Legal Reserve
Code: 3710
👁 Views: 19
Account Information
| Financial Statement | Statement of Financial Position |
| Normal Balance | Credit |
Definition
The mandatory reserve that must be formed at a specified percentage (usually 10%) of annual net profit under corporate laws and cannot be distributed to shareholders.
📐 IFRS vs US GAAP Accounting Treatment
IFRS
IAS 1
Presentation of Financial Statements
US GAAP
ASC 505
Equity
❓ Frequently Asked Questions
Q: What is the legal reserve?
A: A mandatory reserve formed at a specified percentage (usually 10%) of annual net profit and cannot be distributed to shareholders.