Question

The following note related to stockholders’ equity was reported in Wiebold, Inc.’s annual report.

On February 1, the Board of Directors declared a 3-for-2 stock split, distributed on February 22 to shareholders of record on February 10. Accordingly, all numbers of common shares, except unissued shares and treasury shares, and all per share data have been restated to reflect this stock split. On the basis of amounts declared and paid, the annualized quarterly dividends per share were \(0.80 in the current year and \)0.75 in the prior year.

Instructions

1. What is the significance of the date of record and the date of distribution?
2. Why might Wiebold have declared a 3-for-2 for a stock split?
3. What impact does Wiebold’s stock split have on (1) total stockholders’ equity, (2) total par value, (3) outstanding shares, and (4) book value per share?

Short answer

The impact of Wiebold’s Stock split causes anincrease in outstanding shares and a decrease in book value per share. There is no effect on total stockholders’ equity and total par value.

Step-by-step solution

Meaning of Financial Statement

Financial statements arereports arranged by the administration of the company to show budget performance and position at a time. As a rule, a general-purpose set of financial statements includes a balance sheet, an expression of income, a statement of owner's value, and a statement of cash streams

Discussing case 2 of Wiebold, Inc.

A. The date of record marks the time when the ownership of outstanding offers is settled for for-profit purposes. This in turn separates which shareholders will receive share profits. The transfer date is when additional offers are distributed (issued) to shareholders.

B. The reason for sharing part is to expand the marketability of the offer by reducing its showcase price per share. This may reduce the demand for the company to issue additional offers.

C. The impact does Wiebold’s stock split have

1. There is no effecton total stockholders’ equity.
2. Total par value also has no effect.
3. On Wiebold’s stock split, outstanding stocksincrease.
4. Book value per share shows the effect of a decrease.