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Accounting - Stock splits

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Stock splits and reverse splits are often a reflection of the economic times we live in. Could you find a recent real life example of a stock split or reverse split announced by a company?

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Approximately a year to a year and a half ago a company named Boart Longyear went through this process. This firm is a mining company, based in Australia, with United States headquarters in Salt Lake City, Utah. When the stock market tanked in 2008 - 2009, their stock retreated from approximately $2.50/share to $.045/share. As time went by, the shares increased in value to approximately $.40/share.

The company then decided to re-structure their financing, entering into a contract to increase their debt, while at the same time working toward increasing stock share prices, which were decidedly lower in relation to their overall ...

Solution Summary

This is an example of an actual company performing a reverse split and how it eventually played out within the financial market place.

$2.19
See Also This Related BrainMass Solution

Accounting for stock split and stock dividend

13. (Stock Split and Stock Dividend) The common stock of Alexander Hamilton Inc. is currently selling at $120 per share. The directors wish to reduce the share price and increase share volume prior to a new issue. The per share par value is $10; book value is $70 per share. Nine million shares are issued and outstanding.

Instructions:

Prepare the necessary journal entries assuming the following.

a. The board votes a 2-for-1 stock split.

b. The board votes a 100% stock dividend.

c. Briefly discuss the accounting and securities market differences between these two methods of increasing the number of shares outstanding.

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