It is a reserve created by transferring certain amount of undistributed profit for funding expansion, acquisition, paying dividends, discharging of liabilities, writing off extraordinary and/or contingent losses ,buyback and/or redemption of securities.
04 March 2011
Revaluation reserves arise when the value of an asset becomes greater than the value at which it was previously carried on the balance sheet, increasing shareholders funds . Not every increase in value is added to the revaluation reserve, and the exact treatment depends on the history of the asset: in particular whether it has been impaired.