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Doric BPP43

RRichard8y ago
Dear Sir Q(b) I notice reserves don't come into the picture. When i calculated the amount i added the assets less redundancy plus there were 10 in reserves Is it a rule to ignore reserves in the case of an acquisition or disposal? Regards Richard Scully
John MoffatJohn MoffatTutor8y ago#1
Share capital plus reserves is simply the book value of the amount owing to shareholders. Reserves are not an asset or liability. If the company is closed and all the assets are sold, then the shareholders get whatever is left - nothing to do with what share capital and reserves appear as in the SOFP.
RRichard8y ago#2
don't the reserves represent saved cash from retained earnings? like a cash pile for instance.
John MoffatJohn MoffatTutor8y ago#3
No they don't! Reserves are the extra owed to shareholders over and above the share capital. If there is a 'cash pile' then it would appear as an asset in the SOFP.
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