A component of the equity section on the statement of financial position/ balance sheet that belongs to the equity’s respective share of an entity’s reserves. In other words, equity reserves are equal to equity minus share capital and retained earnings. The balance of an equity reserve may arise from multiple sources including statutory requirements (statutory reserves), foreign exchange translations, fair value, and revaluation change. For example, the currency translation contributes to equity reserves and will change over time, depending on on changing in foreign exchange rates. On the other hand, statutory reserve does not usually fluctuate or change its balance unless regulations change.
Accounting
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