Other reserves which appear in the company SFP
When describing ordinary shareholders, we have said that these own the ‘equity’ of the business including any reserves. Shareholders' equity consists of
Share capital (at nominal value)
Share premium – the difference between the issue price of the share and its par value
Revaluation surplus – a non-distributable reserve representing unrealised profits on the revalued assets
Other reserves – very often, these are revenue reserves which may either have a specific purpose (e.g. asset replacement reserve) or not (e.g. general reserve)
Retained earnings – these are profits earned by the company and which have been retained by the business, i.e. they have not been paid out as dividends, taxes or transferred to another reserve. This reserve usually increases from year to year as companies do not normally distribute all their profits.