Capital reserve is created by capital profits of the company which is not kept for distribution to the shareholders in the form of dividend. Common example may the the goodwill which is created prior to the incorporation of the entity.…
As the name suggests, it is a type of reserve which is not shown on the balance sheet and is actually created by too much depreciation or by excessive provision for doubtful debt. The purpose of creating this Secret Reserve…
In order to meet the liability of certain types, this reseve is created. A liability may arise in future for which we are not aware of the exact amount. This is quite common in deciding the value of income taxes.…
The asset loses its value after usage and technical obsolescence to which we called the decline in the value of the asset. Such a decline is called Valuation reserve or offset accounts or contra accounts. This decline may be for…