A reserve created from capital profits that is not available for distribution as dividends to shareholders.
Capital Reserve is a portion of profit set aside from non-operating or capital transactions — such as profit on sale of fixed assets, premium on issue of shares, profit on reissue of forfeited shares, or profit prior to incorporation. Unlike Revenue Reserve (which can be distributed as dividends), Capital Reserve cannot normally be distributed to shareholders. It strengthens the company's financial position and can be used to write off capital losses or issue bonus shares in some jurisdictions.
A company sells land (book value ₹20,00,000) for ₹35,00,000. The capital profit of ₹15,00,000 is transferred to Capital Reserve. This cannot be paid as dividend. The company later uses ₹5,00,000 from Capital Reserve to write off preliminary expenses (a capital loss).
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Capital Reserve is profit set aside from capital transactions (shown on balance sheet). Reserve Capital is the uncalled portion of share capital that the company resolves to call only during winding up. Capital Reserve exists; Reserve Capital is a commitment for the future.
In India under the Companies Act 2013, Capital Reserve can be used for bonus shares only if it is realized in cash. Unrealized capital profits (like revaluation surplus) cannot be used for bonus issues.
The cumulative net profits of a company that have been kept in the business rather than distributed as dividends to shareholders.
The residual interest in the assets of a business after deducting all its liabilities. Also called owner's equity, net worth, or shareholders' equity.
An intangible asset representing the excess purchase price paid during an acquisition over the fair value of the target company's identifiable net assets.
Funds spent by a business to acquire, upgrade, or maintain long-term physical assets such as property, equipment, or technology infrastructure.
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