07 July 2012
how to show the Proposed Dividend in the Balance sheet As per Revised Schedule -VI. Whereas it is not liability of the Company .
But in Reliance Indus. Limited `s Balance Sheet the Proposed Dividend has been shown under the head -Short term provision. is it correct or not ?
in my opinion . Proposed Dividend is part of profit untill it is declared by the Share holders of the company please give right way.... prashanr kumat som
07 July 2012
The format of the Statement of Profit and Loss as per the Revised Schedule VI does not contain disclosure of appropriations like transfer to reserves, proposed dividend, etc. These are now to be disclosed in the Balance Sheet as part of adjustments in ‘Surplus in Statement of Profit and Loss’ contained in ‘Reserves and Surplus’. Further, debit balance of ‘profit and loss account’, if any, is to be disclosed as a reduction from ‘Reserves and Surplus’ (even if the final figure of Reserves and Surplus becomes negative).
If you are satisfied with my answer please revert back.
07 July 2012
Revised Schedule VI does not consider proposed dividend as a "provision". Ref:- page 109 of Taxmann's Illustrated Guide to Revisied Schedule VI. My understanding is, may be disclosed under 'other current liabilities' under the head 'Current Liabilities'.
07 July 2012
Earlier proposed dividends was shown as an appropriation item in the profit & loss account but now revised schedule VI requires appropriation directly in the reserves schedule and additional disclosures by way of notes to accounts as above.
07 July 2012
the schedule VI (revised) has been framed based on the existing Accounting standards, one can draw inference from the requirements of para -14 of Accounting Standard – 4 on “Contingencies and Event occurring after the Balance sheet” which state that; “Dividends stated to be in respect of the period covered by the financial statements, which are proposed or declared by the enterprise after the balance sheet date but before approval of the financial statements, should be adjusted” Accordingly proposed dividend needs to be considered in the books of account and should be shown as appropriation item in Reserve & Surplus section and corresponding liability for proposed dividend under short term provision.
07 July 2012
But in page 145 of the book referred by me , the author, Dr. T.P.Ghosh, says 'it is perhaps sufficient to segregate proposed dividend within the head Reserves and Surplus'.
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