A company adopting the replaceable rules included in the Corporations Act announces a dividend to be paid after the balance date.The company:
A) must recognise a liability in its financial statements.
B) must not recognise a liability.
C) has the choice of whether to recognise a liability or not.
D) none of the above.

Question

Quizplus · Accepted Answer

According to the replaceable rules of the Corporations Act, a company is not required to recognise a liability for a proposed dividend until it is declared by the board of directors. Therefore, the company must not recognise a liability in its financial statements until the dividend has been formally declared.

A Company Adopting the Replaceable Rules Included in the Corporations