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Hi,
I remember the journal entry for stock dividend at the company: Db Reserve and Cr Capital. But surprisingly I do not remember the entry for the investor who receive the dividend. Could we just post as Db Investment and Cr Financial Income? But with which value (market value of shares?). Could anybody help me and point out the relevant standards (if any). Thank you so much!
Actually the journal for the company paying the dividend would be Dr Retained Earnings, Cr Cash.
The journal for a company receiving a dividend would be Dr Cash, Cr Investment Income. Bear in mind this is only if the shares are a held as an investment, NOT if the shares are classed as an associate or susidiary. The relevant standard is IFRS 9.
If the shares are classified as an investment then the market value of the shares will be dealt with separately. They will be revalued to fair value at the end of the period and the gain or loss taken to the P&L or OCI depending on whether the share is deemed to be FVTPL or FVTOCI.
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