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Declare a stock dividend rather than a stock split

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Reference no: EM13867097

Activision Blizzard, Inc., reported the following in the notes to its financial statements.

Stock Split In July, the Board of Directors approved a two-for-one split of our outstanding common shares effected in the form of a stock dividend (the split). The split was paid September 5 to shareholders of record as of August 25. The par value of our common stock was maintained at the pre-split amount of $. 000001 per share.

Required:

1. Describe the effects that this transaction would have had on the company's financial statements. Assume that 600 million shares were outstanding at the time of the transaction, trading at a stock price of $ 33.

2. Why might the board of directors have decided to declare a stock dividend rather than a stock split?

Reference no: EM13867097

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