The board of directors of the Theater Visions Corporation is trying to establish the dividends policy for 2014 for the company. The board has asked you, the vice president of finance, to attend the meeting in order to get your input. You were asked to discuss and evaluate stock dividends from the perspective of both (1) the stockholders, and (2) the issuing corporation's viewpoint.
Required:
a.Theoretically, from a stockholder's viewpoint, stock dividends have several disadvantages. Discuss the disadvantages associated with stock dividends from the stockholder's perspective.
b.Discuss the advantages associated with a stock dividend from the issuing corporation's viewpoint.
c.For financial accounting purposes, explain how the cost of a stock dividend is measured at the date of declaration.

Question

The board of directors of the Theater Visions Corporation is trying to establish the dividends policy for 2014 for the company. The board has asked you, the vice president of finance, to attend the meeting in order to get your input. You were asked to discuss and evaluate stock dividends from the perspective of both (1) the stockholders, and (2) the issuing corporation's viewpoint.
Required: 
a.Theoretically, from a stockholder's viewpoint, stock dividends have several disadvantages. Discuss the disadvantages associated with stock dividends from the stockholder's perspective.
b.Discuss the advantages associated with a stock dividend from the issuing corporation's viewpoint.
c.For financial accounting purposes, explain how the cost of a stock dividend is measured at the date of declaration.

Quizplus · Accepted Answer

The Answer of The board of directors of the Theater Visions Corporation is trying to establish the dividends policy for 2014 for the company. The board has asked you, the vice president of finance, to attend the meeting in order to get your input. You were asked to discuss and evaluate stock dividends from the perspective of both (1) the stockholders, and (2) the issuing corporation's viewpoint.
Required: 
a.Theoretically, from a stockholder's viewpoint, stock dividends have several disadvantages. Discuss the disadvantages associated with stock dividends from the stockholder's perspective.
b.Discuss the advantages associated with a stock dividend from the issuing corporation's viewpoint.
c.For financial accounting purposes, explain how the cost of a stock dividend is measured at the date of declaration.

The Board of Directors of the Theater Visions Corporation Is