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Corporate Law

In: Social Issues

Submitted By iqidi
Words 2803
Pages 12
| BLO 2205 Corporate Law | Assignment | | Student Name: QI DI | Student ID Number: 3812696 |

Synopsis
The aim of this essay is to help company have deep awareness about dividend paid out of profit through discussing about what consist of profit, what is profit in legislation, the rules of case law that companies should obey to pay dividend legally and some relevance of accounting standard.
This essay is divided into five parts. First of all, an introduction will be given. Then the confirmation and types of profit will be introduced. After that, this essay will interpret the rules of paying dividend depends on specific circumstances. Subsequently, the relevance of accounting standard will be offered. The last part is conclusion.

Introduction
In the current commercial world, earning profit is what the profit-oriented companies are seeking for. Accordingly, getting dividend is also what the investors are pursuing. Therefor it is essential and crucial to ascertain divisible profit and dividend to distribute to directors as the return for their investment. In the case of Spanish Prospecting Co Ltd, Fletcher Moulton LJ stated that profit indicates the comparison of the two states which are usually done by an interval of a year. This is taken as the term of profit in the view of legislation. While in accounting method profit is similar to income which according to AASB 118, is clarified as the inflow economic benefits which is in the forms of inflows of assets or decrease of liabilities during the period. Apparently, there are some differences between the two definitions of profit even though they are quite similar. According to the differences, the calculation of profit will also be different and this will lead to different access to distribute dividend. What is more, the rules of what constitute profit, the way to deal with different kinds...

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