Despot Declared a Property Dividend to Give Marketable Securities to Its

question 24

Multiple Choice

Despot declared a property dividend to give marketable securities to its common stockholders. The securities had cost Despot $7 million and currently have a fair value of $16 million. Which of the following would be included in recording the property dividend declaration?

• A)Increase in a liability for $16 million.
• B)Decrease in retained earnings for $7 million.
• C)Decrease in marketable securities by $16 million.
• D)All of the above are correct.

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Definitions:

Cost of Goods Purchased

The total expense incurred by a company to buy the goods it has sold or will sell, excluding any indirect costs.

Finished Goods Inventory

The value of a company's inventory of products that are complete and ready for sale.

Cost of Goods Manufactured

The total cost of goods completed during a specific period, including labor, materials, and overhead.

Cost of Goods Available for Sale

The total cost of beginning inventory plus the cost of goods purchased or manufactured during an accounting period, before any sales are subtracted.