Which statement best describes the treatment of dividends finalised after year end in equity?

Which statement best describes the treatment of dividends finalised after year end in equity?

• A. They are shown as a deduction in equity in the year they are paid
• B. They are not provided for and disclosed as a note
• C. They are recognized as a liability
• D. They are shown as an expense in P&L

Answer: (B)

Dividends finalised after year end are events after the reporting period. There is no present obligation at the reporting date, so no provision or liability is recognised in the statements for that year. IFRS requires such post-balance-sheet dividends to be disclosed as a non-adjusting event in the notes if material. They do not appear as an expense in the P&L, and they are not deducted in equity in the year they were finalized, since the actual distribution occurs later once approved. Therefore the best description is that they are not provided for and disclosed as a note.

Dividends finalised after year end are events after the reporting period. There is no present obligation at the reporting date, so no provision or liability is recognised in the statements for that year. IFRS requires such post-balance-sheet dividends to be disclosed as a non-adjusting event in the notes if material. They do not appear as an expense in the P&L, and they are not deducted in equity in the year they were finalized, since the actual distribution occurs later once approved. Therefore the best description is that they are not provided for and disclosed as a note.