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Stock split belongs in a dated, class-level equity analysis. A stock split increases or decreases share units while making a proportional change in per-share par or stated value. Total equity does not change, and retained earnings ordinarily is not capitalized.
Apply it
A two-for-one split changes 300,000 $2-par shares into 600,000 $1-par shares. The common-stock balance remains $600,000. Comparative shares and EPS are recast for the new unit scale.
Review stock split against stock dividend. Reconcile stock split to retroactive share adjustment, the dated stock split evidence, and its final presentation.
The stock split record ties stock dividend to its source date, measured amount, and retroactive share adjustment effect.
Keep the boundary clear
A split is not revenue, a dividend payable, or a change in each holder's proportional interest. A distribution called a dividend may still be a split in substance under Topic 505.
Authority
Read ASC 505-20-30-6 for accounting for a stock split.
Put the concept to work
Apply this concept
- Explain and apply stock split 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.