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Is "no entry required for stock split-up" acceptable in CMA exam ?

  • 1.  Is "no entry required for stock split-up" acceptable in CMA exam ?

    Posted 09-28-2016 05:34 AM

    ARB 43 and ASC 505-20 say that no entry required for stock split up

    There are 2 kinds of stock dividends,

    a) small (< 20% to 25%) and

    b) big (not < 20% to 25%)

    But, as per paragraphs 13 and 16 of Section B of ARB 43,
    a) the small stock issues (<20% to 25% of previously outstanding stocks) 
    will be deemed to be stock dividends, and

    b) the big stock issues (not <20% to 25% of previously outstanding stocks) will be deemed to be stock split-ups.


    As per paragraph 15 of ARB 43, for the big stock split-up issues,  
    there will be no transfer entry required

    from retained earnings to capital stock & surplus.

    Is this answer acceptable in the upcoming CMA examination ?

    Regards
    Ra K Sankar

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    Kumar Sankar Ra CA
    Director/Manager
    K Sankar Ra & Assoc
    Gurgaon
    India
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