Question

In: Accounting

if a company declare a final dividend to shareholders, under what conditions would such a dividend...

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.

Solutions

Expert Solution

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.

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