## Interim Dividend — Definition and Rules under AS 13

### Final vs Interim Dividend

Type	Declared in	For profits of	Timing
Final Dividend	Current Year (CY)	Previous Year (PY)	After books closed, at AGM
Interim Dividend	Current Year (CY)	Current Year (CY)	Mid-year, declared by Board

> Interim dividend = declared in CY from CY's own profits.

### Treatment Table

Category	Final Dividend	Interim Dividend
Opening shares	Income	Income
CY Purchases	Recovery of Cost	Income ← key difference
Bonus shares	Income (default)	Income (default)
Right shares	Income (default)	Income (default)

### Why CY Purchases = Income for Interim Dividend?

Interim dividend is paid from current year profits — profits earned after your purchase date. There is no pre-acquisition element, so there is no reason to deduct from cost. It is genuine income.

### Rules for Bonus & Right Shares

Default (question silent): Dividend IS received → Income
Exception (question says 'no dividend'): Do not record

### How to Identify the Type

Term in question	Treat as
'Dividend' (plain word)	Final Dividend
'Interim Dividend'	Interim Dividend

### Journal Entry

```

Bank/CIB A/c Dr ₹4,800

To Dividend Income (P&L) ₹4,800

```

Record in the Div column of the investment ledger, not in the Amount/cost column.

Worked example

### Example 1

Example 1 (Q27 — Pages 54-55):

Date: 15.03.20 (interim dividend @ ₹1 per share)
Shares eligible: opening 40,000 − 8,000 sold = 32,000 shares
Note: No dividend on bonus (8,000) and right shares (4,000) as per question
Interim dividend = 32,000 × ₹1 = ₹4,800 → Income
Bank Dr ₹4,800 | To Dividend Income ₹4,800
In ledger: Div column credit ₹4,800; Investment Amount column unaffected

### Example 2

Conceptual Contrast (Page 53):

FY 20-21: If company declares final dividend in Dec 2020 → it is for FY 19-20 profits (PY) → received in CY
FY 20-21: If company declares interim dividend in Dec 2020 → it is for FY 20-21 profits (CY) → received in CY
Both are received in the same year but treated differently: final div on CY purchases = recovery of cost; interim div on CY purchases = income

⚠️ Common exam mistakes

Treating interim dividend on CY purchases as recovery of cost — for interim dividends, ALL categories are treated as income
Confusing 'Dividend' (plain) with 'Interim Dividend' — plain 'Dividend' always means Final Dividend
Not recording interim dividend on bonus/right shares when question is silent (default is to record)
Recording interim dividend in the Amount column instead of the Div column of the investment ledger

Bare-Act text Para 23 (Investment Income) · AS 13 – Accounting for Investments (ICAI) · click to expand

Income from investments is to be recognised when the right to receive payment is established. Interim dividend on investments is income when the right to receive it is established.

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AS 13 – Interim Dividend: Definition, Rules, and Treatment

Worked example

⚠️ Common exam mistakes