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In video inter-entity transaction dividends
Why is it that proposed dividend by parent co. added in liabilities, when it has already been deducted from retained earnings (of parent co.), to arrive at figure of retained earnings proposed dividend was deducted but if proposed dividend had to be added once again in liabilities then why deduct from retained earnings.
Retained earnings and proposed dividend payable both are in liabilities section of FS.For the proposal of a dividend, the double entry is:
Dr Retained Earnings
Cr Current liabilities (proposed dividends)If the dividend HAS been recorded, it will have been deducted from retained earnings and included in liabilities
If it HASN’T been recorded, then it needs to be recorded
Does that answer it?
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