Final answer:
A property dividend is recorded at the market value of the property when it is lower than the book value at the time of dividend declaration.
Step-by-step explanation:
When a property dividend is declared and the book value of the property exceeds its market value, the dividend is recorded at the market value of the property at the time of the dividend declaration. The book value represents the value of the asset on the company's balance sheet, whereas market value is what the asset could currently be sold for in the open market. If the market value is lower than the book value, it reflects the fair value that would be exchanged in an arms-length transaction, and thus it is the amount recorded for the dividend distribution.