ACCA FR · Chapter 8 · Question 9 of 10
On 15 February the directors of Ruff Co declared a final ordinary dividend of $500,000 for the year ended 31 December. The financial statements are authorised for issue on 10 March. How should the dividend be treated in the financial statements for the year ended 31 December?
Test yourself: pick an answer
Reveal answer & explanation
Correct answer: A) It is disclosed in the notes but not recognised as a liability
Explanation
IAS 10 states that dividends declared after the reporting period are not a liability at the reporting date, because no obligation existed then. They are disclosed in the notes. Equity dividends are never an expense in profit or loss; when they are recognised, they are deducted from retained earnings.
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