Sir we are not recording dividend income on Declared basis in MF and recording only when the impact of dividend on price is eliminated so it is not in contravention of AS-9??

Questions › Category: CA-Final Mutual Funds › Sir we are not recording dividend income on Declared basis in MF and recording only when the impact of dividend on price is eliminated so it is not in contravention of AS-9??

0 Vote Up Vote Down

bharat gahlot asked 7 years ago

2 Answers

0 Vote Up Vote Down

Ravi Staff answered 7 years ago

no its not a contravention of AS 9, when dividend is declared on share investment, share prices increase as it become cum dividend, NAV of mutual fund increases (say +3) because of daily valuation rule and profits of MF automatically increase, so dividend is recognised automatically.
when price effect reverses (Say -3) we book actual dividend receivable (Say +3) so dividend effect is booked automatically when declared, no contravention of AS 9

0 Vote Up Vote Down

audit Staff answered 7 years ago

then sir in books of MF the dividend has to be shown in P&L or should be reduced from cost of such invt. as such dividend is pre acquisition dividend then entry would be :-
div. rec. a/c dr. to invt. and then bank a/c dr. to div. receivable
so P&L would not impact in such case?