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Proposed dividend

Sunil Kumar (Indirect Taxation ) (1246 Points)

06 November 2013

Dear freinds kindly suggest me regarding disclosure of proposed dividend in rev sch VI. I well known that from 1.4.11 it should not be disclosed under current liability n provisions but if it available so where should I disclose the same,...

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8 Replies

Sandeep Garg (Consolidation and IndAS Application) (1056 Points)
Replied 06 November 2013

Proposed dividend will be shown as follwos -

1. In Reserve and surplus note - As a reduction from current year profit

2. In BS - Under Short therm provisions

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Sunil Kumar (Indirect Taxation ) (1246 Points)
Replied 06 November 2013

How ever the same disclosure prohibited by Revised schedule vi Since it is not a present obligation of entity so cant be classified as provision.???

CA jatin k Gohil (CA Practice) (95 Points)
Replied 06 November 2013

I am agree with Mr. Sunil Kumar,

Sunil Kumar (Indirect Taxation ) (1246 Points)
Replied 06 November 2013

Kindly suggest me friends.

Sandeep Garg (Consolidation and IndAS Application) (1056 Points)
Replied 06 November 2013

Guidance provided by ICAI on this issue is as follows -

"The Revised Schedule VI requires disclosure of the amount of dividends proposed to be distributed to equity and preference shareholders for the period and the related amount per share to be disclosed separately. It also requires separate disclosure of the arrears of fixed cumulative dividends on preference shares. The Old Schedule VI specifically required proposed dividend to be disclosed under the head “Provisions.” In the Revised Schedule VI, this needs to be disclosed in the notes. Hence, a question that arises is as to whether this means that proposed dividend is not required to be provided for when applying the Revised Schedule VI. AS-4 Contingencies and Events Occurring After the Balance Sheet date requires 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. Keeping this in view and the fact that the Accounting Standards override the Revised Schedule VI, companies will have to continue to create a provision for dividends in respect of the period covered by the Financial Statements and disclose the same as a provision in the Balance Sheet, unless AS-4 is revised. Hence, the disclosure to be made in the notes is over and above the disclosures pertaining to a) the appropriation items to be disclosed under Reserves and Surplus and b) Provisions in the Balance Sheet."

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Sunil Kumar (Indirect Taxation ) (1246 Points)
Replied 06 November 2013

Dear I would like to tell that me was well aware of above matter But the fact that as 4 provides the recognization principle and not disclosure I want to know where should I disclose the dividend. Since ind as prohibited for the provision for this item and required to disclose only fact in notes.