Question

Explore the FASB Codification sections regarding stockholders’ equity. Identify one concept that you did not know prior to completing this research and share it with the class, citing the code section. Identify one question that has arisen as you have explored equity in the codification, and post this question as well

Answer 1

One concept I was not aware of. before completing the research in regards to stock holders' equity was - Stock dividend and stock splits.Lets discuss the topic -

(ASC 505 - 20) Stock Dividend and stock splits - An issuance by a corporation of its own common share to its common shareholders without consideration and under conditions indicating that such action is prompted mainly by a desire to give the recipient shareholders some apparently separate evidence of a part of respective interests in accumulated corporate earnings without distribution of cash or other property that a board of directors deems necessary or desirable to retain in the business.

Stock Split - An issuance by corporation of its own common shares to its common shareholders without consideration and under conditions indicating that such action is prompted mainly by a desire to increase the number of outstanding shares for the purpose of effecting a reduction in their unit market price and,thereby, of obtaining wider distribution and improved marketability of the shares. Sometimes called a stock split.

Question that arose while researching the codification is - Does the stock split or stock dividend dilutes share hoolding of current share holders?