Hi, is creating a provision for dividend payout allowable if it meets the legal obligation/reliable measure/probable rules?
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Provision for dividend
Hi,
We can only recognise a dividend payable when it has been declared as this creates the obligation and therefore meaning that it meets the definition of a liability.
When the dividend is proposed it is only disclosed in the notes to the accounts as there is no obligation to yet pay that dividend and so no liability created.
Thanks
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