Dividends declared definition
/What are Dividends Declared?
Dividends declared refers to dividends that have been authorized by the board of directors, but not yet paid out to investors. Income investors want the amount of dividends declared to be a high proportion of reported income, so the amount declared can be an ongoing issue between investors and a company’s board of directors.
Accounting for Dividends Declared
Dividends declared are recorded in the accounting records as a liability of the corporation. If the dividends are to be paid within one year (as is usually the case), then this liability is classified as a current liability on the balance sheet of the issuing entity. In the extremely rare cases in which dividends are to be paid in more than one year (probably due to a liquidity crisis), the dividends are instead classified on the balance sheet as a non-current liability.