Answered: share dividend on its share capital

Business

Accounting

share dividend on its share capital

Cornerstones of Financial Accounting

4th Edition

ISBN:9781337690881

Author:Jay Rich, Jeff Jones

Publisher:Jay Rich, Jeff Jones

Chapter10: Stockholder's Equity

Section: Chapter Questions

Problem 12MCQ

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Question

The corporation issued a 20% share dividend on its share capital. At what amount should retained earnings be reduced for this transaction?

a. Zero because no effect in the total stockholders' equity

b. Par Value

c. Fair value at the date of issuance

d. Fair value at the declaration date

Definition Definition Assets available to stockholders after a company's liabilities are paid off. Stockholders’ equity is also sometimes referred to as owner's equity. A stockholders’ equity or book value generally includes common stock, preferred stock, and retained earnings and is an indicator of a company's financial strength.

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