A Level Accounting (9706)•9706/12/O/N/19
Explanation
Dividends deducted in SOCIE when declared during the year Steps:
- Final dividend for 2017 paid in 2018 implies declaration in 2018, reducing 2018 retained earnings by $15,000.
- Interim dividend for 2018 paid in 2018 implies declaration in 2018, reducing retained earnings by $8,000.
- Final dividend for 2018 declared on 1 February 2019, after 31 December 2018, so not recognized in 2018.
- Total distributions in 2018 SOCIE: 8,000 = $23,000, per IAS 1 presentation requirements.
Why C is correct:
- C deducts $23,000 for dividends declared in 2018, aligning with IAS 10 (declaration creates liability) and IAS 1 (distributions reduce equity in declaration period).
Why the others are wrong:
- A deducts only $8,000, ignoring 2017 final declared in 2018.
- B deducts 8,000 + $10,000), incorrectly including post-year-end declaration.
- D deducts $33,000, wrongly adding undeclared 2018 final to 2018 payments.
Final answer: C
Topic: Preparation of financial statements
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