CA Inter P2 · Chapter 7 · Question 1 of 9
Which of the following can be a source of dividend under section 123(1)?
Test yourself: pick an answer
Reveal answer & explanation
Correct answer: B) Profits of the current financial year arrived at after providing for depreciation as per Schedule II
Explanation
Section 123(1) allows dividend out of the current year's profits after depreciation, out of undistributed profits of previous years after depreciation, or both. It may also be paid out of money provided by the Central or State Government under a guarantee. Unrealised and notional gains, revaluation gains and fair value changes are excluded when computing profits. The securities premium account is capital in nature.
More Declaration and Payment of Dividend MCQs
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- Q7Under section 127, a director is NOT liable for failure to pay a declared dividend within thirty days in which of the following cases?