Business Accounting and Bookkeeping

What is the accounting double entry when a company declare or pay dividend to its holding overseas company with 10 percent local withholding tax rate?

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2008-09-30 11:55:02
2008-09-30 11:55:02

Let's say the dividend payable is $110.

When the dividend is declared (eg the decision is made to pay a dividend but the dividend and tax won't be paid until, say, the first day of next month) then the entry is:

Debit "Dividends Expense" (Expense Account) $110

Credit "Dividend Payable Parent Company" (Liability Account) $100

Credit "Dividend Tax Withheld" (Liability Account) $ 10

When the dividend and Tax is actually paid (eg it is now the first day of next month) the entry is:

Debit "Dividend Payable Parent Company" (Liability Account) $100

Debit "Dividend Tax Withheld" (Liability Account) $ 10

Credit "Bank Account" (Asset Account) $110

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