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I recently read on another thread that dividends shouldn’t be recognised until paid. I agree that proposed dividends shouldn’t be recognised (certainly not as a liability). However, until seeing this I thought dividends declared should be recognised as a liability. I would be grateful if you could confirm.
Dividends are FR really not SBR.
3 steps:
1. Dividend proposed by directors – do nothing – though disclose as non-adjusting subsequent event.
2. Dividend declared (approved by shareholders – set up liability – because now legally binding
3. Dividend paidSteps 2 and 3 are both AFTER the year end and the gap between them might just be a matter of hours.
Wouldn’t have thought examiners would be bothered about this.
🙂
Thanks a lot. Just had a niggling doubt in my mind. Glad you have comprehensively dealt with my question.
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