A company has not declared a dividend on its cumulative preference shares for the past three years. What is the required accounting treatment or disclosure in this situation? Select one: Disclose the amount of the dividends in arrears.Record a liability for cumulative amount of preference shares dividends not declared.No disclosure or recognition is required.Record a liability for the current year's dividends only.

In case of cumulative Preference shares if dividend for any year is not paid then arrears of…

Answered: company has not declared a dividend on…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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A company has not declared a dividend on its cumulative preference shares for the past three years. What is the required accounting treatment or disclosure in this situation?

Select one:

Disclose the amount of the dividends in arrears.
Record a liability for cumulative amount of preference shares dividends not declared.
No disclosure or recognition is required.
Record a liability for the current year's dividends only.

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