In: Accounting
if a company declare a final dividend to shareholders, under what conditions would such a dividend declaration create a liability that would be required to be disclosed in the statement of financial position.
A declared dividend shall be provided as liability as current liability if satisfied the following condition: | |||||||||||
1) If such event is substantially existed at balance sheet date, and | |||||||||||
2) If such event is approved by competent authority before signing the financial. | |||||||||||
As in this case final dividend was pending on balance sheet date to declare and the same got approved | |||||||||||
before finalisation of financial statement. So condition for recognition of declared dividend as liability | |||||||||||
have been satisfied. | |||||||||||
Related disclosure shall be made for declared dividend as liability payable in the form of (i) Nature of event, | |||||||||||
(ii) Financial impact, (iii) approving authority, (iv) Date of Declaration of dividend, etc. | |||||||||||