The following is information taken from the shareholders' equity section of the projected summary financial statements of Deer Fly Corp. to December 31, 2021, prior to the board of directors' meeting to decide on dividends or other share transactions related to its 10,000 issued common shares for the year. Instructions
Prepare in three-column comparative format, the shareholders' equity section as it would appear under each of the following possible options that the board is considering. Only one of the options will be chosen, so assume they are mutually exclusive. Describe any additional disclosure that would be required.
a) The board declares a 20% stock dividend.
b) The board approves a 3-for-1 stock split.

Question

The following is information taken from the shareholders' equity section of the projected summary financial statements of Deer Fly Corp. to December 31, 2021, prior to the board of directors' meeting to decide on dividends or other share transactions related to its 10,000 issued common shares for the year.  Instructions
Prepare in three-column comparative format, the shareholders' equity section as it would appear under each of the following possible options that the board is considering. Only one of the options will be chosen, so assume they are mutually exclusive. Describe any additional disclosure that would be required. 
a) The board declares a 20% stock dividend.
b) The board approves a 3-for-1 stock split.

Quizplus · Accepted Answer

The Answer is <img src="https://d2lvgg3v3hfg70.cloudfront.net/TB7945/11eb1905_53e8_d21a_95b1_0b123a3ed9c5_TB7945_00.jpg" alt="  Additional disclosure in each case would include the number of shares authorized and issued. In the case of b) this would be the only change in the equity section from before the split." class="answers-bank-image d-block" rel="preload" > Additional disclosure in each case would include the number of shares authorized and issued. In the case of b) this would be the only change in the equity section from before the split.

The Following Is Information Taken from the Shareholders' Equity Section