Question

Large stock dividends are recorded at _______ and small stock dividends are recorded at ______. Multiple choice question. market value; market value par value; par value cost; cost cost; par value par value; market value

Answer 1

Firms always distribute dividend to its shareholders. Large stock dividends are recorded at par value and small stock dividends are recorded at market value

• Large stock dividends are simply referred to as new shares issued that are more than 25% of the value of the total shares outstanding before dividend.

The journal entry is known to transfers the par value of the said shares from retained earnings to paid-in capital.

The stock market often see and adjust for the changing value of each share as the company have an increased number of shares.

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