07-03-2006, 05:46 PM
AOA
yes u r rite
Dividend not yet approved by shareholders is not obligation of the entity.
here is para 20 of IAS 37
An obligation always involves another party to whom the obligation is owed. It is
not necessary, however, to know the identity of the party to whom the obligation is
owedâindeed the obligation may be to the public at large. Because an obligation
always involves a commitment to another party, it follows that a management or
board decision does not give rise to a constructive obligation at the balance sheet
date unless the decision has been communicated before the balance sheet date to
those affected by it in a sufficiently specific manner to raise a valid expectation in
them that the entity will discharge its responsibilities.
para 37 tells us
that a constructive obligation wud arise only when the party/parties affected by such obligation have been communicated before the balance sheet date
it all goes exactly in line with IAS10,& 4 dividend purposedu s[url][/url]ud preferably refer IAS 10 as it specifically presribes treatment of dividends...
now look wat para 20 says about proposed dividends
case is that dividends r 1st proposed by BOD,here ends scope of IAS10.
then after a few days in AGM shareholders approve/unapprove the dividends
now dividends approval is an obligating event & wud give rise to a constructive obligation (i.e final dividend)<u>in the yr in which dividends are approved by share holders</u>,not the yr in which dividends r proposed
hope it helps
and as far as examiners comments r concerned they wud 4 sure had been in line with IAS
however if u dont get them u may post them & v wud try to clarify ...
yes u r rite
Dividend not yet approved by shareholders is not obligation of the entity.
here is para 20 of IAS 37
An obligation always involves another party to whom the obligation is owed. It is
not necessary, however, to know the identity of the party to whom the obligation is
owedâindeed the obligation may be to the public at large. Because an obligation
always involves a commitment to another party, it follows that a management or
board decision does not give rise to a constructive obligation at the balance sheet
date unless the decision has been communicated before the balance sheet date to
those affected by it in a sufficiently specific manner to raise a valid expectation in
them that the entity will discharge its responsibilities.
para 37 tells us
that a constructive obligation wud arise only when the party/parties affected by such obligation have been communicated before the balance sheet date
it all goes exactly in line with IAS10,& 4 dividend purposedu s[url][/url]ud preferably refer IAS 10 as it specifically presribes treatment of dividends...
now look wat para 20 says about proposed dividends
case is that dividends r 1st proposed by BOD,here ends scope of IAS10.
then after a few days in AGM shareholders approve/unapprove the dividends
now dividends approval is an obligating event & wud give rise to a constructive obligation (i.e final dividend)<u>in the yr in which dividends are approved by share holders</u>,not the yr in which dividends r proposed
hope it helps
and as far as examiners comments r concerned they wud 4 sure had been in line with IAS
however if u dont get them u may post them & v wud try to clarify ...
