[Anonymous]

Can anyone explain the difference between the two and why they are accounted for differently. For example, wouldn’t a 2 for 1 stock split be the same thing as a 100% stock dividend (large stock dividend).

[govtec]

Generally speaking a stock split is as a result of the dollar value of the stock decreasing and the stock shares have been increased proportionately and you record a memo entry. The net change on the equity side of the balance sheet is zero. As oppose to a stock dividend, where there are changes within (i.e. Treasury Stock, APIC) and you have to record journal entries to reflect this.

BEC - 12/13
FAR - 5/14
AUD - 8/14
REG - 2/15
Passed 6 of 6 CLEP Exam

[Author]

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