In this case, income tax on profit is determined without deduction of the reserve, and once income tax is determined, it is deducted to determine the liquid profit on which the legal reserve is calculated. „Application of anonymous rules on legal reserves, balance sheets and profit-sharing. The company constitutes a legal reserve, subject to the rules on anonymous public access. The same rules apply to annual balance sheets and profit-sharing. The legal reserve has a specific provision provided for by law, but this limitation is based solely on the value or amount required by law, and not on its surplus, so that the company can use the purpose it wishes for this surplus. Assets (buildings, land, machinery, financial assets, inventories, etc.) must be indicated according to the purchase price principle by the purchase price or the historical price. During periods of inflationary trend, some of these assets appear on the balance sheet at a much lower value than they have in the market at that time. As for the accounting of the legal reserve, it is part of the inheritance, more precisely in the 330505 account according to the Colombian uniform chart of accounts. Since they do not constitute share capital as such, reserves are considered profits, which are included in the company`s own funds as passive capital, although they must have a counterpart in the assets. This means that they are part of the financing of the company as such and therefore cannot be sold for distribution as dividends, except in certain special cases. If an investor wishes to acquire shares at this time, they are valued at 1.9 u.m./share, 1 u.m. corresponding to the shareholder`s participation in the capital and 0.9 u.a. with participation in reserves.

Offering less would hurt the former shareholders because, thanks to their collaboration, the company increased its net assets from $20,000 to $38,000 over two fiscal years. In this context, it is important to recall all that is found in Chapter 7 „Financial assets (I)” on the theoretical value of the share and the raison d`être of the subscription right. The obligation to create a legal reserve is provided for by the Commercial Code and applies to the following companies: The legal reserve is also the one that a company (company) must have under the applicable regulations. In some countries, the legal reserve must be equal to 10% of the profit of the last financial year until it reaches at least 20% of the share capital. This statutory reserve is used to offset losses if the company has no other reserves for this purpose. It is important to note that the „share issue premium” will be an available reserve, i.e. at some point this reserve can be removed from the company without legal obstacles. In this case, the net assets of „DOCE, SA” are 15,000 u.a., represented by 10,000 u.a. share capital and 5,000 u.a. in the form of voluntary reserves. Its materialization in assets is 12 000 u.a. in banks and 3 000 u.u.

in shares. The concept of legal reserve refers to a type of mandate by which a commercial company reserves a certain amount of capital as collateral for its activity. As a general rule, this sum corresponds to twenty per cent of the value of the total share capital. They are gained from the benefits of exercises until they reach that twenty percent. In our opinion, own shares are an account which, from an economic point of view, reduces equity, since their occurrence implies the repatriation of part of the share capital and therefore has no effective contribution. However, account 198 „Own shares in special situations” is located in the balance sheet according to the model proposed by the AGC. – Tangible fixed assets: this group takes into account all assets that have a relatively durable lifespan, whose purpose is to be used for the operation of a business and which are generally not regulated by law. Below is a brief description of each booking mentioned in this block. The company may take this surplus and establish or increase a statutory or occasional reserve or distribute it as a dividend to shareholders. This type of reserve is a subset that belongs to a broader category of reserves from companies` retained earnings and also©includes special, statutory and voluntary reserves, to name a few. The common feature of these categories is that they arise from the economic benefits of the company`s activity: that is, if this year`s result shows a positive balance.

The Administration provides for the revaluation of certain financial investments in the Finance Act for the year X7, including those corresponding to the company „LA SEDA DE SIGÜENZA, SA”.