An ordinary 20% stock dividend

Question

Quizplus · Accepted Answer

A stock dividend is a distribution of additional shares of stock to existing stockholders. An ordinary 20% stock dividend means that the company is issuing 20% more shares to its shareholders, meaning that the contributed capital will increase as shareholders are investing more money in the company by accepting the stock dividend. The retained earnings and assets of the company do not change, as no cash or assets are being distributed. The stock dividend is not reported on the income statement, but it is reported in the notes to the financial statements.

An Ordinary 20% Stock Dividend