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Intermediate Accounting: Reporting...

3rd Edition
James M. Wahlen + 2 others
ISBN: 9781337788281

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Intermediate Accounting: Reporting...

3rd Edition
James M. Wahlen + 2 others
ISBN: 9781337788281
Textbook Problem
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What is the most likely effect of a stock split on the par value per share and the number of shares outstanding?

Chapter 15, Problem 3MC, What is the most likely effect of a stock split on the par value per share and the number of shares

To determine

Explain the effect of a stock split on the par value per share and the number of shares outstanding.

Explanation

Stock Splits: It is a method of increasing the total number of outstanding shares thereby, reducing the market price of each share, however, keeping the corporation’s total market value constant.

a) Stock splits will decrease the par value per share and increases the number of shares outstanding. Thus, this option is correct.

b) Stock splits will decrease the par value per share and increases the number of shares outstanding...

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