Greener Grass Co. pays a constant annual dividend of $1 a share and has 1,000 shares of common stock outstanding. The company:
must always show a current liability on its balance sheet of $1,000 for dividends payable.
must still declare each dividend before it becomes an actual company liability. is obligated to continue paying $1 a share each year. can deduct $1,000 a year as a business expense as a result of its dividend payment.
can be forced into bankruptcy by its shareholders if it fails to pay at least $1 a year in dividends.