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Guest

Guest (Querist)

23 March 2010 I have a query in accounts .........please solve it(IPCC)

Situation: If We are preparing investment accounts for financial year 2009-2010 then

Mr. A purchased 500 equity shares on 1st april 2009 @ Rs 18 per share(FACE VALUE Rs. 10). Dividend declared on 1st may @ 10%. Since we are receiving dividend for the 2008-2009 but we create the investment account with the dividend which we receive in 2008-2009 . Why we credit investment account with amount of dividend which we recieve of previous year please tell me the logic behinnd this

Guest

Guest (Querist)

24 March 2010 I have a query in accounts .........please solve it(IPCC)

Situation: If We are preparing investment accounts for financial year 2009-2010 then

Mr. A purchased 500 equity shares on 1st april 2009 @ Rs 18 per share(FACE VALUE Rs. 10). Dividend declared on 1st may @ 10%. Since we are receiving dividend for the 2008-2009 but we create the investment account with the dividend which we receive in 2008-2009 . Why we credit investment account with amount of dividend which we recieve of previous year please tell me the logic behinnd this

Anurag Agarwal

Anurag Agarwal (Expert)

24 March 2010 The dividend you are talking about is the pre-acqusition dividend which is not your income as you where not holding the investment during that period (2008-09). More over the price of dividend is indirectly included in Rs.18 per share paid by you. Thus any amount relating to the preacqusition will reduce your cost. For More Ellaboration Refer As-13 Investment

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