Baker Company has 200,000 shares of common stock outstanding. The company declares a stock dividend of 58,000 shares. According to GAAP, this dividend should be treated as:

Question

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A stock dividend is considered large if it is more than 20-25% of the existing shares outstanding. In this case, 58,000 shares on 200,000 shares outstanding is 29%, which qualifies it as a large stock dividend according to GAAP.

Baker Company Has 200,000 Shares of Common Stock Outstanding