can anyone please explain that when one person sold shares to another person on cum-dividend basis,whether such expected amt of div to be rcvd by buyer, is included in the sale value to be paid to seller.
priyatambika ( ca final student) (323 Points)
02 October 2011can anyone please explain that when one person sold shares to another person on cum-dividend basis,whether such expected amt of div to be rcvd by buyer, is included in the sale value to be paid to seller.
ACCOUNTANT
(Student)
(559 Points)
Replied 02 October 2011
Yes.....that salevalue includes the amount of dividend to be received by the buyer for the period which he doesnt actually hold them but receives div when declared by the co...
Like the seller receives the div for which he is the righfull owner as a part of the sale consideration...
ashish gupta
( student)
(1922 Points)
Replied 02 October 2011
yes the value of dividend is included in the price.
priyatambika
( ca final student)
(323 Points)
Replied 02 October 2011
can u explain this with journal entries to be passed by the seller at the time of sale on cum dividend basis
ashish gupta
( student)
(1922 Points)
Replied 02 October 2011
Simple entry for selling the investment that is
Bank A/c Dr
To Investment A/c
To Profit/loss on sale of investment A/c
Entry is different in case of debenture or bond. Then the time value of interest is taken into consideration and accounted for
Rahul Suneja
(CA-Final, CS-Exec)
(215 Points)
Replied 02 October 2011
yes cum dividend includes the amount of dividend accrued till the date of sale of shares
priyatambika
( ca final student)
(323 Points)
Replied 02 October 2011
i here just want to confirm that whether such portion of div included in sale value will be taken to p&l a\c of seller and for that, another entry.....
bank a\c dr
to div a\c
will be passed?
ashish gupta
( student)
(1922 Points)
Replied 03 October 2011
No you cannot account for dividend. No need to pass that entry.
Ateeq
(CA - Final)
(218 Points)
Replied 08 October 2011
| Originally posted by : ashish gupta | ||
 |
No you cannot account for dividend. No need to pass that entry. |
 |
I Agree with ashish,
Since the amount being paid in excess of the share value is because of the buyer getting the benefit of dividend at a later date. So the excess amount is being earned by the seller is a remuneration/profit instead as actual dividend.
for more details refer: -
CAclubindia
