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Recognised liability of proposed dividend as per companies act 2013 and ind as 10

himanshu (article) (45 Points)

24 May 2016

Balance sheet of abc ltd. is to be approved on 20th aug. 2016. But between 31st march and 20th aug abc ltd. Proposed dividend at 10% on equity share. Ind as is applicable to the company. Since ind as 10 said there should not be booked as liability of dividend. Whether liability recognised or not as per companies act 2013. I do not know treatment of proposed dividend as recognised as liability in books of accounts. Please clarify me as rule of law 1st prevail over ind as.

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Naseem (Practice) (34 Points)
Replied 24 May 2016

Ind AS applies certain company but not all, who applied the IND AS 10 , he shall not recognised as LIABILITY at end of reporting period. (Para 12 of Ind as 10)

As per Para 14 of AS 4 state that proposed divended shoud be adjusted.

As per schedule 3 of comapies act 2013, first preference shall be given to AS or Ind AS

It is also state that proposed dividends should be discolsed as CONTINGENT LIABILITY

But preference given to AS, so that you can disclosed in tow way

First way is more reliable i.e. you disclose reserve in two parts first PROPOSED DIVIDENDS AND balance reserve in head of reserve & surplus

Its earlier interperation of word adjusted means current liab. you may continue but it not correct

Because it is not qualify the definition of Liability

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