ACCA Applied Knowledge · Financial Accounting · Capital structure and finance costs
Brook Co has 4,000,000 ordinary shares of $0.50 each in issue. During the year it paid an interim dividend of $0.04 per share and, after the year end, declared a final dividend of $0.06 per share. What amount is shown as dividends in the statement of changes in equity for the year?
The amount is $160,000, being the interim dividend of $0.04 on 4,000,000 shares. The final dividend declared after the year end creates no obligation at the reporting date, so it is excluded from the statement of changes in equity and only disclosed.
- A$160,000Correct
- B$240,000
- C$400,000
- D$200,000
Explanation
Only the interim dividend was paid in the year: 4,000,000 × $0.04 = $160,000. The final dividend of $240,000 is declared after the reporting date, so it is not recognised in equity this year. Choosing $400,000 wrongly includes the final dividend.
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