On January 1, 2017, When the Market Value of Their

question 1

Multiple Choice

On January 1, 2017, when the market value of their common shares was $20 per share, Belgrade Inc.declared a 10% common stock dividend.Shareholders' equity before the stock dividend was declared was:
Common shares, no par value, authorized 200,000 shares,
What was the effect on Belgrade's retained earnings as a result of the stock dividend?

• A)$240,000 decrease
• B)$400,000 decrease
• C)$480,000 decrease
• D)$800,000 decrease

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Definitions:

Goodwill

An intangible asset that arises when a business is purchased for more than the fair value of its net identifiable assets, representing future economic benefits arising from non-physical assets.

Acquisition Fair Value

The price that would be paid to acquire an asset or the amount received to assume a liability during a business combination.

Business Combination

The coming together of separate entities or businesses into one reporting entity through a variety of transactions such as mergers or acquisitions.

Equity Securities

Equity securities are financial instruments that signify ownership in a company or an entity, and represent a claim on part of its assets and earnings.