Stock Dividends and Splits
Response to the following problem:
Stock splits and stock dividends may be used by a corporation to change the number of shares of its stock outstanding.
Required
1. Explain what is meant by a stock split effected in the form of a dividend.
2. From an accounting viewpoint, explain how a stock split effected in the form of a dividend differs from an ordinary stock dividend.
3. How should a stock dividend that has been declared but not yet issued be classified in a statement of financial position? Why?