As per AS 4, Proposed Dividend should be accounted as liability only when after it has been approved by shareholders in General Meeting which is held after closure of accounting year.
Thus, accordingly it will be treated as follows:
Proposed Dividend of previous year should be added to determine Net Profit before Tax and same amount should deducted under Cash Flow from Financing Activity.
Is this treatment correct or incorrect, pl clarify b'coz earlier we were adding current years proposed dividend to net profit and previous years proposed dividend was treated as an outflow of cash from financing activity .
Thanks
Regards
CAclubindia
