{"schema_version":2,"canonical_url":"https://asc.understandingaccounting.org/asc/505/20/#25-recognition","source":"FASB Accounting Standards Codification, Basic View","usage":"Study and research edition. Verify current requirements with the official source. Summaries, enrichment, and tags are machine-generated study aids. Paragraph html preserves source markup; snippet is abbreviated. Pending content is not necessarily effective.","topic":"505","topic_title":"Equity","subtopic":"505-20","subtopic_title":"Stock Dividends and Stock Splits","section":{"number":"25","label":"25 Recognition","anchor":"25-recognition","is_sec":false,"groups":[{"block":null,"heading":"Criteria for Treatment as Stock Dividend or Stock Split","paragraphs":[{"citation":"505-20-25-1","para":"25-1","html":"<div class=\"asc-body\"><div class=\"norm-text\">This Section provides guidance on determining whether stock dividends and stock splits are to be accounted for in accordance with their actual form or whether their substance requires different accounting.</div></div>","snippet":"This Section provides guidance on determining whether stock dividends and stock splits are to be accounted for in accordance with their actual form or whether their substance requires different accounting.","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:87b5cfadeea88e9b3fb4a5340a38c868b252c69ae00262ab1dec2d99cabbfd5f","downloaded_from":"2026-09-10T00:37:41.401Z","last_downloaded_at":"2026-09-10T00:37:41.401Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147481378","source_sha256":"30bb6cd0d68775d38ed85f808488645fe32b28fecdf6c310d8047741ea858d98"}}],"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:f3b8e07e463c6cfd7c3d4381c14df1b89617820c82ab8a3bd639f060576cb3cb","downloaded_from":"2026-09-10T00:37:41.401Z","last_downloaded_at":"2026-09-10T00:37:41.401Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147481378","source_sha256":"30bb6cd0d68775d38ed85f808488645fe32b28fecdf6c310d8047741ea858d98"}},{"block":null,"heading":"Stock Dividend in Form","paragraphs":[{"citation":"505-20-25-2","para":"25-2","html":"<div class=\"asc-body\"><div class=\"norm-text\"><span class=\"sfragment\" id=\"sfr_FDC47C81-6E92-1014-A13F-6E4B94C84136\"><span class=\"sfragment-source\">The number of additional shares issued as a <a href=\"/glossary/s/#stock-dividend\" class=\"term\" title=\"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.\"><span>stock dividend</span></a> may be so great that it has, or may reasonably be expected to have, the effect of materially reducing the share market value. In such a situation, because the implications and possible shareholder belief discussed in paragraph <a href=\"/asc/505/20/#505-20-30-3\" class=\"xref\">505-20-30-3</a> are not likely to exist, the substance of the transaction is clearly that of a <a href=\"/glossary/s/#stock-split\" class=\"term\" title=\"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 increase the number of outstanding shares for the purpose of effecting a reduction in their unit market price and, thereby, of obtaining wider distribution and improved marketability of the shares. Sometimes called a stock split-up.\"><span>stock split</span></a>. </span></span></div></div>","snippet":"The number of additional shares issued as a stock dividend may be so great that it has, or may reasonably be expected to have, the effect of materially reducing the share market value. In such a situation, because the im…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:2d5f988eef9daf57b74d834f350a0494121f2d72f7acc05a66e47a44c34c4417","downloaded_from":"2026-09-10T00:37:41.401Z","last_downloaded_at":"2026-09-10T00:37:41.401Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147481378","source_sha256":"30bb6cd0d68775d38ed85f808488645fe32b28fecdf6c310d8047741ea858d98"}},{"citation":"505-20-25-3","para":"25-3","html":"<div class=\"asc-body\"><div class=\"norm-text\"><span class=\"sfragment\" id=\"sfr_FDC47DCD-6E92-1014-A13F-6E4B94C84136\"><span class=\"sfragment-source\">The point at which the relative size of the additional shares issued becomes large enough to materially influence the unit market price of the stock will vary with individual entities and under differing market conditions and, therefore, no single percentage can be established as a standard for determining when capitalization of retained earnings in excess of legal requirements is called for and when it is not. Except for a few instances, the issuance of additional shares of less than 20 or 25 percent of the number of previously outstanding shares would call for treatment as a stock dividend as described in paragraph <a href=\"/asc/505/20/#505-20-30-3\" class=\"xref\">505-20-30-3</a>. </span></span></div></div>","snippet":"The point at which the relative size of the additional shares issued becomes large enough to materially influence the unit market price of the stock will vary with individual entities and under differing market condition…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:710d50c398008f99570fb43ec91f26ddc39e03a820bd85da1d760f08d3899c05","downloaded_from":"2026-09-10T00:37:41.401Z","last_downloaded_at":"2026-09-10T00:37:41.401Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147481378","source_sha256":"30bb6cd0d68775d38ed85f808488645fe32b28fecdf6c310d8047741ea858d98"}}],"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:bbfe3b35ccee437e492ba1a5a311b558c71690ce77fe2a59212da19238b08a39","downloaded_from":"2026-09-10T00:37:41.401Z","last_downloaded_at":"2026-09-10T00:37:41.401Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147481378","source_sha256":"30bb6cd0d68775d38ed85f808488645fe32b28fecdf6c310d8047741ea858d98"}},{"block":null,"heading":"Stock Split in Form","paragraphs":[{"citation":"505-20-25-4","para":"25-4","html":"<div class=\"asc-body\"><div class=\"norm-text\"><span class=\"sfragment\" id=\"sfr_FDC47EDE-6E92-1014-A13F-6E4B94C84136\"><span class=\"sfragment-source\">A stock split is confined to transactions involving the issuance of shares, without consideration to the corporation, for the purpose of effecting a reduction in the unit market price of shares of the class issued and, therefore, of obtaining wider distribution and improved marketability of the shares. </span></span></div></div>","snippet":"A stock split is confined to transactions involving the issuance of shares, without consideration to the corporation, for the purpose of effecting a reduction in the unit market price of shares of the class issued and, t…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:9c206c0e7f9bee8e42e44fe9bde6d7c97d2cdd187cac7bba85647a15c7599641","downloaded_from":"2026-09-10T00:37:41.401Z","last_downloaded_at":"2026-09-10T00:37:41.401Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147481378","source_sha256":"30bb6cd0d68775d38ed85f808488645fe32b28fecdf6c310d8047741ea858d98"}},{"citation":"505-20-25-5","para":"25-5","html":"<div class=\"asc-body\"><div class=\"norm-text\"><span class=\"sfragment\" id=\"sfr_FDC47FD9-6E92-1014-A13F-6E4B94C84136\"><span class=\"sfragment-source\">Few cases will arise in which the aforementioned purpose can be accomplished through an issuance of shares that is less than 20 or 25 percent of the previously outstanding shares. </span></span></div></div>","snippet":"Few cases will arise in which the aforementioned purpose can be accomplished through an issuance of shares that is less than 20 or 25 percent of the previously outstanding shares.","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:a396c8b8be8eb24e0feac86b6d4f4cdf2491097c8988e009d37a6ebf940a6752","downloaded_from":"2026-09-10T00:37:41.401Z","last_downloaded_at":"2026-09-10T00:37:41.401Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147481378","source_sha256":"30bb6cd0d68775d38ed85f808488645fe32b28fecdf6c310d8047741ea858d98"}},{"citation":"505-20-25-6","para":"25-6","html":"<div class=\"asc-body\"><div class=\"norm-text\"><span class=\"sfragment\" id=\"sfr_FDC480BB-6E92-1014-A13F-6E4B94C84136\"><span class=\"sfragment-source\">The corporation's representations to its shareholders as to the nature of the issuance is one of the principal considerations in determining whether it shall be recorded as a stock dividend or a stock split. Nevertheless, the issuance of new shares in ratios of less than 20 or 25 percent of the previously outstanding shares, or the frequent recurrence of issuances of shares, would destroy the presumption that transactions represented to be stock splits shall be recorded as stock splits. </span></span></div></div>","snippet":"The corporation's representations to its shareholders as to the nature of the issuance is one of the principal considerations in determining whether it shall be recorded as a stock dividend or a stock split. Nevertheless…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:1cf89b498c36647dc4f9e04d3f12f0779e079a003ae5fade08622282684ee41b","downloaded_from":"2026-09-10T00:37:41.401Z","last_downloaded_at":"2026-09-10T00:37:41.401Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147481378","source_sha256":"30bb6cd0d68775d38ed85f808488645fe32b28fecdf6c310d8047741ea858d98"}}],"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:f417e1cdfbb791b4b98ab1c66c026327465bd0c88a267344591365dbce104280","downloaded_from":"2026-09-10T00:37:41.401Z","last_downloaded_at":"2026-09-10T00:37:41.401Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147481378","source_sha256":"30bb6cd0d68775d38ed85f808488645fe32b28fecdf6c310d8047741ea858d98"}}],"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:3563e088038965838eacb1ca8fe08ce6279c700090479eb93083bb7520f88454","downloaded_from":"2026-09-10T00:37:41.401Z","last_downloaded_at":"2026-09-10T00:37:41.401Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147481378","source_sha256":"30bb6cd0d68775d38ed85f808488645fe32b28fecdf6c310d8047741ea858d98"}},"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:3563e088038965838eacb1ca8fe08ce6279c700090479eb93083bb7520f88454","downloaded_from":"2026-09-10T00:37:41.401Z","last_downloaded_at":"2026-09-10T00:37:41.401Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147481378","source_sha256":"30bb6cd0d68775d38ed85f808488645fe32b28fecdf6c310d8047741ea858d98"}}