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A company generally cannot pay dividends from asset revaluation reserves as these reserves are not considered distributable profits. Dividends must typically be paid from retained earnings or profits generated from the company's operations. Realization reserves, which arise from the sale of assets, can sometimes be distributed as dividends, but this depends on the specific legal and accounting regulations applicable in the company's jurisdiction. It's essential for companies to consult with legal and financial advisors to ensure compliance with relevant laws.
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Can dividend be declared out of revaluation of fixed assets justify?
No, Dividend Can't be declared out of revaluation of fixed assets. dividend may be declared by a company for that year out of the accumulated profits earned by it in previous years and transferred by it to the reserves, But not from revaluation reserve as its a unrealized profit...
What is difference between revaluation account and realization account?
Revaluation account and Realisation account both are nominal account. the purpose of revaluation account is taking the effect of fluctuations in asset & liabilities in their books while purpose of realisation account is to closing the books of accounts of a comapany or a firm. Revaluation a/c is made when any fluctuation in value of an asset takes place. realisation a/c is made at the time of liquidation of a company or a firm.
What is a simple explanation of a dividend?
A dividend is a share of a company's profit paid to each stockholder.
What is The size of dividends paid to stockholders is directly related to?
The size of dividends paid to stockholders is directly related to a company's profitability and cash flow. A company that generates strong earnings and has sufficient cash reserves is more likely to distribute higher dividends. Additionally, the company's dividend policy and its commitment to returning value to shareholders play a crucial role in determining dividend payouts. Economic conditions and industry trends can also influence a company's ability to maintain or increase dividends.
Can capital reserve be transferred to profit and loss account?
No, capital reserves cannot be transferred to the profit and loss account. Capital reserves are typically created from specific transactions, such as the revaluation of assets or the issuance of shares at a premium, and are intended for long-term use within the company. They are not available for distribution as dividends, unlike profits generated from normal business operations that flow into the profit and loss account.
Can dividend be declared out of revaluation of fixed assets justify?
No, Dividend Can't be declared out of revaluation of fixed assets. dividend may be declared by a company for that year out of the accumulated profits earned by it in previous years and transferred by it to the reserves, But not from revaluation reserve as its a unrealized profit...
Can a dividend be distributed from a revaluation surplus?
No, a dividend cannot be distributed from a revaluation surplus. A revaluation surplus arises from the increase in the value of assets after revaluation and is considered a component of equity, but it is not part of distributable profits. Dividends can only be paid from retained earnings or profits generated from operations, ensuring that the company maintains sufficient capital for its ongoing obligations.
Where and under which heading is the unclaimed dividend disclosed in the balance sheet of the company?
reserves surplus
What is difference between revaluation account and realization account?
Revaluation account and Realisation account both are nominal account. the purpose of revaluation account is taking the effect of fluctuations in asset & liabilities in their books while purpose of realisation account is to closing the books of accounts of a comapany or a firm. Revaluation a/c is made when any fluctuation in value of an asset takes place. realisation a/c is made at the time of liquidation of a company or a firm.
Is liquidating dividend a capital reserve?
A liquidating dividend is not considered a capital reserve; rather, it represents a return of a portion of a company's capital to its shareholders. This type of dividend is typically paid out when a company is winding down or liquidating its assets, and it reflects the company's distribution of its remaining equity rather than profits. Capital reserves, on the other hand, are funds set aside for specific purposes, such as reinvestment or covering future liabilities.
Where does the dividend go in its postintion?
In its post-issue position, a dividend typically reduces the retained earnings of a company, as it represents a distribution of profits to shareholders. The dividend payment is made from the company's available cash or reserves and is recorded as a liability until it is paid out. After the payment, the cash balance decreases, and the retained earnings on the balance sheet reflect the reduction. Ultimately, dividends serve to return value to shareholders while impacting the company's equity structure.
What is the process for receiving a loan stock dividend?
To receive a loan stock dividend, you must own shares of the company that issues the dividend. The company will announce the dividend payment date, and you will receive the dividend in the form of additional shares of stock or cash, depending on the company's policy.
What is the accounting treatment of non divisible profit?
DIVISIBLE PROFITS :-According to black and white publishing company (1901) "Profit available for dividend means net profits after making any deduction which the directors can duly make."Profit which can be distributed legally in the form of dividends to the shareholders of the company are called divisible profits.There is no any particular rule about the determination of profit. By company law has laid down the following rules or principles which guides us to determine the divisible profits.PRINCIPLES OF DIVISIBLE PROFIT :-Following are the important principles of divisible profits :1. According The Company Rules :-The articles of association are the rules of the company. The directors are entitled to distribute the profits under rules. They also follow the company law. The dividend can be paid out of revenue profit.2. Follow The Court Cases :-While calculating the divisible profits, the court cases must be kept in mind. The auditors must know the decisions of the courts announced time to time.3. Profit Not Out Of Capital :-The capital can not be used to pay dividend. The revenue profits can be used for the payment of dividend.4. Approval Of Shareholders :-In the annual general meeting shareholders may approve the rate of profit recommended by the directors. So divisible profits can be used to pay as dividend after approval.5. Right Of Proposal :-The directors can purpose the rate of dividend out of divisible profits. After completing the legal formalities the directors can decide the dividend.6. Undistributed Profit :-It is the right of the directors to use such profit for the payment of dividend at the end of a year. It is a revenue of the provision year.7. Depreciation :-Before declaring revenue profits the depreciation on fixed assets must be charged. In manufacturing company it is compulsory to charge depreciation before the declaration of profits.8. Secrete Reserves :-If according the articles association it is allowed to create and use the such reserves then these can be used for the payment of dividends.9. Capital Profits :-Under certain conditions the capital profit can be used to pay dividend but articles association should allow the distribution of capital profit as dividend.10. Capital Loss :-Inspite of capital loss the dividend can be paid out of revenue profits. The capital profit must be used to eliminate capital loss first and then surplus can be used to pay dividends.11. Loss Of Provision Year :-If a company suffers a loss in one year but earns profit next year. Such loss can be adjusted by the company from benefit of the current year.12. Revaluation Of Assets :-After the revaluation of asset, if it becomes surplus then it can be used after realization. Profit may be paid after selling the assets.13. Revenue Profits :-According the principle of divisible profit dividend must be paid out of revenue profit. But it is essential that calculation should be correct.14. Asset Goodwill Written Down & Up :-If a company has written down good will out of profits, it may also write up this asset, with the appreciation. But the value written up should not excess than the true value.
How is capital reserve made?
A capital reserve is created by transferring a portion of a company's profits or retained earnings into a separate account designated for specific future purposes, such as expansion or debt repayment. This transfer is typically done through a board resolution and is often reflected in the company's financial statements. Capital reserves can also arise from the revaluation of assets or gains from the sale of fixed assets. Unlike revenue reserves, capital reserves are not intended for distribution as dividends.
What is the importance of dividend history in finances?
Dividend history is important especially for stock investing. Without knowing the dividend history for a company, you will never know if the company will be reliable to pay the dividend every quarter.
What is the meaning of proposed dividend?
Proposed Dividend means a dividend that is paid by the company that the end of a finical year.
What is the difference between a stock dividend and a cash dividend?
A stock dividend is when a company distributes additional shares of its stock to shareholders, while a cash dividend is when a company pays out cash to shareholders as a form of profit sharing.
