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When does a corporation record a dividend related liability?
on a declaration date
What date determines those shareholders that will receive a cash dividend distribution?
The date that determines which shareholders will receive a cash dividend distribution is known as the "record date." This is the cutoff date set by the company, after which new shareholders will not receive the upcoming dividend. Shareholders who are on the company's books as of the record date are entitled to the dividend payment. Typically, the ex-dividend date is set one business day before the record date, which is when the stock starts trading without the value of the upcoming dividend.
What effect will the declaration and distribution of a stock dividend have on the net income and cash flows?
19. What effect will the declaration and distribution of a stock dividend have on net income and cash flows? (Points : 2)No effect on net income or cash flowsNo effect on net income, decrease cash flowsDecrease net income, decrease cash flowsIncrease net income, no effect on cash flows
What journal entries are passed as required declaration and payment of dividend?
The date of declaration is the date which a resolution to pay cash dividends to stockholders of record on a specific future date is approved by board of directors.
In the case of a cash dividend a dividend liability comes into existence on what?
Date of Declaration
The date the board of directors announces that a dividend is declared is called the?
The date the board of directors announces that a dividend is declared is called the "declaration date." On this date, the company formally approves the dividend payment and specifies the amount, as well as the payment and record dates. This announcement informs shareholders about their entitlement to receive the dividend.
When do you recognize dividend as income?
on declaration date
Do you use a debit or credit dividends declared by the corporation?
Dividend TransactionsA. Dividend DatesDeclaration DateThe date on which the board of directors officially approves the dividend. The dividend becomes a liability of the the corporation at this time.Date of RecordThis date is used to establish who will receive the dividend. In other words, whoever owns the stock on this date will received the dividend. Stock sells ex-dividend after this date.Date of PaymentThe date on which the dividend is disbursed to the date or record shareholders. Dividends are always based on the number of shares outstanding. Dividends are not paid on Treasury Stock. B. Cash Dividends With Only Common StockExample:On December 1, 2005 ABC Inc. declares a dividend of $2 pershare. The dividend is payable on December 21 tostockholders of record on December 10. There are 10,000shares of stock outstanding.12/1 Dr / Retained Earnings 20,000Cr/ Dividends Payable 20,000Review dividend terminology. The "declaration date" is the date the board approves the dividend payout. The "date of record" is the date which establishes the stockholders to receive the dividend; that is, if you sell the stock one day before the day of record, you will not receive the dividend. The "effective date" is the day the dividend is disbursed to shareholders.Walk through an example. XYZ Corporation has 10,000 shares of common stock outstanding. On Nov. 10, the board of directors declared a $1 per share cash dividend, to be paid to stockholders of record on Nov. 30. The dividend was distributed on Dec. 10.Record the dividend journal entry on the day of record, which is Nov. 30. Make a debit to retained earnings for $10,000 ($1 x 10,000 shares) and a credit to dividends payable for $10,000. This is what the company issuing the dividend enters on the date of distribution.Use a contra account to hold funds until the distribution date. In some cases, the company will want to create a contra (side) account to hold the dividends until they are actually paid. If this is this the case, then make a debit to dividends declared and then close the balance to retained earnings on the effective (distribution) date.
What is dividend distribution tax?
Dividend distribution tax is the tax levied by the Indian Government on companies according to the dividend paid to a company's investors. As per existing tax provisions, income from dividends is tax free in the hands of the investor. There is a levy of 15% of the dividend declared as distribution tax. This tax is paid out of the profits/reserves of the company declaring the dividend.  The provisions of this Section applies to a domestic company for any assessment year, on an amount declared, distributed or paid by such company by way of dividends (whether interim or otherwise)  The Company is required to pay the Dividend Distribution Tax within 14 days from the date of declaration or distribution or payment of any dividend whichever is earlier.  The said dividend distribution tax is in addition to the income tax chargeable on the total income of the Company and the same shall be payable @15% and the same shall be increased by Surcharge @10%, and such aggregate of tax and surcharge shall be further increased by an Education cess @2% and higher education cess 1% .  The Section applies to dividend payments made either out of current or accumulated profits.  The dividend so paid will be eligible for exemption for the shareholders under Section 10(34).  The Dividend Distribution Tax is payable by a Domestic Company even if no income-tax is payable on its total income.
How do you record declared cash dividend?
A declared cash dividend is recorded by debiting the dividend account and crediting the dividend payable account.
What is meant with dividend dates in finances?
There are 3 important dates to consider with dividends; the declaration date- when a board declares it's intention to pay, the date of record - the date from which stockholders are entitled to the payment, the payment date - is the date the dividend will actually be given to shareholders.
What is reserve distribution?
A non-distributable reserve is one which is not available for distribution to shareholders as a dividend.
