When forming and using reserve capital, it is important to consider the purposes for which it will be used. Let's consider where this capital can be directed.
To compensate for losses
Chapter 8, paragraph 1, Article 65 of the Federal Law on Joint-Stock Companies provides that only the board of directors can decide what purpose is pursued when using the reserve capital. During the preliminary approval of the annual report, a decision can be made to cover losses at the expense of the FRS. In the context of accounting, the use of reserve capital to compensate for losses is considered an event that occurred after the reporting date. This is provided for by PBU 7/98 "Events after the reporting date".
In accordance with PBU 7/98, transactions singapore email list related to covering losses at the expense of the Federal Reserve System are classified as events occurring after the reporting date and affecting the results of economic activity. This type of event should be reflected in the notes to the balance sheet and financial statements.
Reserve capital for compensation of losses
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In this case, no entries are made in accounting (synthetic and analytical) within the reporting period. In other words, if the company compensates for uncovered losses for 2023 from reserve funds, the corresponding entries will be made in 2024. At the same time, the notes to the annual financial statements for 2023 must contain information about what the supervisory board decided to use to cover the losses incurred in the reporting period of the Federal Reserve System. In parallel, the amount of the transaction itself should be displayed.
For payments on bonds
If the enterprise has no other sources, the profit deductions to the reserve capital can be used to pay off the bonds. According to the chart of accounts manual, this is reflected by the entry:
Debit 82 and credit 66 or 67
With such posting, the debt on bonds does not decrease, but on the contrary increases. To repay them, property assets and, above all, financial resources are required. The largest reserves formed by the enterprise and recorded in liabilities will not help if the company does not have cash.
Funds and reserve capital improve the financial stability of the company. Retained earnings, not used for dividends or other purposes, help improve the financial position by creating a FRS. However, excessive investments in real estate, providing long-term payment deferrals to counterparties and issuing loans can negatively affect the liquidity of the enterprise. It is important to ensure the availability of liquid assets at the time of redemption of its bonds.