Study the following case/situation and express your opinion :
RAJ Company limited decides to pay Interim Dividend
- Is the Board justified to decide Interim Dividend of ₹ 5/per share even though profits till date are insufficient?
- Can the Board declare it out of Free Reserves?
- Can the Board declare it out of Capital?
- No, the Board is not justified to decide the interim dividend of ₹ 5/- per share if the profits till date are insufficient. This is because the Interim Dividend is declared out of profits.
- No, the Board cannot declare interim dividends out of Free Reserves.
- No, the Board cannot declare the interim dividend out of capital. It is declared out of profits of the current accounting year.
Concept: Interim Dividend
Is there an error in this question or solution?