Shivam Kashyap (student) (25 Points)
24 June 2017
Rishika Jain
(Paid Assistant)
(41 Points)
Replied 24 June 2017
As per the ammendment in AS 4, Proposed Dividend is not a liability which is to be recognised in books of accounts but is only contingent in nature untill declared. So, dividend payable to be only recognised when declared.
If in case a company has shown proposed dividend, it is an error on part of the company and should be rectified.
Journal Entry for the cancellation of Proposed Dividend be:
Proposed Dividend Dr.
To General Reserves/ P/L
In both the chapters of Amalgamation and Consolidation, before starting the question, pass the rectification entry and solve the question normally.
Hope this helps!!
CA Gopal Somani
(Consultant)
(2070 Points)
Replied 27 June 2017
Please check the below video for better understanding "Proposed Dividend Amendment impact in Consolidated Financial Statement - By CA Gopal Somani"
https://youtu.be/IlbBnEYC8wU
Please let me know if you have any further query.
CA Gopal Somani
(Consultant)
(2070 Points)
Replied 31 August 2017
Welcome..I am glad that the video was helpful for you.
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