I'm seeking advice on accounting for dividends paid in small companies.
I was always under the impression that dividends should only be recognised once they had been cash settled, rather than creating a dividend payable liability in the interim.
Under what circumstances, if any, is it acceptable to have a dividend payable liability at the year end please?
For context, a new client has asked for my advice on whether he can make a prior period adjustment to his 2016 accounts (Dr Distributable reserves Cr Dividend liability/Director loan). The cash was withdrawn during the 2017 accounting year (accounts not yet filed).
Thanks in advance
I was always under the impression that dividends should only be recognised once they had been cash settled, rather than creating a dividend payable liability in the interim.
Under what circumstances, if any, is it acceptable to have a dividend payable liability at the year end please?
For context, a new client has asked for my advice on whether he can make a prior period adjustment to his 2016 accounts (Dr Distributable reserves Cr Dividend liability/Director loan). The cash was withdrawn during the 2017 accounting year (accounts not yet filed).
Thanks in advance