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Questions › Category: Co.Audit - II › Dividend
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Vismay ShahVismay Shah asked 3 years ago

What is the meaning of Adequate or inadequate profit for distributing dividends? If there is adequate profit, then there is no limit to giving dividends, unlike Inadequate profit? And if the company is giving dividend out of C.Y. profit then it should be calculated as per section 198 or as per the statement of profit & loss? What if there is Accumulated losses, still the company can give dividend?

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RaviRavi Staff answered 3 years ago

Adequate Profits means, profits are enough to pay amount of dividend we want to pay. Profits in P&L Account = 25,00,000, Dividend we want to pay 20,00,000 that means profits are adequate. If we want to pay dividend of 30,00,000 then we will have to use general reserves also.
Profit should be as appearing in P&L Appropriation A/C
 

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RaviRavi Staff answered 3 years ago

See this link to understand what will happen if there is loss
 

Sir, what is the meaning of “carried over past losses and depreciation” which must be set off before declaring the dividend. Is it having the same meaning as given under the Income Tax Act?