When a Stock Dividend Is Small, for Example a 10

question 38

Multiple Choice

When a stock dividend is small, for example a 10% stock dividend,

• A) Retained earnings is not reduced because the dividend is immaterial.
• B) Retained earnings is reduced by the fair value of the stock.
• C) Retained earnings is reduced to the par value of the stock.
• D) Paid-in capital in excess of par value is unaffected.

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