Page 158 - Finac1 Test 4 Slides

EVENTS AFTER THE REPORTING PERIOD

Dividends

• If dividends to holders of equity instruments (as

defined in the statement on Financial Instruments:

Disclosure and Presentation – not part of this

module) are proposed or declared after the

reporting period, an entity must not recognise

those dividends as a liability at the reporting

period, as they do not meet the criteria of a

present obligation.

• It is important to note that an entity's past practice

of paying dividends does not give rise to a

constructive obligation and therefore still does not

warrant the recognition of a liability.

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