This document discusses key items that appear on the statement of comprehensive income (SOCI) for limited companies, including directors' remuneration, debenture interest, auditor's remuneration, and dividends. It explains that directors may receive fees or salaries, debenture interest is an expense of the company, and auditor's remuneration needs to be accrued. It also outlines the distributable profits calculation and factors directors must consider in determining dividend policy, such as available profits and cash needs. The SOCI format provided shows net profit, preference dividends, ordinary dividends, and retained profit calculations.

1. Limited
Companies
Statement of Comprehensive
Income (SOCI)
CORPORATE REPORTING

2. Directors’ Remuneration
 Directors are employees of the company. As
employees they are entitled to receive fees and /or a
salary.
 Directors fees are payable to those directors that act in
an advisory capacity and attend directors meetings.
 Salaries are payable to directors who are involved in
the day-to-day running of the company.
 You will normally be given the value of salaries and
fees that have been paid during the year, but you may
be required to accrue additional fees and/or salaries.
 The journal entry for this is as follows:
 Dr. Directors Remuneration
 Cr. Accruals

3. Debenture Interest
 Debenture interest is an expense of the company and is
shown with other expenses.
 Debenture is a document given by a company to
someone who has lent the company money. It states the
amount of loan, the annual amount of interest payable,
and the dates on which interest is to be paid.
 It also includes the date on which the loan is to be repaid
by the company.
 Usually the repayment is spread over a period of time and
the dates of commencement and end of the period are
included in the description of the debenture.
 The amount of the interest should be the charge for the
year and not the amount that has been paid
 Therefore you may need to accrue some interest to
ensure that there is a full years charge to the SOCI

4. Auditor’s Remuneration
 This is the fee paid to the auditors and is only
known after the accounts have been prepared
and suited.
 This means that it will need to be accrued in
the accounts.
 The journal entry is as follows:
 Dr. Auditors Remuneration
 Cr. Accruals

5. Format: SOCI
XYZ Berhad
Statement of Comprehensive Income for the
year ended 31 December 2015
Gross Profit xxxx
Less Expenses:
Directors Remuneration xx
Auditors Remuneration xx
Debenture Interest xx
xxx
Net profit for the year xx

6. Distributable Profits
 The distributable profits of a company consists of:
 (1)Its accumulated realised profits which have not
already been distributed or used for any other
purpose less
 Its accumulated realised losses which have not
previously written off
 (2) Profits attributable to the equity holders plus
any retained earnings brought forward from last
year
 Once the directors have decided how much, if any
of this should be transferred to reserves, the
balance can be used to pay dividends to the
shareholders.

7. Dividends
 Dividends are the means by which shareholders
share in the profits of a company.
 Directors may not pay dividends to shareholders
except out of distributable profits
 Dividend payment may be made in more than one
instalment
 Interim dividends – paid during a company’s
financial year provided the directors are satisfied
that profits for the purpose have been earned and
the cash resources of the company are sufficient
to pay the dividend. Interim dividends paid during
the year are shown in the Statement of Changes
in Equity.

8. Dividends
 Final preference dividend – a fixed amount
agreed when preference shares were purchased
 Final ordinary dividend - at the end of the
accounting year, when the company knows how
much profit it has available to distribute, it may
declare a final ordinary dividend. However the
directors may only recommend the amount of
dividend to be paid. Before it can be paid, the
shareholders must approve the payment by
passing a resolution at the company’s Annual
General Meeting. Final dividends approved after
the end of the financial year appear as a note to
the accounts and will be an accrued amount in the
Statement of Financial Position.

9. Dividends
 Dividends are usually declared as so many
cents per share or as a percentage of the
nominal value of the shares:
 A company has issued 100,000 ordinary
shares of RM 1 per share:
 (a) The directors have recommended a
dividend of RM 0.07 per share. The company
will pay a total dividend of 100,000 x RM0.07
= RM7,000.
 (b) The directors have recommended a
dividend of 5%. The company will pay a total
dividend of 5% of RM100,000 = RM5,000 ( or
RM 0.05 per share).

10. Dividends
 The journal entries to reflect ordinary and preference dividends
are as follows:
 1. An interim ordinary share dividend paid during the
accounting year:
 Dr. Interim Ordinary Dividend Paid
 Cr. Bank
 2. A final dividend declared when the company’s profit is
known:
 Dr. Proposed Final Ordinary Dividend
 Cr. Accruals
 3. A preference share dividend paid during the accounting
year:
 Dr. Preference Dividend Paid
 Cr. Bank
 4. A preference share dividend for the year which has yet to
be paid:
 Dr. Preference Dividend
 Cr. Accruals

11. Dividend Policy
 Before paying or recommending dividends, directors of a
company must consider the following important matters:
 1. whether sufficient distributable profits are available
 2. whether the company’s funds will be sufficient to pay
the dividend; a cash forecast is needed
 3. whether there is any need to transfer profits into
revenue reserves to strengthen the business
 4. whether there is a proper balance between dividend
growth and capital growth; unless dividends and share
value increase, shareholder’s wealth is diminished by
inflation in the economy (undistributed profits increases
the company’s reserves and the Statement of Financial
Position value of the ordinary shares)
 5. a generous dividend policy may increase the value of
shares on the Stock Exchange, and a ‘mean’ policy will
have the opposite effect.

12. Format: SOCI for Limited Companies
RM RM
Net profit for the year xxx
8% Preference dividend paid (xx)
Interim ordinary dividend paid (xx)
(xxx)
Retained profit for the year xxx
Retained profit b/fwd xxx
Retained profit c/fwd xxx