Retained Earnings Mrs. Paz Castro

Paragraph 10 of IFRIC 17 provides that the liability to pay a dividend shall be recognized when the dividend is appropriately authorized and

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is no longer at the discretion of the entity, which is the date:

• When declaration of the dividend, e.g. by management or the board of directors, is approved by the relevant authority, e.g. the shareholders, if the jurisdiction requires such approval, or
• When the dividend is declared, e.g. by management or the board of directors, if the jurisdiction does not require further approval.

IFRIC 17 Distributions of Non-cash Assets to Owners was developed by the International Financial Reporting Interpretation Committee and issued by the Internal Accounting Standards Board in Nov. 2008. Its effectivity date is July 1 2009.

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IFRIC 17 Distributions of Non-cash Assets to Owners was developed by the International Financial Reporting Interpretation Committee and issued by the Internal Accounting Standards Board in Nov. 2008. Its effectivity date is July 1 2009.

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DATE OF RECORD
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A list of shareholders entitled to the declared dividends is prepared at the date of record.
If an investor buys a share of stock after this date, he will not receive the dividends. This share is said to be traded ex-dividend.
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No entry is required on this date.

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□ DATE OF PAYMENT
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The corporation settles its liability on this date. An entry is made debiting the dividend liability or
shares distributable account and crediting cash, property distributed or share capital.

Cash Dividends

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Majority of dividends distributed by corporations is paid in cash.
A company must have both an appropriate amount of retained earnings and the necessary amount of cash.
A corporation, however, may successfully accumulate earnings and at the same time not be sufficiently liquid to pay large dividends.
Dividends on par value shares are stated as a certain percentage of the par value.
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