Journal entry of dividend declaration

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Querist : Anonymous

Querist : Anonymous (Querist)

19 May 2016 Hello Experts,
Pls solve my query....final dividend
Would be declare by board of directors
in AGM after finalization of accounts,

Query...assume accounts of AY 2016-17
Has been finalized and the same was
Represent in AGM however the directors
Has declared dividend say Rs. 1 lakh pls
Let me know if accounts become finalized
Before AGM then how the accounting entry
Of declared dividend in AGM will be pass
In Finalized accounts....
As per my knowledge if accounts has been
Finalized then No any entry can be pass
Later...

Thanx & Regard
Anuj Gautam

CS Ankur Srivastava

CS Ankur Srivastava (Expert)
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19 May 2016 For dividend appropriation is to be done and as soon as directors recommend the dividend the appropriation been done in the accounts and balance sheet is prepared accordingly.

However, in case of any change in the Dividend in the General Meeting the same need to be corrected in the current year balance sheet only, another board meeting is to be called, accounts will be approved again, and AGM will be adjourned and if needed extension for holding the General Meeting need to be taken and again Financial Statements will be adopted and filed accordingly..

It is my personal opinion... I am yet to find any clear law on this topic...

Contrary view are welcome....

Amol S Joglekar

Amol S Joglekar (Expert)
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19 May 2016 BoD propose/recommend the dividend............
AGM approves/passes it. What is the difficulty?

CS Ankur Srivastava

CS Ankur Srivastava (Expert)
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19 May 2016 oh! Sorry! i have mixed the 2 queries...

I have replied if the AGM has rejected the Dividend.

CS Ankur Srivastava

CS Ankur Srivastava (Expert)
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19 May 2016 The entries are to be passed as soon as the Directors recommend the dividend and Financial Statement are prepared accordingly to be adopted in the AGM.

Amol S Joglekar

Amol S Joglekar (Expert)
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19 May 2016 Absolutely.
"Proposed Dividend" could be a good nomenclature. Even some companies put the year also e.g. "proposed dividend 2015-16" and so on so forth.

Querist : Anonymous

Querist : Anonymous (Querist)

19 May 2016 sir... many thanx to both of you......... for your valuable reply, but still i am in confussion,

plz confirm... weather dividend will be propose by bod before agm or after agm...
if before agm then it will be depends on the share holders weather to approve or reject..

CS Ankur Srivastava

CS Ankur Srivastava (Expert)
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19 May 2016 Final Dividend is always recommended by the Board of Directors then approved by the Shareholders.
Yes it may be....

Amol S Joglekar

Amol S Joglekar (Expert)
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19 May 2016 Why are you so much SCARED and DECISIVE about AGM? BoD can propose/recommend dividend as per the profitabilty of the company. Just to add your confusion about AGM timing......Interim devidend can be recomened during the financial year and well ahead of AGM. Can you please enlighten as to why you are so much keen about AGM timing??? Any specific issue?

Querist : Anonymous

Querist : Anonymous (Querist)

19 May 2016 sir.... does that means accounts will be fully finalized after the conducting AGM & all the statutory due would be paid accordingly

CS Ankur Srivastava

CS Ankur Srivastava (Expert)
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19 May 2016 Interim Dividend may be declared by the Board of Directors and there is no intervention of shareholders in Interim Dividend, you need to report the Interim Dividend paid during the year in the Directors Report.

CS Ankur Srivastava

CS Ankur Srivastava (Expert)
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19 May 2016 Statutory Dues need to be paid as per their due dates.

Financial Statements are approved by the Board of Directors which are required to be adopted by the Shareholders in the AGM the process completes.

Amol S Joglekar

Amol S Joglekar (Expert)
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19 May 2016 FINALISATION? Now you are sticking and giving some EXTRA importance to this finalisation word.....tell me what is your basic annoyance....there is nothing impracticable in this..... for last so many years many companies are doing this and that too without any hassel.....(If you find any anamoly in this, please let me know......so that you can come up with a new, out of box thinking....isnt it? Please tell what is really annoying you.....

Querist : Anonymous

Querist : Anonymous (Querist)

19 May 2016 sir.... weather accounts will be finalized before conducting AGM or After agm

Amol S Joglekar

Amol S Joglekar (Expert)
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19 May 2016 Now please.......
01. year end occurs physically.
02. books of accounts completed and financial statement prepared by management
03. audit conducted....get the accounts audited.
04.BoD approves the same
05. AGM conducted
06. Shareholders adopt the accounts in the AGM.
This is the sequence/chronology. Please tell me at which step you are facing difficulty.?

Querist : Anonymous

Querist : Anonymous (Querist)

19 May 2016 my query is related to step 3, weather accounts will be finalized & audited before AGM or after agm if before agm then suppose directors had proposed the dividend and the same has been
rejected by share holders in agm in that case how the finalized & audited accounts will be correct accordingly.......

CS Ankur Srivastava

CS Ankur Srivastava (Expert)
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19 May 2016 Audit has to be done before AGM and Audited Financial Statement has to be submitted by the Auditors to the Board and the Directors and Auditors sign on the Audited Financial Statement.

Amol S Joglekar

Amol S Joglekar (Expert)
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19 May 2016 The entry is passed in the subsequent year. (for next year audit........Event occurring after balance sheet date, prior period item.....reporting can be done)

Querist : Anonymous

Querist : Anonymous (Querist)

19 May 2016 ok... if audit will be conduct before agm... assume the director had proposed the dividend
and the share holders has rejected the same in AGM in that case how the audited accounts will be
correct accordingly....

CS Ankur Srivastava

CS Ankur Srivastava (Expert)
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19 May 2016 see my first reply in the matter.....

Querist : Anonymous

Querist : Anonymous (Querist)

19 May 2016 what is the diff between p/L appropriation and profit & loss acconts

Amol S Joglekar

Amol S Joglekar (Expert)
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19 May 2016 CS Ankur Srivastava has rightly answered your query in earlier replies

Message likes : 1 times

CS Ankur Srivastava

CS Ankur Srivastava (Expert)
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