Reserves and Provisions
The term reserves may include the following:
- Reserves created by means of appropriation from profit and loss account.
- General reserve
- Fixed asset replacement reserve
- Stock replacement reserve
- Debenture reserve
- Share premium account
- Revaluation reserve
- Capital redemption reserve
- Merger reserve
- Reserves provided for by the articles of association
The term is defined by companies act and includes:
- Provision for depreciation or diminution in value of assets-this includes provision for depreciation, stock and doubtful debts. Such provisions are deducted from the asset heading to which they relate.
- Provisions for liabilities or charges-amounts retained as reasonably necessary for the purpose of providing for any liability or loss which is either:
- Likely to be incurred, or
- Certain to be incurred but uncertain as to amount or date on which it will arise.