Can dividend be paid under the following circumstances: (a) Out of current profit without making good past
Question:
Can dividend be paid under the following circumstances:
(a) Out of current profit without making good past losses?
(b) Out of a capital profit.
(c) Out of past profit when there is neither profit nor loss in the current year.
(d) Realised capital profits.
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The specific regulations regarding the payment of dividends can vary greatly between jurisdictions and the details of individual company bylaws or articles of incorporation can also play a significant role However the answers provided here are generally true in most cases a Yes a dividend can typically be paid out of current profits without making good on past losses Companies are not obligated to cover their past losses before they can pay dividends Their primary obligation is to ensure they remain solvent and can meet their current and future obligations A company can choose to retain some or all its earnings to cover past losses but it doesnt have to do this before issuing dividends b In most jurisdictions a ...View the full answer
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Joseph Mwaura
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