10-07-2004, 02:27 AM
Hi
IAS 10 treatment may have been misunderstood. Interim dividends are shown on face of financial statements including statement of changes in equity, however final dividend is only shown if declared before date of balance sheet. The reason of not showing final dividend is that unlike interest, dividends do not accrue over a period of time and thus their is no certainity on balance sheet date for their announcement. A company may not declare dividends at all - as is case with many Pak listed companies. However the obligating event occurs when the board announces it and thus a liability occurs which was not present at balance sheet date. Thus not an adjusting event.
The nature of dividend here is not even residual but a distribution of residual (profit) therefore it does not accrue and depends on a decision. Similarly recognition of dividend and interest incomes also follow the same principle (Reverse to the above treatments of IAS 10).
Hope this shall answer your question.
Aamer Sikandar
Edited by - aamersikandar on Oct 06 2004 93108 PM
IAS 10 treatment may have been misunderstood. Interim dividends are shown on face of financial statements including statement of changes in equity, however final dividend is only shown if declared before date of balance sheet. The reason of not showing final dividend is that unlike interest, dividends do not accrue over a period of time and thus their is no certainity on balance sheet date for their announcement. A company may not declare dividends at all - as is case with many Pak listed companies. However the obligating event occurs when the board announces it and thus a liability occurs which was not present at balance sheet date. Thus not an adjusting event.
The nature of dividend here is not even residual but a distribution of residual (profit) therefore it does not accrue and depends on a decision. Similarly recognition of dividend and interest incomes also follow the same principle (Reverse to the above treatments of IAS 10).
Hope this shall answer your question.
Aamer Sikandar
Edited by - aamersikandar on Oct 06 2004 93108 PM
