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Master Creator declared a ₹50,000 DIVIDEND after the reporting period for year ended 31 March 20X2. The board recommended the dividend AFTER 31 March 20X2 but before the financials were authorised. Under Ind AS 10 + Ind AS 1:
ARecognise as a contingent liability disclosed in the notes only
BDO NOT recognise the dividend as a liability at 31 March 20X2 (it's a non-adjusting event); DISCLOSE the proposed dividend in the notes
CRecognise as a current liability at 31 March 20X2 — dividend was for the year
DRecognise as an appropriation from retained earnings on 31 March 20X2
Answer & Solution
Correct answer: B. DO NOT recognise the dividend as a liability at 31 March 20X2 (it's a non-adjusting event); DISCLOSE the proposed dividend in the notes
Ind AS 10 — proposed dividends declared/recommended after the reporting date but before financials are authorised are NON-ADJUSTING events (no liability at reporting date). Disclose the proposed dividend in the notes per Ind AS 1. This is a key contrast to AS where proposed dividends were sometimes provided in the books at year-end.
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