Stock Dividend-Effect on Book Value

question 48

Essay

Stock dividend-effect on book value
Olympic Corporation has 75,000 shares of $1 par value stock outstanding.The largest single stockholder is Lou Cheng,who owns 6,000 shares.On December 31,the total assets of the company amount to $4,360,000 and total liabilities to $2,230,000.On that date,the board of directors declared a stock dividend of one new share for each five shares outstanding.Compute the following:

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Definitions:

Double Taxation

The imposition of two or more taxes on the same income, asset, or financial transaction, often seen in international business where income is taxed in both the source and the resident country.

Secured Bond

A bond backed by collateral to decrease the risk of default.

Due Process

A fundamental legal principle that ensures fair treatments and procedures are followed by the government before depriving a person of life, liberty, or property.

Fourth Amendment

A provision in the U.S. Constitution protecting individuals from unreasonable searches and seizures by the government.