11 September 2009
The Guidence Note on Terms used in Financial Statements defines the term"reserve" as The portion of earnings, receipts or other surplus of an enterprise (whether capital or revenue) appropriated by management for a general or specific purpose other than provision for depreciation or diminution in the value of assets or for a known liability.Here the word APPROPRIATED should be dealt with carefully. If a broader view is taken the answer given by Mr.Jitender is correct. Otherwise, on a narrower view, the answer may be different.If looked at a much deeper prespective,reference may be made to clause 7(1)(b) of part 111 of schedule V1 of The Companies Act,1956 which defines the term "reserve" by way of a -ve explanation. In view of this I didnot conclude my findings and left to other members for their valuable views.
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