I had seen that many people are raising doubt regarding this topic. I hve small information on this topic. Think it is helpful.
1. Distinguish between Reserve Capital & Capital Reserve.
|
|
Reserve Capital |
Capital Reserve |
|
a) |
It refers that portion of uncalled share capital which shall not be called up, except in the event of winding up. |
It refers to reserve that is created out of profits. |
|
b) |
It refers to the amount, which has not been received. |
It refers to the amount, which has already been received. |
|
c) |
It is not shown in the balance sheet |
This amount is shown in the balance sheet under the heading ‘Reserves & Surplus’. |
|
d) |
This amount cannot be used up during the lifetime of the company. |
This amount can be used up during the life time of the company |
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