BMC Associates says Replied on 5th September,2026 06:09 AM

The treatment depends on whether you are applying AS 4 / Ind AS 10 and, importantly, on whether the dividend is declared before or after approval of the financial statements. 1. Dividend declared after Balance Sheet date but before approval of financial statements For financial statements relating to periods beginning on or after 1 April 2017, under AS 4, the proposed dividend is not recognised as a liability at the Balance Sheet date. So, if the year ended 31 March 2026, and management declares/proposes dividend in April 2026 before the financial statements are approved: ❌ Do not create a dividend payable liability as at 31 March 2026. ❌ Do not reduce the retained earnings for the dividend at 31 March 2026. ✅ Disclose the proposed dividend and related amount in the Notes to Accounts, as required. The actual accounting liability arises when the dividend becomes payable under the applicable law. 2. What if the dividend is declared/approved after approval of financial statements? Once the financial statements have already been approved, a dividend subsequently declared relates to the subsequent period. Therefore: It is not adjusted in the previously approved financial statements. It is accounted for in the next accounting period, when the liability is recognised according to the applicable legal requirements. It is not an event requiring reopening of the already approved financial statements merely because a dividend was subsequently declared. Simple example Year-end: 31 March 2026 Dividend proposed: 15 April 2026 Financial statements approved: 30 April 2026 ➡️ No dividend liability as at 31 March 2026; disclose the proposed dividend in the notes. If dividend is declared after 30 April 2026, after approval of the financial statements: ➡️ No adjustment to the 31 March 2026 financial statements; account for it in the subsequent period as applicable. This distinction is important when preparing accounts and audit working papers, whether you're working with chartered accountant firms in gurgaon, a chartered accountant gurgaon, a ca firm in gurgaon, or a ca in gurgaon.