Before a company can issue a property dividend in shares of another company, it must ensure that the shares are recorded at market value.The dividend is then paid out of the company's contributed capital accounts rather than its retained earnings.

Question

Quizplus · Accepted Answer

A property dividend involves distributing non-cash assets to shareholders, and while the assets (such as shares of another company) might be revalued to their fair market value at the time of the dividend declaration, the dividend itself is typically paid out of the company's retained earnings, not its contributed capital accounts.

Before a Company Can Issue a Property Dividend in Shares