Milano Tools Inc. announced a 100 percent stock dividend.
1. Determine the impact (increase, decrease, no change) of this dividend on the following:
a. Total assets.
b. Total liabilities.
c. Common shares.
d. Total shareholders’ equity.
e. Market value per common share.
2. Now assume that the company announced a 2-for-1 stock split. Determine the impact of the stock split on the five items above. Explain why the accounting for stock dividends differs from that of the stock split.