Dividends paid

mge

Just wondering why dividends paid aren't treated on an accruals-type basis, but are recognised on the Financial Statements in the year they are paid (rather than the year to which they relate).

Any help would be much appreciated.

PGM

I think its because its not a business cost, business don't have to give dividends.

Rinske

I thought it was because it won't be approved yet in the year it is due.

The end of year dividend won't be decided and approved in the year, so you won't recognise them, until they are approved.

Nikdoug

I think it goes by the date they are declared. Then if there are any dividends declared during the year that remain unpaid at the year end then these are disclosed in the accounts, however don't quote me as i have not come across this yet.

mge

Many thanks for the replies. Very helpful

Steve Collings

Hi,

Yes PGM is correct - dividends are merely distributions of profit as opposed to business "costs". In addition, FRS 21/IAS 10 also prohibits dividends being "backdated" in the financial statements i.e. declaring a dividend on 10 March but backdating it to the year-end 31 December.

Best wishes
Steve

mge

Thanks Steve. That's very helpful.