When shareholders are entitled to stock dividends in amounts equal to fractional units,corporations issue additional shares for whole units plus cash equal to the market value of the fractional units.

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When stock dividends result in fractional shares, corporations typically issue additional shares to round up to a whole number for the dividend and then distribute cash in lieu of the fractional share based on its current market value. This approach simplifies the distribution process and avoids the complexities of dealing with fractional shares in the shareholders' accounts.

When Shareholders Are Entitled to Stock Dividends in Amounts Equal