CAF-4 · Chapter 23 · Question 6 of 7
A company revalues its investment property, generating an unrealized gain of Rs. 10 million on its income statement. Can the company declare a cash dividend out of this gain?
Test yourself: pick an answer
Reveal answer & explanation
Correct answer: C) No, dividend cannot be paid out of unrealized gains on investment property.
Explanation
Dividends can only be paid out of realized profits. Unrealized gains, such as the revaluation of investment property under fair value models, cannot be used to distribute cash dividends.
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