Penrose Ltd, a private company, has the following figures: accumulated realised profits brought forward £120,000; realised profit for the current year £30,000; accumulated realised losses not previously written off £40,000; and an unrealised revaluation gain on property £50,000. What is the maximum amount it may lawfully distribute as a dividend?

Correct answer: B) £110,000

Explanation

A private company may distribute only its accumulated realised profits, so far as not previously used, less its accumulated realised losses, so far as not previously written off (s830). Realised profits = £120,000 + £30,000 = £150,000. Less realised losses of £40,000 gives £110,000. Unrealised revaluation gains cannot be distributed, so £160,000 is wrong, and £150,000 ignores the realised losses.