Question

GAAP identifies stock dividends above ______% of outstanding shares as large and permits large stock dividends to be recorded at _________ value.

Answer 1

GAAP identifies stock dividends above a certain percentage of outstanding shares as large and permits large stock dividends to be recorded at par value.

Step-by-step explanation:

According to GAAP (Generally Accepted Accounting Principles), stock dividends above a certain percentage of outstanding shares are considered large. The specific threshold for large stock dividends may vary depending on the situation. GAAP permits large stock dividends to be recorded at par value, which is the nominal or face value of the stock.

For example, if a company has 1,000,000 outstanding shares and GAAP identifies stock dividends above 20% of outstanding shares as large, any stock dividend exceeding 200,000 shares would be considered large. These large stock dividends would be recorded at their par value, which means a specific dollar amount assigned to each share.