Dividends

[missright]

Hi all

I am just in the process of preparing my statutory accounts and I just wanted to get some clarification on what to include in the 'Dividends' note.

During the financial year (2009) the company paid a dividend of £10k which is accounted for on the P&L note.

After the year end the company proposed a dividend of £5k.

Should the £5k be brought into account (ie a liability) in the 2009 financial year? Or should I simply disclose this as 'Dividends proposed after the balance sheet date'?

My understanding was that a liability should only be recognised if the dividend was actually proposed before the year end.

I would be grateful for any clarification on this!

[Zeno]

The dividend proposed after the year end date is not a liability and should not be disclosed in any way on your financial accounts (assuming that you understand the notion of "paid" can be somewhat fluid in the case of credits to Director's current accounts).

[supercarbon]

Sorry to step in, I’m just wondering what happens now with the 2010 accounts with relation to where the 5K dividend goes?
If the 5K dividend was paid in 2010 from 2009 deferred profits and the 2009 deferred profits have had corporation tax paid on them, then I would not expect the 5K dividend to be in the 2010 Profit and Loss account since the dividend was paid against 2009 profit that has already been taxed!

[supercarbon]

Sorry to step in, I’m just wondering what happens now with the 2010 accounts with relation to where the 5K dividend goes?
If the 5K dividend was paid in 2010 from 2009 deferred profits and the 2009 deferred profits have had corporation tax paid on them, then I would not expect the 5K dividend to be in the 2010 Profit and Loss account since the dividend was paid against 2009 profit that has already been taxed!

[Zeno]

Sorry to step in, I’m just wondering what happens now with the 2010 accounts with relation to where the 5K dividend goes?
If the 5K dividend was paid in 2010 from 2009 deferred profits and the 2009 deferred profits have had corporation tax paid on them, then I would not expect the 5K dividend to be in the 2010 Profit and Loss account since the dividend was paid against 2009 profit that has already been taxed!

The £5 will simply appear as a dividend paid in the 2010 accounts. It is not paid out of any years specific profits but from the accumulated reserves. Dividends are irrelevant to Corporation Tax.