What is the accounting impact of Dunkin’ Donuts’ dividend declaration?

Source: Wendy Tietz

Dunkin’ Brands (NASDAQ: DNKN) declared a dividend of $0.265 on February 5, 2015, to be paid on March 18, 2015, to shareholders of record as of the close of business on March 9, 2015.  This dividend is a 15% increase over the prior quarter’s dividend.

Questions

1. On which date will Dunkin’ Brands record a liability for the dividend?
2. On which date will Dunkin’ Brands pay the cash dividend?
3. On the date of declaration, what will be the impact (increase, decrease, no effect) on Dunkin’ Brands’:
   • Assets
   • Liabilities
   • Stockholders’ equity
4. On the date of payment, what will be the impact (increase, decrease, no effect) on Dunkin’ Brands’:
   • Assets
   • Liabilities
   • Stockholders’ equity
5. What might be some of the reasons that Dunkin’ Brands would increase its dividend?

Instructor Resources

These resources are provided to give the instructor flexibility for use of Accounting in the Headlines articles in the classroom. The blog posting itself can be assigned via a link to this site OR by distributing the student handout below. Alternatively, the PowerPoint file below contains a bullet point overview of the article and the discussion questions.

• Student handout (pdf) (word) (contains entire blog posting + discussion questions)
• PowerPoint file (brief article overview + discussion questions)

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