statutory reserve

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.

I assume that you know treatment of statutory reserves in amalgamation.

Hope you are clear.

As you are asking for amalgamation take care of these points also..

For amalgamation in nature of purchase

-- No reserves other than statutory reserves should be incorporated in the books of Purchasing company.

-- The statutory reserves are those reserves in the books of vendor company which are to be maintained by purchasing co. after amalgamation for certain number of years.

Entry--

Amalgamation adjustment a/c               Dr.

         To statutory reserves a/c

(reverse the entry when the assets are no longer required)

Various Statutory reserves --

Development Rebate Reserve

Investment Allowance Reserve

Export Profit Reserve

SIMPLE DEFINITION OF STATUTORY RESERVE:  RESERVE WHICH IS CREATED / RETAINED DUE TO APPLICABILITY OF LAWS/ACTS

AND REGARDING AMAGAMATION: SEE 

As you are asking for amalgamation take care of these points also..

For amalgamation in nature of purchase

-- No reserves other than statutory reserves should be incorporated in the books of Purchasing company.

-- The statutory reserves are those reserves in the books of vendor company which are to be maintained by purchasing co. after amalgamation for certain number of years.

Entry--

Amalgamation adjustment a/c               Dr.

         To statutory reserves a/c

(reverse the entry when the assets are no longer required)

Various Statutory reserves --

Development Rebate Reserve

Investment Allowance Reserve

Export Profit Reserve

Agree with Lokesh and Resham............and these statutory reserves are maintained for a minimum period of 4 years

statutory means required by law (statue) and reserves means appropriation of profit ,but there is a difference between simple reserve and statutory reserve i.e,statutory reserve will be made from profit &loss account while simple reserve made from profit & loss appropriation account.

Do "Employee profit sharing Account " comes under statutory Reserves ?

Can anyone clear my doubt as to why the above reserves is incorporated in the nature of Purchase Method ,Amalgamation.

Refer IPCC- Accounting Paper 1 - Vol. II of ICAI pg: 6.7 Question 4, Ch:Amalgamation

Respected learned ones,

whether statutory reserves like development rebate reserve be trasferred to equity shareholders account or not in amalgamation. 

statutory reserves should be maintained for a specific period of 4 yrs  after such expiry of period where these statutory reserves are transfered to?

Can someone help to understand whether 'Retirement Gratuity Fund' considered as Statutory Reserve for amalgamation?