what is the treatment of capital reserve in CFS ?

Its treatment will be same as the general reserve. Like we add the general reserve in the operating acitivities similary we will add the capital reserve in the operating activities since it is a reserve and a component of reserves and surplus

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In illustration 52 of 2016 edition capital reserve is a profit on sale of investment so why its is not taken in operating activity? Why capital reserve is not taken anywher ??????
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Increase in capital reserve means there is capital profit due to sale of assets or gain on purchase of own debentures or due to forfeiture . If there is increase in capital reserve it will be added to the those activitiy due to which it arise. If it is due to sale of asset it will be added to the sale of asset under investing activity.
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Capital Reserve is a fund or account set aside for major long-term investment projects or other anticipated expenses of the organisation that will be incurred in the future. It is not created out of the profit earned in normal course of the business. Capital reserve is created out of the profit earned from some specific transactions of capital nature.

No Treatment needs to be carried out in Cash Flow Statement for Capital Reserve. But one only need to account all the receipt and payment of cash in Cash Flow Statement and any Profit or Loss from Sale of any Capital Asset will must needs to be Transferred to Capital Reserve and must be deducted from Sales Proceeds in Cash Flow Statement.

 
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