Question

Bonnie Group declared a dividend of $2.5 million out of the current year’s profit of $10 million. Before the end of the reporting period, a dividend of $1.5 million was paid to the shareholders of Bonnie. The remaining unpaid dividend of $1 million was recognized as dividend payable in the statement of financial position. In the statement of comprehensive income, the total dividend declared of $2.5 million was deducted from profit for the year and the net figure after the dividend was reported as “profit available for distribution”.

Comment on Bonnie Group’s presentation in the statement of comprehensive income.

Answer 1

The treatment of the profit is out of the total profit $10million the Amount declared as dividend $2.5million will be deducted from the above and the profit and $7.5million will be presented as profit available for distribution

Out of the declared $2.5 million the paid $1.5 million will be deducted and the balance $1million will be presented as the liability in the financial statements

Hence the treatment of the Bonnie group is correct

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