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What is the effect of property dividend on retained earnings

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Reference no: EM132771803

Problem 1: On December 1, 2016, Milan Company declared a property dividend of marketable securities to be distributed on December 31, 2016 to shareholders of record on December 15, 2016. On December 1, 2016, the trading securities had a carrying amount of P60,000 and a fair value of P78,000. What is the effect of this property dividend on 2016 retained earnings after all nominal accounts are closed?

Option 1: 0
Option 2: 18,000 increase
Option 3: 60,000 decrease
Option 4: 78,000 decrease

Reference no: EM132771803

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