Hey there! Sign in to join this conversationNew here? Join for free
    • Thread Starter
    Offline

    5
    ReputationRep:
    For my seminar I have been asked to write up the Statement of Financial Position of a given company. On the trial balance it includes "Dividends on preference share" and I am confused as to whether or not this is included in the Statement of Financial Position/Balance Sheet. Please could someone tell me if I should include it or not, and if so where would I include it, thank you!
    Offline

    17
    ReputationRep:
    If the company has Cr balance preference shares in its balance sheet (TB) that it has issued then is this a DR balance representing dividends paid/payable or if it holds investments of Preference shares as assets in its balance sheet (TB) is the dividend a CR entry re dividends received./ receivable?

    It could also be a provision if the preference dividends have not actually been paid, a JE would have been something like:

    Dr Pref dividends payable
    Cr Pref dividends due

    Have a look at the other TB balances re preference shares and in context with these you ought to be able to work out what it represents.

    If payable DR or receivable CR it is an I & E item, if provision CR it is a balance sheet item

    Do also remember that where you disclose preference shares issued will depend on the shares/ rights/ repayment terms etc , they are often disclosed as creditors under what was FRS25 rather than equity. Hard for me to say as do not know at what level you are working, FRS102 covers in detail, have a look at section 22.

    I suspect it will likely be a DR paid/payable so not in BS but in I & E , but you do need to consider the bigger picture.

    (Frankly pretty poor wording on the TB, ought to be clearer)
 
 
 
  • See more of what you like on The Student Room

    You can personalise what you see on TSR. Tell us a little about yourself to get started.

  • Poll
    Will you be richer or poorer than your parents?
  • See more of what you like on The Student Room

    You can personalise what you see on TSR. Tell us a little about yourself to get started.

  • The Student Room, Get Revising and Marked by Teachers are trading names of The Student Room Group Ltd.

    Register Number: 04666380 (England and Wales), VAT No. 806 8067 22 Registered Office: International House, Queens Road, Brighton, BN1 3XE

    Quick reply
    Reputation gems: You get these gems as you gain rep from other members for making good contributions and giving helpful advice.