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Intermediate Accounting: Reporting...

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

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BuyFindarrow_forward

Intermediate Accounting: Reporting...

3rd Edition
James M. Wahlen + 2 others
ISBN: 9781337788281
Textbook Problem
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Stock splits and stock dividends may be used by a corporation to change the number of shares of its stock outstanding.

Required:

  1. 1. Explain what is meant by a stock split effected in the form of a dividend.
  2. 2. From an accounting viewpoint, explain how a stock split effected in the form of a dividend differs from an ordinary stock dividend.
  3. 3. How should a stock dividend that has been declared but not yet issued be classified in a statement of financial position? Why?

1.

To determine

Describe the concept the stock split effected in the form of a dividend.

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 split that is been affected in the form of stock dividend, that is used for distribu...

2.

To determine

State manner by which the stock split is affected in the form of a dividend differs from an ordinary stock dividend.

3.

To determine

State the manner by which the stock dividend that has been declared but not yet issued should be classified in the statement of financial position.

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