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Stock dividends on common stock should be recorded at their fair value by the investor when the related investment is accounted for under which of the following methods?
Cost/Equity
a. Yes Yes
b Yes No
c No Yes
d No No
Choice 'd" is correct, No - No.
Rule: Stock dividends and stock splits are not considered income to the recipient.Therefore, investors do not record stock dividends at fair value. They simply reallocate the investment account balance (under either method -- cost or equity) over more shares so that value per share decreases.

Respuesta :

Option d is correct. Stock dividends on common stock should be recorded at their fair value by the investor when the related investment is accounted for under No-No methods.

Stock dividends are not regarded as income by the recipient. Investors don't report stock dividends at fair value as a result. In order to reduce the value per share, they merely reallocate the investment account balance (using either the cost or equity technique) over additional shares.

A stock dividend is a dividend payment that is delivered to shareholders in shares as opposed to cash. The benefit of the stock dividend is that it rewards shareholders without dipping into the company's cash reserves.

The majority of these stock distributions are made as fractions paid per outstanding share. If a business distributes a 5% stock dividend, it must give existing shareholders 0.05 shares for every share they currently own. Five extra shares would be added to the 100-share owner's ownership.

Know more about Stock dividends here:

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