1. Compare a stock dividend with a cash dividend. 2. Compare a large stock dividend with a...
Question:
1. Compare a stock dividend with a cash dividend.
2. Compare a large stock dividend with a small stock dividend.
3. Describe the impact of the sale of treasury stock for more than cost on the income statement and the statement of cash flows.
4. Explain why a company might purchase treasury stock.
A dividend is a distribution of a portion of company’s earnings, decided and managed by the company’s board of directors, and paid to the shareholders. Dividends are given on the shares. It is a token reward paid to the shareholders for their...
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Req 1 A stock dividend is a dividend paid in additional stock of the issuing company while a cash di...View the full answer
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Treasury stock refers to shares of a company\'s own stock that the company has bought back from its shareholders and now holds as a form of asset on its balance sheet. When a company buys back its own stock, it reduces the number of outstanding shares in the market, which can potentially increase the value of the remaining shares. Treasury stock can be acquired through a variety of methods, such as open market purchases, negotiated transactions, or as a result of converting convertible securities. Companies may buy back their own shares for a number of reasons, including to return capital to shareholders, to signal confidence in the company\'s future, or to use the shares for employee stock option plans. While treasury stock does not pay dividends, it can be reissued by the company at a later time, which could dilute the value of the remaining shares. Companies are required to report their treasury stock holdings in their financial statements.
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