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Reserves Print E-mail

Companies Act statutory reserves


In the balance sheet, these reserves appear in the shareholders’ fund section under ordinary share capital at nominal value.

Share premium

Revaluation reserve

Profit and loss account

The difference between share price and nominal value of shares on the date of issue of new shares in the entity

Accumulated increase in the value of assets and investments since initial capitalisation, less accumulated decreases, less release of revaluation reserves on sale, up to the value of original cost recorded.

Accumulated realised & unrealised gains less accumulated realised & unrealised losses since the start of trading

Credit full amount to share premium reserve

Credit to Properties revaluation reserve and Investment revaluation reserve

Increase/decrease at each year end by the

Not distributable

Not distributable

Realised gains and losses are distributable to shareholders via dividends

Can only use to write off cost & discount of share issues & debenture issues, or premium on redemption of shares or debentures.



Can issue bonus shares out of share premium.

Cannot be a debit balance. Write off reduction in value of an asset in excess of credit balance on revaluation reserve to P&L.


Use for increase or decrease in MV of assets and investments, deferred tax effect of revaluations, revaluation of assets available for sale to fair value.

Dividends can only be distributed out of a credit balance on the profit and loss account. Exclude unrealised gains and losses

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Only registered users can write comments!
Jane   |196.35.158.xxx |2010-01-19 06:11:17
What are the notes related to reserves?
Nicole  - Notes related to reserves   |31.114.194.xxx |2012-07-09 15:54:20
Reserves are expanded in the Statement of Recognised Gains and Losses or in a
note to the balance sheet called 'Reconciliation of reserves'. To see examples
of the notes visit http://www.uktaxandaccounts.com/index.php/Preparat
ion-of-Accounts/fs-template-ca-2006.html or view the accounting standards at
Steven  - ......   |178.121.118.xxx |2012-07-08 18:44:37
_,Cheers, I really love the way you wrote the story??¦ maybe you could
come to my site and make some advices. thank you in advance.
France  - Taxation   |88.39.97.xxx |2013-03-26 13:51:37
Hello to all
Assume that during the year I proceed to sell an asset that has
been revalued in previous years.
I have therefore a decrease in the revaluation
reserve due to the sale.
What happens from a tax perspective?
When the
revaluation reserve should be taxed?

Thanks to all
Nicole  - Ms   |90.215.94.xxx |2013-06-25 17:56:05
The revaluation reserve is outside the scope of tax. The tax on the sale of an
asset is based on the profit calculated as the proceeds on sale less the actual
cost. The actual charge varies depending on what type of asset is being sold.
The accounting treatment of the revaluation reserve is a separate issue and
covered in IAS 16 Property, Plant & Equipment (relevant for 2013)
Ann  - Ms   |86.144.65.xxx |2013-06-25 13:34:29
I have to write off a balance in the balance sheet to 'P&L Reserves' should I
use the account 'P & L Current year' or should I open a new BS account called P
&L Reserves ?
Nicole  - P&L reserve   |90.215.94.xxx |2013-06-25 17:57:42
If your software allows you to post directly to P&L Current year, you can use
that account.

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