Stock Dividends vs Stock Splits

• Stock Dividends
• Stock Divedends result in more shares being issued as dividend(No cash flow is involved). 
• Small stock dividends involve issues of less than 20%-25% of stock.
• The accounting for small stock dividends is based on the fair market value of stock issued.
• The accounting for large stock dividends(more than 20%-25%) is based on the par value of stock issued.
• Stock Split
• When a stock splits the par value of each share decreases; the number of shares increases.

Review

1. PV of a share
1. Div = does not change
2. Split = PV decreases
2. Total number of shares
1. Div = increases
2. Split = increases
3. Stockholder's Equity
1. Div = Less retained earnings & more of stock 
2. Split = same amount of stock & retained earnings
4. Journal entries required?
1. Div = YES
2. Split = NO