium received in cash,capital redemption reserve,
Why is capital redemption reserve created?
No
What is the difference between retained earnings and revenue reserve?
Capital reserve is capital set aside for specific future purpose such as building a new facility in the near future. It would be like you saving to buy a new a car. Reserve capital is money set aside for unforeseen issues. It's like a saving account or emergency fund that has no specific earmark.
Can investment depreciation reserve be considered as free reserve to compute as tier you or tier ii capital?
Investment deportation reserve not considered as free reserve
