Question

A large stock dividend:

a. Is a stock dividend of less than 20% of the number of shares of stock outstanding.
b. Is reported at par value rather than at fair market value.
c. Is reported at fair market value rather than at par value.
d. Increases retained earnings in the amount of par value times the number of shares to be distributed.

Answer 1

A large stock dividend is a stock dividend of less than 20% of the number of shares of stock outstanding and is reported at fair market value rather than at par value.

Step-by-step explanation:

A large stock dividend is a stock dividend of less than 20% of the number of shares of stock outstanding. It is reported at fair market value rather than at par value. It does not increase retained earnings in the amount of par value times the number of shares to be distributed. Instead, it decreases retained earnings and increases the paid-in capital in excess of par value.