In this case, dividend expenses are recorded because by declaring them the company is held liable to make good on the declaration and deliver the dividend. [substeps] A declaration specifies when the declaration is made, when the date of record is, and when the dividend will be paid.
[header] How to account for dividends paid [title] Recognize when to record the liability of the company to pay the cash dividends. [step] This occurs on the " date of declaration, " when the board of directors formally authorizes payment of dividends. Under standard accounting procedures, expenses are recorded when they are incurred.