Fixed asset replacement reserve

System
System Posts: 100,534 🤖 Admin 🤖
edited June 18 in AAT student discussion
Does anyone know how to account for fixed asset replacement reserve in the financial statements?

Any help gratefully received

Cheers

Sarah

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  • System
    System Posts: 100,534 🤖 Admin 🤖
    Re:Fixed asset replacement reserve

    Well, as far as I know this is one of those type of reserves that is simply conjured up by a business.

    i.e. where as normally all the profits are simply stored in retained profits (a revenue reserve) a business may wish to transfer some of those profits into seperate reserves of there own. So you are just transferring some of the value out of the retained profits into a different reserve.

    It must be remembered it is still a revenue reserve that can be distributed to shareholders, unlike capital reserves (e.g. share premium + revaluation reserves).

    But this as far as I know - perhaps someone else on here could either confirm it or make me look silly?

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