Question

A corporation records a dividend-related liability on the payment date. on the record date. on the declaration date. when the stock sells ex-dividend.

Answer 1

Option A. Declaration date.

Step-by-step explanation:

The reason is that the liability must be recorded when the obligation becomes probable and this is in-accordance with the International Accounting Standard IAS 37 Provisions, Contingent Liabilities and Contingent Assets, which says that the liability must be recorded when the obligation to pay becomes probable. On the declaration date, the obligation to pay dividend becomes probable, so it must be recorded as liability in the financial statements.