Accounting · Events After the Reporting Period
A company's reporting date is 31 December 20X5. On 1 February 20X6, the directors propose a final dividend of 500,000 for the year 20X5. On 1 March 20X6, the shareholders formally approve this dividend. The financial statements are authorised for issue on 15 March 20X6. What is the correct accounting treatment of this dividend in the 31 December 20X5 financial statements?
Verified Solution4 OptionsUpdated: October 2026👁️1 View
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- 1Disclose the dividend as an adjusting event directly in the Statement of Changes in Equity.
- 2Recognise the dividend as an adjusting event that reduces retained earnings at the reporting date.
- 3Do not recognise a liability, but disclose the dividend details in the notes as a non-adjusting event.✓
- 4Recognise a liability of 500,000 in the Statement of Financial Position.
Correct answer
Do not recognise a liability, but disclose the dividend details in the notes as a non-adjusting event.
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