A Corporation Declared and Issued a 15% Stock Dividend on November

question 48

Multiple Choice

A corporation declared and issued a 15% stock dividend on November 1. The following information was available immediately prior to the dividend: The amount that contributed capital will increase (decrease) as a result of recording this stock dividend is:

• A) $45,000.
• B) $135,000.
• C) $(45,000).
• D) $(135,000).
• E) $0.

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Definitions:

Receivership

The first form of external administration prescribed by the Corporations Act. Receivership involves a receiver, receiver–manager or controller being appointed by a court or by secured creditors in order to protect the security of those creditors.

Liquidation

The third form of external administration prescribed by the Corporations Act. The process whereby a company is dissolved, at which point the company ceases to be a legal entity.

Liquidator

An external administrator appointed to dissolve the company.

Creditors

Individuals or entities that a company owes money to, typically as a result of receiving goods or services.