For purposes of computing the weighted average number of shares outstanding during the year,a midyear event that must be treated as occurring at the beginning of the year is the:

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When a stock dividend is declared and issued, the number of shares outstanding increases as of the date of declaration. Therefore, for purposes of computing the weighted average number of shares outstanding during the year, the stock dividend must be treated as occurring at the beginning of the year, regardless of when it was actually declared and issued during the year. This will have an impact on the calculation of earnings per share, as the increase in shares outstanding will dilute the earnings per share.

For Purposes of Computing the Weighted Average Number of Shares