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Free Reserves : Meaning and Definition

"Free Reserves" meaning and definition - Companies Act 2013

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;

3 comments:

  1. Whether capital reserve is an example of free reserve ??

    ReplyDelete
  2. AnonymousMay 06, 2017

    whether share issue expoense can be written off against free reserves?

    ReplyDelete
  3. No it is not a free reserve because it is not available for distribution of dividend

    ReplyDelete

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