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CA Intermediate · Advanced Accounting · AS 25 Interim Financial Reporting

Gokul Investments Ltd (April–March year) holds shares in a subsidiary. The subsidiary declares and pays a dividend of ₹24 lakh to Gokul in August 2026, once a year, and the dividend income would be recognised in full in an annual report. Gokul publishes quarterly interim reports. In the report for the quarter ended 30 September 2026, the dividend income recognised under AS 25 is:

Gokul recognises the full ₹24 lakh in the quarter ended 30 September 2026. AS 25 prohibits anticipating or deferring occasional or seasonal income at an interim date when that would not be appropriate at year end, so the dividend is not spread across quarters.

  1. A₹6 lakh, spreading the dividend equally over the four quarters
  2. B₹12 lakh, spreading it over the first half-year
  3. CNil, because it can be recognised only at year end
  4. D₹24 lakh, because the income is recognised in the quarter in which it arisesCorrect

Explanation

AS 25 states that revenue received occasionally or seasonally within a year should not be anticipated or deferred at an interim date if that would not be appropriate at year end. The dividend arose in the July–September quarter, so the full ₹24 lakh belongs to that quarter. Spreading it as ₹6 lakh per quarter would anticipate or defer income inappropriately.

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