davidjameson
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Accrue dividends evenly throughout the year

Accrue dividends evenly throughout the year

The company I work for has issued some preference shares that pay a fixed dividend once a year. I was intending to divide the dividend by 12 and accrue that amount each month and then when the dividend is paid, release the accrual. Obviously the accrual will appear in the balance sheet under current liabilities, I was going to show the other side on the monthly P+L as "Preference share dividends" below interest paid. I know this wouldn't be the case if these were dividends on ordinary shares or dividends on preference shares where there was no obligation to pay a dividend. In our case there is an obligation, is this the correct way to record them? Thank you.

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05th Mar 2016 10:29

Management ?

Are you doing internal management accounts here ?

If so, you can do as you wish - whatever is helpful to the Board of Directors.

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05th Mar 2016 17:47

Hi, thank you for the reply. It is management accounts which are used mainly for the directors. Although they do get occasionally sent third party's such as the bank and some suppliers so just want to make sure it wouldn't be wrong to do so.

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05th Mar 2016 17:51

Fine

Then I still say you can do as you wish, though I might make any third parties aware of how you've treated these dividends.

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