Dividend on Redeemable Preference Shares

Comparison between Indian GAAP and Ind-AS/ IFRS

The difference in the presentation and classification of financial instruments was discussed here. Moving ahead, since redeemable preference shares are classified differently under Indian GAAP and Ind-AS/IFRS, the treatment of dividend on redeemable preference shares also needs to be discussed.

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Under Indian GAAP, preference dividends are always recognised as an appropriation to the profits similar to equity dividend and are never treated as financing expense.

However, under Ind-AS/ IFRS, dividends on redeemable preference shares classified as financial liability is recognised as finance cost in the statement of profit or loss and other comprehensive income.

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