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CBSE Class 12-commerce Answered

How to treat (iv)and  (v) point in this question with reason.why we will not take date effect in point (iv) to calculate interim dividend
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Asked by Smitakhadayate20 | 25 Mar, 2020, 07:37: PM
answered-by-expert Expert Answer
Following is the explanation for the mentioned illustration:
  • Point (iv): Interim Dividend Paid @15% on 31.01.2019: It means Interim Dividend is paid @15% on the Capital Balance on the same date which is Rs.3,00,000 in the given question. Amount of Interim Dividend = 15% * 3,00,000 = 45,000 (Since, the rate given is just 15% without per annum or per month being mentioned after the rate, time period will not be relevant for calculating the amount of Interim Dividend).
    Such Interim Dividend is Added to Profit under Operating Activities and deducted from Financing Activities.
  • Point (v): Dividend Proposed on Preference Shares for years ended 31.03.2018 (previous year) and 31.03.2019 (current year): 

Dividend proposed for the current year: It is added back to the Net Profit Before Tax of the current year as we need to determine the cash flow from operating
                activities for which any appropriations are to be added back.

Dividend proposed for the previous year: It has to be deducted from the Cash Flow from Financing Activities as it is paid in the current year.

Answered by Surabhi Gawade | 26 Mar, 2020, 02:57: PM

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