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Voting Question: why is proposed dividend and provision for tax is treated as current liability in working capital?

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  • Voting Question: why is proposed dividend and provision for tax is treated as current liability in working capital?


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Answer #1 | 17/12 2013 10:01
Dividend once declared is payable within a short period, so it is treated as current liability
Answer #2 | 19/12 2013 03:32
because they both are not paid yet and have to be paid in coming months.
Answer #3 | 19/12 2013 05:10
Proposed Dividend and Provision for Tax are treated as current liability because 1) these are the liability which will are payable in near future and 2) they all depends on approval of shareholder in case of dividend and Provision of Tax depends on final filing of Income tax Return 3) Both are statutory Liability means liability created by some provisions For more details check Schedule VI of Companies Act http://www.taxfaq.in/balance-sheet-format.html and for new companies Act http://www.taxfaq.in/download-companies-act-2013-pdf.html
Answer #4 | 17/12 2013 05:41
Dividend once declared by the Board of Directors of a Company has to be paid within the time frame provided in the Companies Act. Similarly, tax once determined on such dividends HAS TO BE paid before the dividend is distributed. These cannot be delayed indefinitely at the whims and fancies of the Management of the Company. Therefore, these are rightly treated as Current Liability in the Balance Sheet and shown as such.

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