capital reserve and reserve capital means the same thing. comment
Difference between Reserve Capital and Capital Reserve
Reserve Capital | Capital Reserve |
1. Reserve Capital is the part of uncalled capital, which shall not be called except in the event of winding up of the company | 1. Capital Reserve is maintained out of the capital profits of the company |
2. It is not mandatory to create Reserve Capital | 2. Capital Reserve is mandatory to be created in case of profit on reissue of forfeited shares |
3. It is not to be disclosed in the Balance Sheet of the company | 3. Capital Reserve is to be shown in liability side of the balance sheet of the company under the heading of ’Reserve and Surplus’ |
4. Reserve Capital cannot be used to cover capital losses | 4. Capital Reserve is used to cover capital losses and to issue bonus shares to shareholder |
5. Reserve capital cannot be used to issue bonus shares | 5. Capital reserve realized realised in cash can be used to issue bonus shares |
6. Reserve capital is not received because it is part of uncalled capital | 6. Capital reserve is that profit which has been realised except in the case of profit on revaluation of assets |