Rohan
(Student)
(289 Points)
Replied 21 October 2014
Guddi
(employee)
(769 Points)
Replied 22 October 2014
Statutory reserves are maintained for compliance of law. They are not allowed for distribution of dividends. Ex. Debenture redemption reserve. General Reserves are allowed for distribution of dividends.
Santhosh Poojary
(SIEMPRE AHÍ PARA TI)
(15607 Points)
Replied 22 October 2014
Statutory reserves means reserves(profit) appropriated for compliance of any law(statute).
For.e.g:- Sec117(c)(1) of Companies Act, says " A company must create debenture redemption reserve for redemption of debentures" . The amount is appropriated every year until such debentures are redeemed.
Clarification of above provision{117(c)(1)} is given by SEBI vide circular No. 9/2002 dated 18.4.2002
Another example could be reserve required to be maintained by banking companies @ 25% of net demand and time liabilities.
Other lStatutory reserves -:
Development Rebate Reserve
Investment Allowance Reserve
Export Profit Reserve
General Reserve :
When any amount is kept separate by a company out of its profit for future purpose then that is called as general reserves. In other words the general reserves are the retained earnings of a company which are kept aside out of company’s profits to meet future known or unknown obligations. General reserves are the part of Profit and Loss Appropriation Account.
In other words the general reserve is a free reserves which can be utilized for any purpose after fulfilling certain conditions... unlike statutory reserves. hope you are clear now.
sumit chopra
(Student CA IPC / IPCC)
(36 Points)
Replied 23 October 2014
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