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Compare effects of a share dividend and a share split. (LO 5) E11-15 on October 31, the equity section of Lucerne Company AG consists of
Compare effects of a share dividend and a share split. (LO 5) E11-15 on October 31, the equity section of Lucerne Company AG consists of share capital-ordinary CHF300,000 and retained earnings CHF860,000. Lucerne is considering the following two courses of action: (1) declaring a 7% share dividend on the 50,000, CHF6 par value shares outstanding, or (2) effecting a 2-for-1 share split that will reduce par value to CHF3 per share. The current market price is CHF13 per share. Instructions Prepare a tabular summary of the effects of the alternative actions on the components of equity, outstanding shares, and par value per share. Use the following column headings: Before Action, After Share Dividend, and After Share Split
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