Treatment of interim dividend as per as-13

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Devendra Kumar Kocherla (Querist)
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23 July 2013 In doing problems of AS-13 interim dividend is credited to income column of investment account entire amount without considering the period

Devendra Kumar Kocherla

Devendra Kumar Kocherla (Querist)
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23 July 2013 I need opinions

Aashok Kumar Sharma

Aashok Kumar Sharma (Expert)
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02 August 2025 Regarding **treatment of interim dividend as per Accounting Standard 13 (AS-13) — Accounting for Investments**, here’s the correct approach:

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### Key points under AS-13 for Dividend Income:

1. **Dividend Income Recognition**
Dividend income from investments is recognized **when the right to receive the dividend is established** (i.e., on the date the dividend is declared).

2. **Interim Dividend vs. Final Dividend**

* **Interim dividend** is declared and paid during the financial year before finalization of accounts.
* **Final dividend** is declared after the financial year-end.

3. **Treatment of Dividend Received on Investments**

* Dividend received (interim or final) is credited to the **Profit & Loss Account under ‘Dividend Income’**.
* It is **not adjusted against the cost of investments** or the carrying amount of investments.
* The entire dividend amount is recognized in the year it is declared and payable, irrespective of the period for which the investment was held.

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### Common confusion:

* Some may try to **proportionately recognize dividend based on holding period**, but as per AS-13, **dividend is recognized fully when right to receive is established**.
* Dividend is not treated as income earned over a period; it's income on the date declared.
* The carrying amount (cost) of investment remains unaffected by dividend income.

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### Example:

* If an interim dividend of ₹10,000 is declared on 30th September, but the investment was held only for 3 months before that, the entire ₹10,000 dividend is credited to P\&L in that accounting year.
* You **do not adjust the investment cost or recognize dividend on a pro-rata basis**.

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### Summary:

| Treatment of Interim Dividend | AS-13 Position |
| -------------------------------- | -------------------------------------------- |
| Dividend credited to income | Entire amount credited in P\&L when declared |
| No adjustment to investment cost | Cost of investment remains unchanged |

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If you want, I can help you with a sample journal entry or a numerical illustration. Would you like that?

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