Stock splits and stock dividends are given different accounting treatment.

Stock splits

When there is a stock split, the par value of the stock is reduced, and the number of shares is increased. For example, after a 2-for-1 stock split on 100,000 shares of par value of $1, there will be 200,000 shares of par value $0.50.

Stock dividends

There are two primary methods used to record stock dividends:

• Par value method — The par value of shares issued is transferred from retained earnings to share capital.
• Fair value method — The market value of shares issued is transferred from retained earnings to share capital and share premium (if in excess of par value).

In other words, debit retained earnings, and credit share capital (a.k.a. "common stock") and credit share premium (a.k.a "additional paid-in capital").

Stock dividends under US GAAP

US GAAP distinguishes between small and large stock dividends. A "small" stock dividend is one that increases the number of shares by less than 20-25%.

• For small stock dividends, US GAAP uses the fair value method.
• For large stock dividends, US GAAP uses the par value method.

Stock dividends under IFRS

IFRS does not specify which method to use to account for stock dividends.

References:

• Intermediate Accounting, IFRS Edition, 4th Edition by Kieso, Weygandt, Warfield. Chapter 15 — Equity.
• ASC 505-20-25 (Equity - Stock Dividends and Stock Splits - Recognition)
• ASC 505-20-30 (Equity - Stock Dividends and Stock Splits - Initial Measurement)

Stock splits and stock dividends are given different accounting treatment.

Stock splits

When there is a stock split, the par value of the stock is reduced, and the number of shares is increased. For example, after a 2-for-1 stock split on 100,000 shares of par value of $1, there will be 200,000 shares of par value $0.50.

Stock dividends

There are two primary methods used to record stock dividends:

• Par value method — The par value of shares issued is transferred from retained earnings to share capital.
• Fair value method — The market value of shares issued is transferred from retained earnings to share capital and share premium (if in excess of par value).

In other words, debit retained earnings, credit share capital and if necessary, credit share premium.

Note: "Share capital" is also known as "common stock". "Share premium" is also known as "additional paid-in capital".

Stock dividends under US GAAP

US GAAP distinguishes between small and large stock dividends. A "small" stock dividend is one that increases the number of shares by less than 20-25%.

• For small stock dividends, US GAAP uses the fair value method.
• For large stock dividends, US GAAP uses the par value method.

Stock dividends under IFRS

IFRS does not specify which method to use to account for stock dividends.

References:

• Intermediate Accounting, IFRS Edition, 4th Edition by Kieso, Weygandt, Warfield. Chapter 15 — Equity.
• ASC 505-20-25 (Equity - Stock Dividends and Stock Splits - Recognition)
• ASC 505-20-30 (Equity - Stock Dividends and Stock Splits - Initial Measurement)

Stock dividends and stock splits are given different accounting treatment. From my understanding of US GAAP, there are:

• Small stock dividends, which increase the number of outstanding shares by less than 20-25%.
• Large stock dividends, which increase the number of outstanding shares by more than 20-25%.

Small stock dividends are accounted for by:

• subtracting [market price of stock * number of stock dividend shares] from retained earnings
• adding [par value of stock * number of stock dividend shares] to paid-in capital
• adding the remaining amount (i.e. [(market price of stock - par value of stock) * number of stock dividend shares]) to additional paid-in capital

Large stock dividends are accounted for by:

• subtracting [par value of stock * number of stock dividend shares] from retained earnings
• adding the same amount to paid-in capital

Stock splits are accounted for by reducing the par value of the stock. e.g. If there is a 3-for-1 stock split, the par value is divided by 3.

References:

• ASC 505-20-25 (Equity - Stock Dividends and Stock Splits - Recognition)
• ASC 505-20-30 (Equity - Stock Dividends and Stock Splits - Initial Measurement)

Stock splits and stock dividends are given different accounting treatment.

Stock splits

When there is a stock split, the par value of the stock is reduced, and the number of shares is increased. For example, after a 2-for-1 stock split on 100,000 shares of par value of $1, there will be 200,000 shares of par value $0.50.

Stock dividends

There are two primary methods used to record stock dividends:

• Par value method — The par value of shares issued is transferred from retained earnings to share capital.
• Fair value method — The market value of shares issued is transferred from retained earnings to share capital and share premium (if in excess of par value).

In other words, debit retained earnings, and credit share capital (a.k.a. "common stock") and credit share premium (a.k.a "additional paid-in capital").

Stock dividends under US GAAP

US GAAP distinguishes between small and large stock dividends. A "small" stock dividend is one that increases the number of shares by less than 20-25%.

• For small stock dividends, US GAAP uses the fair value method.
• For large stock dividends, US GAAP uses the par value method.

Stock dividends under IFRS

IFRS does not specify which method to use to account for stock dividends.

References:

• Intermediate Accounting, IFRS Edition, 4th Edition by Kieso, Weygandt, Warfield. Chapter 15 — Equity.
• ASC 505-20-25 (Equity - Stock Dividends and Stock Splits - Recognition)
• ASC 505-20-30 (Equity - Stock Dividends and Stock Splits - Initial Measurement)