Accountancy Forum

I was going through some financial statements issued by some companies, in which they declared the divided and recognized that as liability, which is i think against IAS-10 (revised 1999)
as per IAS 10
"If dividends to holders of equity instruments are proposed or declared after the balance sheet date, do not recognise those dividends as a liability (as had been permitted under the old IAS 10). [IAS 10.11] However, disclosure of post-balance-sheet-date dividends is required by paragraph 85 of IAS 1, Presentation of Financial Statements, and if they are stock dividends, IAS 33, Earnings Per Share, requires adjustment of earnings per share. That disclosure could be in the notes or in the equity section of the balance sheet. The option in the earlier IAS 10 to recognise a liability for dividends that are proposed or declared after the balance sheet date has been removed."

so what do u think people, isn't it the violation of IAS 10??
can u clear my confusion ????

S M R

Oh yes, I got the answer, there is a contradiction b/w IAS and CO 1984 so law is dominant, according to 4th schedule the company has to disclose "proposed dividend" under the head current liabilities,
but the confusion is, the Directors must have to disclose the departure from IAS 10 regarding such accounting treatment,
as it is the requirement of Code of corporate governance, but i m surprised that no company did that.

S M R

otherwise i help you out<img src=icon_smile_big.gif border=0 align=middle><img src=icon_smile_big.gif border=0 align=middle><img src=icon_smile_big.gif border=0 align=middle><img src=icon_smile_big.gif border=0 align=middle><img src=icon_smile_big.gif border=0 align=middle>

S A Dar

Default possition in Pakistan regarding the conflicts between Companies Ordinance, 1984 and IAS is that the provision of Companies Ordinance and directives of SECP will take precedence. There is a conflict there where IAS requires different treatment than Companies ordinace. Companies Ordinance will prevail and Dividend needs to be disclosed as proposed dividend in the year in which it is declared.

One thing more IAS does require disclosure of departure from a provision of IAS however in case of Pakistan, if you refer new statement of compliance required to be included in accounting policy now makes it clear that if there is a conflict than the Cos ordinance has precedence

In case of departure other than resulting from a conflict with the law needs to be disclosed.

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One thing more IAS does require disclosure of departure from a provision of IAS however in case of Pakistan, if you refer new statement of compliance required to be included in accounting policy now makes it clear that if there is a conflict than the Cos ordinance has precedence

In case of departure other than resulting from a conflict with the law needs to be disclosed.


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