Ch 18 Case Study

The following is a press release from Tiger Corporation:

Tiger Corporation ANNOUNCES 33% INCREASE IN BASE DIVIDEND, 2-FOR-I STOCK SPLIT

Los AngelesTiger Corporation today announced that its Board of Directors approved a base quarterly dividend increase of 33.3%.

Tiger Corporation announcement indicated that the new quarterly dividend would be $0.25 per share. It also stated that the Board of Directors declared a two-for-one stock split and reaffirmed its commitment to a share repurchase program.

Required:

What are the two primary reporting alternatives does Tiger Corporation has in accounting for the repurchase of its shares? What would be the effect of the optional courses of action on total shareholders equity? Explain. What would be the effect of the optional courses of action on how stock would be presented in Tigers balance sheet? If the shares are later resold for an amount greater than cost, how should Tiger account for the sale?

What are the two primary courses of action does Tiger has in accounting for the stock split, and how would the choice affect Tigers shareholders equity? Why?

How should Tiger account for the cash dividend, and how would it affect Tigers balance sheet? Why?