When a midyear stock dividend increases the number of common shares outstanding for the period, the average number of common shares outstanding is computed as if the stock dividend was distributed at the beginning of the year.

Question

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When computing the average number of common shares outstanding during the year, a midyear stock dividend is treated as if it had been issued at the beginning of the period in which the dividend is declared. This means the additional shares are weighted for the portion of the year after the dividend is declared, not the entire year.

When a Midyear Stock Dividend Increases the Number of Common