- The profits which may be distributed as dividend are accumulated realized profits so far as not previously utilized by distribution or capitalization, less accumulated realized losses so far as not previously written off in a reduction or re-organization.
- Profits are generally ascertained by reference to audited accounts prepared on a proper basis.
- If a fixed asset has a limited useful economic life, provision must be made for depreciation calculated to write off the value of that asset over the period of its useful economic life.
- In so far as depreciation relates to the historical cost of the asset it must be treated as a realized loss and debited against profit, in determining the amount of distributable profit remaining. But if the asset has been revalued, any increase depreciation provision related to the increase in value of the asset may be treated as profit.
- If on a general revaluation of all fixed assets it appears that there is a diminution in value, any provision related to it need not be treated as realized loss.
-If a company shows development expenditure as an asset in its accounts it must usually be treated as realized loss.
- A public company may only make a distribution of its net assets are at the time, not less that the aggregate of its called up of its called up share capital and
marto answered the question on February 6, 2019 at 08:19
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