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What is the difference between a small stock dividend and a large stock dividend?

When a company issues a stock dividend, it will typically be expressed as a percentage of the total amount of outstanding shares.

If the stock dividend is less than 25% of outstanding shares, then it is considered a small stock dividend. If it is greater than 25%, it is considered a large stock dividend.

The reason you need to understand whether its small or large is because the rules for recording the stock dividend are different. For a small stock dividend, we use the market value, but for a large stock dividend, you would use the par value.


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