Reserve fund

The reserve fund includes componentsof capital. They can be used to repay unforeseen expenses in the future. The reserve fund of the organization is formed at the expense of real funds of net profit and is reflected in the corresponding article of the balance sheet - 82: "Reserve capital". Losses may occur at any time for objective or subjective reasons.

The reserve fund is the capital that is formedstrictly on the basis of constituent documents of the organization and regulatory acts at the expense of funds representing a part of net profit. Information about him is an indicator of the financial condition of the enterprise. For a joint-stock company, the fund should be formed depending on the authorized capital, and it should be replenished annually by at least 5 percent of the net profit amount. Its size can be changed upwards, if there is a corresponding resolution of the meeting of shareholders. In addition, if the authorized capital varies, then the amount of reserves decreases or increases.

Limited Liability CompanyLegislatively it is not obliged to have a reserve fund, in contrast to JSC, but at its discretion it can form. These funds can be used for social development of the enterprise, for replenishment in case of need of capital, payment of dividends, as well as for unforeseen expenses connected with the onset of the crisis.

The reserve funds of the joint-stock company may be used to cover expenses related to:

- with losses of the enterprise;

- with the need to pay dividends;

- With liquidation of the enterprise (for payment of debts);

- with other circumstances, which are fixed by legislation, and regulatory documents of the organization.

Disposal of funds lies in the zoneresponsibility of either the board of directors or the supervisory board. If losses occur, they are directed to their repayment, in whole or in part. Cash should be kept in accessible, but at the same time reliable financial instruments. Experts do not recommend creating a large reserve fund, since it takes a significant part of the capital out of the enterprise and the lost profit from their use can be quite high. These funds can not be used in the present tense and will not bring income in the future.

The reserve fund of the enterprise implies andadditional capital. It includes the total amount of the organization's property growth arising from revaluation, share premium and non-current assets received free of charge and is used to cover the arising losses.

The enterprise also uses the concept of a reserve of doubtful debts. Its formation is conditioned by the possibility of losses arising from outstanding bad or doubtful debts.

Formation of reserve fund

Reserve funds are formed on the basis of legally fixed documents, therefore, the following stages should be taken into account:

  • First, it is necessary to define the purposes according to which the funds will be distributed subsequently.
  • Secondly, these goals must be included in the company's charter. It is also worth fixing the minimum size of both the fund itself and the amount of deductions to it.
  • Thirdly, it is necessary to hold a meeting of founders,at which questions are resolved on changes in the amounts of deductions and the manner in which they are spent. The meeting is recorded and verified, according to its results, an appropriate order is issued.
  • Fourth, the company's balance sheet reflectsnet profit and funds directed to the reserve fund. Then you can make the appropriate transactions associated with spending or replenishing it, performing the posting in the balance sheet properly.

Related news

Reserve fund Reserve fund Reserve fund Reserve fund Reserve fund Reserve fund Reserve fund Reserve fund Reserve fund Reserve fund Reserve fund Reserve fund Reserve fund