When a stock dividend is small, for example a 10% stock dividend,
A) Retained earnings is not reduced because the dividend is immaterial.
B) Retained earnings is reduced by the fair value of the stock.
C) Retained earnings is reduced to the par value of the stock.
D) Paid-in capital in excess of par value is unaffected.

Question

Quizplus · Accepted Answer

Retained earnings is reduced by the fair value of the stock issued as a dividend, reflecting the distribution of value to shareholders.

When a Stock Dividend Is Small, for Example a 10