Overview

This Section establishes recognition and presentation standards in respect of accounting for reserves. The use of the term "reserve" shall be limited to an amount that, though not required to meet a liability or contingency known or admitted or a decline in value that has already occurred as at the balance sheet date, has been appropriated from retained earnings or other surplus:

1. at the discretion of management (for example, reserve for future decline in inventory values, reserve for general contingencies, reserve for future plant extension); or
2. pursuant to the requirements of a statute, the instrument of incorporation or by-laws of a company or a trust indenture, or other agreement (for example, sinking fund reserve, general reserve, preferred stock redemption reserve).

History of Section 3260

Note: The above summary does not include details of consequential amendments made as the result of other projects.