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Stock dividend belongs in a dated, class-level equity analysis. A stock dividend gives existing owners additional shares in proportion to their holdings. It changes share units and reallocates amounts within equity under the applicable size and substance analysis; it does not bring new assets into the entity.
Apply it
With 100,000 shares outstanding, a 10 percent stock dividend issues 10,000 shares. If the applicable route uses a $6 fair value and $1 par, retained earnings decreases by $60,000, common stock rises by $10,000, and APIC rises by $50,000.
Review stock dividend against stock split. Reconcile stock dividend to retroactive share adjustment, the dated stock dividend evidence, and its final presentation.
Keep the boundary clear
A large distribution may be a stock split in substance. The corporate label is evidence, but size, purpose, and expected market-price effect also matter.
Authority
Read ASC 505-20-30-3 for measurement of a stock dividend.
Put the concept to work
Apply this concept
- Explain and apply stock dividend within a reconciled class-level equity workpaper using supplied authoritative facts.
Learning resources
Choose a lesson, try an application, or inspect the sources behind this concept.
Build on these ideas
- Outstanding shares — Apply
To apply this concept: Required. This prior idea supplies the quantities or classification needed for the current analysis.