Question

Why is Additional Paid-In Capital recorded for a small stock dividend? A: Because small stock dividends...

Why is Additional Paid-In Capital recorded for a small stock dividend?

A: Because small stock dividends are recorded at market value.

B: Because large stock dividends are recorded at par value.

C: Because small stock dividends are recorded at par value.

D: Because large stock dividends are recorded at market value.

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Answer #1

ANSWER A) Because small stock dividends are recorded at market value

explanation

1.when you issue the stock dividend ,the total value of the equity is the same (it doesnt affect the total value of equity)

2.if the company issued stock dividends less than the 25%of total value of outstanding shares before the dividends , they are called small stock dividends

3.these small stock dividends are recorded at market value

4. when you issue more than 25%of the stock dividend from the total value of outstanding shares before dividend is called large stock dividends ,they are recored at par value .

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