Types of dividends — AccountingTools (2024)

On June 1, ABC pays the dividends, and records the transaction with this entry:

Stock Dividend Example

ABC International declares a stock dividend to its shareholders of 10,000 shares. The fair value of the stock is $5.00, and its par value is $1. ABC records the following entry:

Property Dividend Example

ABC International's board of directors elects to declare a special issuance of 500 identical, signed prints by Pablo Picasso, which the company has stored in a vault for a number of years. The company originally acquired the prints for $500,000, and they have a fair market value as of the date of dividend declaration of $4,000,000. ABC records the following entry as of the date of declaration to record the change in value of the assets, as well as the liability to pay the dividends:

On the dividend payment date, ABC records the following entry to record the payment transaction:

Scrip Dividend Example

ABC International declares a $250,000 scrip dividend to its shareholders that has a 10 percent interest rate. At the dividend declaration date, it records the following entry:

The date of payment is one year later, so that ABC has accrued $25,000 in interest expense on the notes payable. On the payment date (assuming no prior accrual of the interest expense), ABC records the payment transaction with this entry:

Liquidating Dividend Example

ABC International's board of directors declares a liquidating dividend of $1,600,000. It records the dividend declaration with this entry:

On the dividend payment date, ABC records the following entry to record the payment transaction: