Small stock dividends are recorded at market value per share and large stock dividends are recorded at par value per share.

Question

Quizplus · Accepted Answer

Small stock dividends (typically less than 20-25% of the existing shares) are recorded at the market value per share because they are considered to have a more significant impact on the share price and shareholder value. In contrast, large stock dividends (more than 20-25%) are recorded at par value per share because they are viewed primarily as a formal capital structure change without intending to affect market value significantly.

Small Stock Dividends Are Recorded at Market Value Per Share