Why dividend declared in the present year is assumed to be charged in the current yr's pl in the chapter of holding company?
It may also be the case that Dividend may be recommended in last year and thus last yr's pl may have hit and now in the current year dividend is declared in the general meeting and thus no adjustment in current yr pl would have been done.
Are you asking about Dividend Received by Subsidiary or Dividend Declared by Subsidiary company?
In case of Dividend Received AS 9 permit the recognition only when right to receive dividend arise i.e. when declared in AGM. Hence Dividend of last year (Say FY 2013-14) should be surrendered as income only in the FY 2014-15 after declaration thereof in the AGM of Paying Company.
In case of dividend declared
AS 4 required making provision for proposed dividend hence practically you are right that dividend proposed in last year (which is declared in current year) may had already been provided in last year P&L. But in question it is generally assumed that expense in P&L is charged only when liability to pay has arise i.e. declaration in AGM
Yes I got it.
It is the assumption that the charge on p&l is made this yr.
Thnx .
CAclubindia
