The Accounting Review Vol. 37 No. 2 1962
STOCK DIVIDENDS--SUGGESTIONS FOR CLARIFICATION.
Abstract
Attention has been directed and limited in this paper to four significant but often neglected aspects of corporate stock dividends; namely, terminology, sources, notifications and disclosure, and the balance sheet presentation. The recommendations evolving from these considerations are summarized as follows: 1. The term "dividend" should be restricted in use to identify only declarations from retained earnings payable in corporate assets. 2. Use the term "stock distribution in kind" to identify the distribution of stock to stockholders of the same class of stock distributed. 3. Use the term "stock distributions not in kind" to identify the distribution of stock to stockholders of a class of stock different from the stock distributed. 4. Recognize the impropriety of fixed asset appraisal increments as a source of stock distributions in kind. This recommendation does not include appraisal increments from quasi-reorganizations which were not considered in the previous discussion. 5. Continue the notification and disclosure requirements of Accounting Research Bulletin No. 11. 6. Present declared but unissued stock distributions in kind as part of capital stock. 7. Follow the A.I.C.P.A. proposal that stock distributions in kind be disclosed on subsequent financial statements until such information loses its significance. The introduction and acceptance of new terminology should greatly facilitate the understanding of the nature and effect of "stock dividends," Acceptance of the recommendations pertaining to notifications and statement presentation will mark a forward step in the development of accounting theory and practice.
- DOI
- 10.2308/tar-7098384
- Volume
- 37
- Issue
- 2
- Pages
- 283-288
- Language
- en
- Sources
- crossref openalex