Question

Royce has 100,000 shares of $10 par issued and outstanding. royce declares a 2-for-1 stock split in the form of a stock dividend. which of the following are true? (select all that apply)

O the par value will not change.
O a loss is recorded for the amount of the stock dividend.
O the number of shares outstanding increases.
O treasury stock increases.

Answer 1

When a stock split occurs, the par value remains the same, while the number of shares increases.

Therefore, the correct options are:

- the par value will not change.

- the number of shares outstanding increases.

Step-by-step explanation:

When a company declares a 2-for-1 stock split in the form of a stock dividend, it means that every shareholder will receive an additional share for every two shares they already own.

A common stock dividend is the dividend paid to common stock owners from the profits of the company. Like other dividends, the payout is in the form of either cash or stock.

In this case, Royce has 100,000 shares, so after the stock split, he will have 200,000 shares.

The par value of the stock remains the same at $10. No loss is recorded for the stock dividend, as it is simply a redistribution of shares among the existing shareholders. Therefore, the correct options are:

• The par value will not change.
• The number of shares outstanding increases.