Li Company declared a property dividend of 20,000 shares of its investment in $1 par P Company common stock. The P stock was purchased for $5 per share. The fair value of the P stock was $10 per share on the declaration date of the property dividend and $12 per share on the distribution date. What is the amount of the dividend?
answer; (b) insider trading;
$200,000
Explanation:
DIVIDEND can be defined as the amount of cash which is been paid regularly by a company to its shareholders out of its profits or surplus.
Property dividend of 20,000 shares ×
Fair value of the P stock at $10 per share on the declaration date of the property dividend.
Therefore:
20,000 x $10 = $200,000
The amount of DIVIDEND is $200,000
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