Regarding financial statement preparation

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This query is : Resolved

RATHAMMA (Querist)

08 October 2018 Dear Sir,

Please clarify whether proposed dividend of FY 2017-18 has to be shown in financial statements of FY 2017-18?

CA Ankit R Momaya

CA Ankit R Momaya (Expert)

08 October 2018 As per the revised Accounting Standard, proposed divided is no longer to be recognised as liability as on Balance Sheet Date. The same will be accounted when it is approved by the Shareholders in the Annual General Meeting.

Aashok Kumar Sharma

Aashok Kumar Sharma

(Expert)

20 July 2025 As per the applicable accounting standards and the Companies Act, the treatment of proposed dividend in the financial statements has changed over time.

✅ Current Position (As per Companies Act, 2013 & Ind AS/AS):
Proposed Dividend for FY 2017–18 should not be shown as a liability in the financial statements for FY 2017–18.

🔹 Why?

As per AS 4 (Revised) and Ind AS 10, proposed dividends are events occurring after the reporting period.
Since the dividend is declared after the balance sheet date (usually at the AGM), it should not be recognized as a liability as on 31st March 2018.
📌 How to Show It?
Particular Treatment
Balance Sheet (as of 31.03.2018) ❌ Do not show proposed dividend as a liability
Notes to Accounts ✅ Disclose under “Contingent Liabilities / Events After the Reporting Period”
Directors’ Report ✅ Mention the proposed dividend for shareholder information
📝 Example Disclosure in Notes:
"The Board of Directors has recommended a final dividend of ₹ X per share for the financial year 2017-18. This is subject to the approval of the shareholders at the ensuing Annual General Meeting and hence not recognized as a liability as on 31st March 2018."

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