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ACCA Applied Knowledge · Financial Accounting · Events after the reporting period

Which of the following statements about dividends declared after the reporting period on equity shares is correct under IAS 10?

Dividends declared after the reporting period are not recognised as a liability at the reporting date, because no present obligation existed then. IAS 10 requires disclosure in the notes instead, whatever the amount involved.

  1. AThey are recognised as a liability at the reporting date if declared before the financial statements are authorised
  2. BThey are not recognised as a liability at the reporting date because no obligation existed thenCorrect
  3. CThey are recognised as a liability only if the amount is material
  4. DThey are recognised as a provision at the reporting date because they are probable

Explanation

If dividends are declared after the reporting period, there is no obligation at the reporting date, so no liability is recognised. They are disclosed in the notes as a non-adjusting matter. Materiality does not change the recognition rule.

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