When a stock dividend was declared above par the excess was ignored and only the par value was used.This error would cause:

Question

Quizplus · Accepted Answer

When a stock dividend is declared above par, the excess amount is transferred to a separate account called "Capital Surplus" or "Paid-in Capital in Excess of Par Value". However, in this scenario, the excess amount is being ignored and only the par value is being used. As a result, the stockholders' equity will be overstated, as the capital surplus account will not reflect the true value of the dividend distribution.

When a Stock Dividend Was Declared Above Par the Excess