Accounting advanced dividend liquidating Real free 100 live chat 121 uk

Posted by / 07-Aug-2017 10:53

Accounting advanced dividend liquidating

It is hardly reasonable to assume that Congress intended to prevent a Federal reserve bank from paying its current dividends while its surplus fund is far in excess of the amount of its subscribed capital.Under Section 7 as originally enacted, the argument that the surplus fund of a Federal reserve bank was intended solely as a protection to the bank against possible future losses could have been made with greater force.Otherwise, it is only reasonable to assume that Congress would have required or permitted some part of the earnings, which must now go into the unlimited surplus, to be paid into a fund of "undivided profits" out of which the dividends could be paid currently in a year of small earnings.This leads to the observation that under the terms of Section 7 a Federal reserve bank is not permitted to accumulate a fund of "undivided profits".

Consequently, by accumulating a fund of "undivided profits" from year to year a bank may make provision for the continuance, during years when earnings are small, of dividend payments without reducing its surplus fund.A Federal reserve bank cannot make provision for the continuance of dividends in this particular manner, because the law absolutely requires Federal reserve banks to dispose of earnings, over and above the amount paid as dividends, either by payment into the surplus fund or by payment of the franchise tax to the United States.The continuity of dividends is fully as desirable in the case of Federal reserve banks as it is in the case of commercial banks, and Congress, having precluded the Federal reserve banks from making provision for such continuity by setting up "undivided profits", may reasonably be assumed, in my opinion, to have contemplated that the surplus funds, which are required to be accumulated without limit as to size, would be available for the purpose of paying dividends as well as for the purpose of protecting the banks again possible future losses.It is the usual custom of commercial banks to show among their liabilities an item of "undivided profits", in addition to their liabilities on account of capital and surplus.From this fund of "undivided profits", dividends are customarily paid and from it also transfers are made from time to time to increase the surplus fund.

accounting advanced dividend liquidating-70accounting advanced dividend liquidating-47accounting advanced dividend liquidating-33

Subject: Payment of dividends of Federal Reserve Banks out of surplus Date: April 11, 1922 You have requested my opinion upon the question of whether a Federal reserve bank, which has accumulated a surplus fund out of earnings of past years, has authority to use a part of this fund to pay to its stockholding member banks the dividend for a subsequent year during which the current earnings of the federal reserve banks are insufficient to pay such dividend.

One thought on “accounting advanced dividend liquidating”