The liability to pay a dividend shall be recognized when the dividend is appropriately authorized and is no longer at the discretion of the entity, which is the date (a) when declaration of the dividend, e.g. by management or the board of directors, is approved by the relevant authority, e.g. the shareholders, if the jurisdiction requires such approval, or (b) when the dividend is declared, e.g. by management or the board of directors, if the jurisdiction does not require further approval.
This story discusses a case study where a company distributed inventory to the shareholders as dividends whose accountant is looking for its guidance under Ind AS. This story not only discusses the accounting aspect but also the legal aspect of distributing non-cash assets by a company given under the Companies Act 2013.
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