Question

As a minimum, how large in relation to total outstanding shares may a stock distribution be before it should be accounted for as a large stock dividend instead of as a small stock dividend?

Answer 1

A stock distribution is considered a large stock dividend if it is more than 20-25% of the total outstanding shares.

Step-by-step explanation:

In general, a stock distribution is accounted for as a large stock dividend if it is greater than 20-25% of the total outstanding shares. This means that if the distribution represents more than 20-25% of the total shares, it would be considered a large stock dividend and would require different accounting treatment.

For example, if a company has 100,000 outstanding shares and decides to distribute 25,000 additional shares, this would be considered a large stock dividend because it represents 25% of the total outstanding shares.

On the other hand, if the distribution represents less than 20-25% of the total outstanding shares, it would be considered a small stock dividend and would be accounted for differently.