Asked by Jessica Alonso on Jun 08, 2024
Verified
Discuss the changes in the accounting rules for recognition of liabilities for dividends payable after 1 January 2005.
Accounting Rules
Formal guidelines and procedures that govern the recording, reporting, and analysis of financial transactions and positions.
Liabilities
Financial obligations or debts owed by a company to third parties, which must be settled through the transfer of assets, provision of services, or other economic benefits.
Dividends Payable
A liability recorded on a company's balance sheet for dividends declared by the board of directors but not yet paid out to shareholders.
- Discern the processing of dividends in financial statements and how it affects consolidation.
Verified Answer
AG
Arthur GordonJun 13, 2024
Final Answer :
Recognition of liability for dividend payable:
- Since 2005 Accounting Standard AASB 110 Events after the Reporting Period prevents the recognition of a liability for dividends payable unless the dividend is 'declared' by the reporting date
- 'Declared' means authorised and no longer at discretion of the entity
- Since 2005 Accounting Standard AASB 110 Events after the Reporting Period prevents the recognition of a liability for dividends payable unless the dividend is 'declared' by the reporting date
- 'Declared' means authorised and no longer at discretion of the entity
Learning Objectives
- Discern the processing of dividends in financial statements and how it affects consolidation.