When a corporation distributes a 10% stock dividend,common shares will be:

Question

Quizplus · Accepted Answer

When a corporation distributes a 10% stock dividend, common shares will be credited for the new shares times the current market value of the shares. This means that the shareholders will receive additional shares of stock in the company equal to 10% of the outstanding shares they currently hold, and these new shares will be valued at the current market value of the existing shares. The other choices are incorrect because the average issue price or the book value of the shares are not relevant to the calculation of the value of the new shares that the shareholders will receive through the stock dividend.

When a Corporation Distributes a 10% Stock Dividend,common Shares Will