As per Section 2(43) of the Companies Act, 2013, “free reserves” means such reserves which, as per the latest
audited balance sheet of a company, are available for distribution as dividend. Provided that—
(i) any amount representing unrealised gains, notional gains or revaluation of assets, whether shown as a reserve
or otherwise, or
(ii) any change in carrying amount of an asset or of a liability recognised in equity, including surplus in profit and
loss account on measurement of the asset or the liability at fair value, shall not be treated as free reserves.
Can anybody differentiate between point no 1&2?
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Free reserves
Replies (2)
in short , only cash reserve / Monetory reserve is available for distribution of dividend .
Fictitious Reserve(Revaluation Reserve) which created by revaluation of Assets is not in Cash/Bank real form , so no one can distribute dividend out of these .
Yes. That is obvious. But I can hardly differentiate between point no 1&2. Both feels similar to me.
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