A technical question I hope some one might answer.
For a limited company, if it is decided to pay a dividend on the ordinary shares after the year end and final accounts are prepared, should the BS be redrafted to change the creditor liability and show a reduction against retained post tax profit, or enter in the notes to the accounts that a proposed amount will be due? Or both?
There is probably another alternative I haven't considered
I guess the Capital and Reserves section will need to be reduced by the Dividend amount under the P&L account and the Creditors section increased, plus the notes to the accounts need to be amended also.
You will also need to have the correct board minutes of the meeting prior to the year end for that dividend payment.
If an entity declares dividends to holders of its equity instruments after the end of reporting period, the entity shall not recognise those at end of period as liability. The amount of the divident may be presented as a segregated component of retained earnings at the end of reporting period. That is following IFRS ( and in IFRS there is no alternative) but I would think it is the same in UK GAAP.
-- Edited by attilabenko on Tuesday 13th of July 2010 09:09:44 PM
