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What is a stock dividend

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Reference no: EM131107118

(Stock Dividends and Splits) The directors of Merchant Corporation are considering the issuance of a stock dividend. They have asked you to discuss the proposed action by answering the following questions.

(a) What is a stock dividend? How is a stock dividend distinguished from a stock split 

(1) from a legal standpoint, and 

(2) from an accounting standpoint?

(b) For what reasons does a corporation usually declare a stock dividend a stock split?

(c) Discuss the amount, if any, of retained earnings to be capitalized in connection with a stock dividend.(AICPA adapted) 

Reference no: EM131107118

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