Hello
I want to know about accounting treartment of Proposed Dividend for MAY 17 exam.
I have taken class from Parveen Sharma sir last year and he told different treatment of proposed dividend for May 17 exam in consolidation and valuation chapters and also tell me Dividend tax treatment.whether CDT need to grossed up.
Student who is taking class are requested to post latest notes on consolidation, Prposed Dividend.
Reply Soon....
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.
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
CA Gopal Somani
(Consultant)
(2057 Points)
Replied 15 April 2017
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.
Srikanth Tvns
(7 Points)
Replied 07 September 2017
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
Chirag Bafna
(2 Points)
Replied 15 April 2018
satish
(teaching)
(2046 Points)
Replied 16 April 2018
refer AS 4 Events occured after the balance sheet date.
especially exceptions to AS4
Abhishek
(CA FINAL)
(54 Points)
Replied 08 September 2018
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)
CAclubindia
