CASE 1510 Stock Splits and Stock Dividends

A corporation may use stock splits and stock dividends to change the number of shares of its stock outstanding.

Required:

1. What is meant by a stock split effected in the form of a dividend?
2. From an accounting viewpoint, explain how the stock split effected in the form of a dividend differs from an ordinary stock dividend.
3. How should a stock dividend that has been declared but not yet issued be classified in a statement of financial position? Why?