Respuesta :
Answer:
a)Book value per share before stock dividend= 26.901
TBV before stock dividend= $12105.450
b) Book value per share after stock dividend= 23.191
TBV after stock dividend= 12105.702
Explanation:
Assuming we have the following data with respect to the question,
Total shareholders' equity = 1910000
Total shares issued are = 71000
The directors' declare a 16% stock dividend distributable to stock holders.
Solution:
Stock dividend refers to the issuance of shares in place of cash dividend to shareholders. This means stock dividend results in increase in number of shares. The impact of issuance of additional shares increases the supply of shares hence the book value per share after stock dividend decreases but the impact on Total shareholder's equity remains same, because in case of cash dividend we reduce retained earnings (which is part of owners' equity) but in this case we increase our equity and don't reduce retained earnings.
A)
Book value per share before stock dividend:
BVS= total shareholders equity / total shares issued
BVS= 1910000 / 71000
BVS= 26.901
The total book value before stock dividend:
TBV before stock dividend= BVS * stockholder owned shares
TBV before stock dividend= 26.901 * 450
TBV before stock dividend= $12105.450
B)
Book value per share after stock dividend:
Book value per share after stock dividend= 1,910,000 / (71,000*1.16)
Book value per share after stock dividend= 23.191
The total book value after stock dividend:
TBV after stock dividend= 23.191 * (450*1.16)
TBV after stock dividend= 12105.702
