Treatment of proposed dividends

This query is : Resolved

Querist : Anonymous

Querist : Anonymous (Querist)

09 September 2017 [1] According to the latest MCA amendment w.e.f. 30 March 2016 by MCA in AS 4, proposed dividend is not to be recognised as liability in the books of account; but is to be shown only by way of a note to the accounts since the statutory obligation for dividends arises only after approval by the shareholders.
[2] ICAI suggested answers [CA Inter May 2017 Q. 1(d)] also confirm this treatment.
[3] Most of the published Financial Reports of listed companies for year ending 31 March 2017 have also shown proposed dividend only by way of note and not as an appropriation / current liability.
[4] However, in all the Illustrations in the latest study material (July 2017) for CA Inter Paper 1 Accounting Module 23 Chapter 4 - Financial Statements of Companies-; and CA Final Financial Reporting RTP for Nov 2017 Q 1, proposed dividend is shown in the body of the balance sheet (by deduction as appropriation from Reserves and surplus; and as current liability) and not in the notes.

Which treatment is to be followed?

sivaram

sivaram (Expert)
Follow

09 September 2017 now it is not an adjusting event show in notes to accounts please follow this as this is a new amendment and please follow to make it clear in exams put a note and say problem is attempted based on this