# ASC 505-20-15: Equity — Stock Dividends and Stock Splits — 15 Scope and Scope Exceptions

Source: FASB Accounting Standards Codification, Basic View

[Read online](https://asc.understandingaccounting.org/asc/505/20/#15-scope-and-scope-exceptions)

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## ASC 505-20-15: 15 Scope and Scope Exceptions

[Read section](https://asc.understandingaccounting.org/asc/505/20/#15-scope-and-scope-exceptions)

SEC content: no

#### Entities

##### [505-20-15-1](https://asc.understandingaccounting.org/asc/505/20/#505-20-15-1)

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The guidance in this Subtopic applies to all entities that are corporations.

#### Transactions

##### [505-20-15-2](https://asc.understandingaccounting.org/asc/505/20/#505-20-15-2)

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The guidance in this Subtopic applies to all [stock dividends](https://asc.understandingaccounting.org/glossary/s/#stock-dividend "An issuance by a corporation of its own common shares to its common shareholders without consideration and under conditions indicating that such action is prompted mainly by a desire to give the recipient shareholders some ostensibly separate evidence of a part of their respective interests in accumulated corporate earnings without distribution of cash or other property that the board of directors deems necessary or desirable to retain in the business. A stock dividend takes nothing from the property of the corporation and adds nothing to the interests of the stockholders; that is, the corporation's property is not diminished and the interests of the stockholders are not increased. The proportional interest of each shareholder remains the same.") and stock splits, with specific exceptions noted in paragraphs [505-20-15-3 through 15-3A](https://asc.understandingaccounting.org/asc/505/20/#505-20-15-3).

##### [505-20-15-3](https://asc.understandingaccounting.org/asc/505/20/#505-20-15-3)

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The guidance in this Subtopic does not apply to the accounting for a distribution or issuance to shareholders of any of the following:

1.  a
    
    Shares of another corporation held as an investment
    
2.  b
    
    Shares of a different class
    
3.  c
    
    Rights to subscribe for additional shares
    
4.  d
    
    Shares of the same class in cases in which each shareholder is given an election to receive cash or shares.

##### [505-20-15-3A](https://asc.understandingaccounting.org/asc/505/20/#505-20-15-3A)

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Item (d) in the preceding paragraph includes, but is not limited to, a distribution having both of the following characteristics:

1.  a
    
    The shareholder has the ability to elect to receive the shareholder's entire distribution in cash or shares of equivalent value.
    
2.  b
    
    There is a potential limitation on the total amount of cash that all shareholders can elect to receive in the aggregate.
    

For guidance on recognition of an entity's commitment to make a distribution described in the preceding paragraph, see paragraph [480-10-25-14](https://asc.understandingaccounting.org/asc/480/10/#480-10-25-14). For guidance on computation of diluted EPS of an entity's commitment to make such a distribution, see the guidance in paragraphs

[260-10-45-45 through 45-47](https://asc.understandingaccounting.org/asc/260/10/#260-10-45-45)

.