Regarding the Receipt of a Stock Dividend from an Investment

question 131

Multiple Choice

Regarding the receipt of a stock dividend from an investment that is held as a long-term investment in available-for-sale security, which of the following statements is CORRECT?

• A)Dividend revenue, based on the current fair value of the stock, is recorded.
• B)Because the number of shares of stock held has increased, the investor's cost per share also increases.
• C)A new cost per share is determined and that amount is used for all future transactions affecting the investment.
• D)The accounting treatment for a stock dividend is the same as the accounting treatment for a cash dividend.

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Definitions:

Sexual Maturity

The stage of development where an individual is biologically able to reproduce.

Ejaculation

The process of ejecting semen from the male reproductive tract as a part of the sexual response cycle.

Adolescent Growth Spurt

Sharp increase in height and weight that precedes sexual maturity.

Menarche

Girl’s first menstruation.