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A14-18 Stock Dividend and Stock Split (LO 14-6, 14-7) At the end of 206, Home Ltd. reported the following in shareholders' equity: At this time,
A14-18 Stock Dividend and Stock Split (LO 14-6, 14-7) At the end of 206, Home Ltd. reported the following in shareholders' equity: At this time, the shares were trading in the range of $3 to $5 per share on public stock markets. The company's board of directors is contemplating two alternative courses of action: 1. Declaring a 50% stock dividend, or 2. Executing a 3 -for-2 stock split. Required: 1. Prepare the shareholders' equity section for each alternative, assuming that market value is used to capitalize the stock dividend. 2. What would the expected share price be assuming a share price of $3 for alternative 1 and a share price of $5 for alternative 2 ? (Round your answers to 2 decimal places.) 3-a. Which alternative would shareholders prefer? 3-b. This part of the question is not part of your Connect assignment. 4. Which alternative would the company prefer? Declaring a 50% stock dividend, or Executing a 3-for-2 stock split Shareholders are indifferent in both situations
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