What is the difference between Capital Reserve and Reserve
Capital?
Answer Posted / sai keerthi
CAPITAL RESERVE a company may decide by passing a special resolution that a certain portion of its subscribed uncalled capital shall not be called-up except in the event of winding up of the company.It may be called-up in the case of liquidation of the company CAPITAL RESERVE refers to that amount which is not regarded as free for distribution to shareholders by way of dividend.It is statutory to create capital reserve in the case of profit on forfeited shares.Capital reserve is required to be disclosed as the first item under the head of 'reserves & surplus' on the liabilities side of the balance sheet. This cannot be used during the lifetime of the company. Capital reserve is that amount which has already been realized. This cannot be used to writeoff capital losses. It can be used to declare a bonus shares.
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