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!
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Statement of Financial Position (Balance Sheet) watch
- Thread Starter
- 29-10-2017 14:13
- 01-11-2017 01:15
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)