STATUTORY RESERVES.

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AKSHIT MALHOTRA (Querist)

13 March 2011 I WANT TO KNOW WHAT IS STATUTORY RESERVES & PLEASE GIVE EXAMPES OF THAT.

ALSO TELL WHAT HAPPENS TO THESE IN B/S.
THNX IN ADVANCE.

CMA. CS. Sanjay Gupta

CMA. CS. Sanjay Gupta (Expert)

13 March 2011 Statutory reserves means reserves(profit) appropriated for compliance of any law(statute).

For Example:

1) Every non-banking financial company shall create a reserve fund and transfer thereto a sum not less than 20.0 per cent of its net profit every year as disi in the profit and loss account and before any dividend is declared. Such fund to be created by every NBFC irrespective of the fact whether it accepts] deposits or not. Further, no appropriation can be made from the fund ft purpose without prior written approval of RBI.

2) 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.

Some other statutory reserves---

***Development Rebate Reserve

***Investment Allowance Reserve

***Export Profit Reserve

AKSHIT MALHOTRA

AKSHIT MALHOTRA (Querist)

14 March 2011 THNX A LOT SIR.

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