Proposed dividend

If dividend is proposed by  company, Profit and Loss Appropriation Account will be debited and Proposed Dividend Account will be credited which will be shown as a current liability in the Balance Sheet.

Proposed Dividend belonging to the minority shareholders will be shown only as a current liability at the time of preparing a Consolidated Balance Sheet.

But the dividend which belongs to the holding company will simply be added to either Consolidated Profit and Loss Account or Capital Reserve —depending on whether the said dividend has been proposed out of post-acquisition profits or pre-acquisition profits.

Mr. Sameer go through the latest amendments.

It says that proposed dividend should be shown in notes to accounts.

AND i agree with the treatment that you suggested.

THANKS FOR UPDATE 

Proposed Dividend Amendment applicable from May 2017:

Proposed Dividend or Dividend declared after balance sheet date are not to be shown as liability in current year balance sheet. Instead, It has to be shown as Notes to the Account.

This change will effect Final Accounts, Cash Flow, Amalgamation and Internal Reconstruction topics. In simple words, proposed dividend will now not be in balance sheet but in Notes.

Students are advised to take note of the same

U CAN DO IT FOR OTHER TOPIC ALSO

U AND OTHER ALSO BENIFITED FROM THIS 

I have uploaded a video on youtube explaining the impact of Amedment of Proposed Dividend in Consolidated Financial Statement. Below is the link -

https://youtu.be/IlbBnEYC8wU

Please let me know if you have any further queries.

Thanks for that video, it is very useful,

but i had a doubt that,

In Study module there is a problem with dividend declared. In that problem they deducted the portion of dividend from the Minority Interest Caclulation.

is that required to deduct.?

if it is required then what will the amount to be reduced from Minority.?

what is the treatment of dividend paid by both holding and subsidiary company in current year out of current year profits.?

see the problem number 19 in study module january 2017 edition.

and also clarify about treatment of arrears of Preference dividend of Holding company and also subsidiary company.

Pleae help me to make it clear 

refer AS 4 Events occured after the balance sheet date.

especially exceptions to AS4

Hi friends,

Propsed dividend is not a liability as it is just proposed by the Directors. Therefore, now proposed dividend should not come in balance-sheet untill it is being declared. If in question of holding "proposed dividend" is given then treat it as a part of Reserve and surplus only.

As per AS 4 - 

1. "provison on proposed dividend" is non-adjusting event and now such provison will not be made in balance-sheet. Only disclosure in report of approving authority is required.

2. If an enterprise declares dividends to shareholders after the balance sheet date, the enterprise should not recognise those dividends as a liability at the balance sheet date (unless law requires). Such dividends should be disclosed in notes (Refer para 8.5)