I am confused as to how to account for proposed dividends in the balance sheet and income statement. I had thought I understood that you just put a remark in the notes to the income statement and nothing in the balance sheet. So not included in any calculations in either income statement or balance sheet. Or equivalently proposed dividends as a liability in the balance sheet (and subtract them off the retained earnings from the income statement to get a smaller retained earnings for balance sheet - i.e. balance sheet retained earnings plus dividend liability = income statement retained earnings). However, April 2006 exam Qu.20 contradicts both of these methods by subtracting the proposed dividends in the income statement and they appear nowhere in the balance sheet. The only thing I can see is proposed dividend TO BE PAID - is that to assume they have been approved and paid?
Hi The treatment of dividends was different in 2006 Core Reading. The examiners' report is based on this "old" treatment - you're right that it would be different now.... http://www.acted.co.uk/forums/showthread.php?t=1556 Best of luck for Thursday Lynn
