How to create reserve capital

Each organization has its own capital, which is determined by the difference between the sums of assets and the external obligations of the enterprise. It includes some components. In addition, it can be either permanent or variable. At the same time, its variable part depends on the financial result of the entire activity of the organization, and at its expense creates a reserve capital.

Thus, one of the components of capital is the reserves of the organization, which are necessary to cover unexpectedly arising unforeseen expenses, caused, for example, by a crisis condition. This is due to the fact that any economic decision is, in one way or another, associated with some risk, with possible losses from the activities carried out. At the same time, losses can be provoked not only by objective factors, but also by subjective factors.

That is why to ensure stability in the economic development of the organization, some of the results obtained should be put off to the reserve. In the asset balance of the enterprise, these reserved values are accounted for in the current turnover, but in the passive they are reflected as a credit balance of 82 accounts. Thus, the reserve capital is an "untouchable" part of the money, which in no case should be reduced. It is formed from profit. Defining the concept of "reserve capital", it should be clarified that this is part of the profit of the organization, subject to distribution, on which the owner of the enterprise or the law imposes restrictions in the options for its use. In this case, the amount of deductions from profit is established individually in each organization.

All deductions made from profits in reserve capital are reflected in the 82 credit account, and the expenditure of its funds is indicated in the debit of this account. Correspondence is conducted with 84 accounts.

Special attention should be given to the order of use of funds that contain reserve capital. It is often suggested that they be used for the purpose of redemption of shares and redemption of bonds. However, from the position of the logic of accounting such actions are unacceptable. This is explained by the fact that losses during these operations must first be reflected in the accounts of financial results, and afterwards to cover reserves at the expense of capital. In addition, the company's reserve capital for a 82-credit account may have a fairly large amount, and in fact there are no cash on hand and bank accounts, so there can be no question of redemption of shares, as well as the redemption of bonds.

Reserve capital of the joint - stock company is formed depending on its charter. And its minimum size should be no less than 15% of the company's total equity. If the organization has foreign investment, then the reserve size should reach a minimum of 25%. Reserve capital is replenished to the amount established by the charter through annual deductions that are mandatory. They should account for 5% of the net profit remaining at the full disposal of the organization after the payment of all tax and other liabilities. A reserve is formed only in order to be able to cover the losses of the joint stock company that accumulated over the reporting year, and not for any other purposes. At the same time, the balance of reserve capital, which was not in demand, is being transferred to the next year.

It must be said that the mandatory formation of a reserve is peculiar only to joint-stock companies. Many other organizations should not create it. However, they can do so in accordance with accounting policies or constituent documents. This situation is due to the established legislation.