Alcoa is the world’s leading producer of primary aluminum, fabricated aluminum, and alumina. The following is a press release from the company: A lcoa A nnounces 33% I ncrease in B ase D ividend, 2- for -1 S tock S plit PITTSBURGH—Alcoa today announced that its Board of Directors approved a base quarterly dividend increase of 33.3%. Alcoa’s announcement indicated that the new quarterly dividend would be 25 cents per share. It also stated that the Board of Directors declared a two-for-one stock split and reaffirmed its commitment to a share repurchase program. Required: 1. What are the two primary reporting alternatives Alcoa has in accounting for the repurchase of its shares? What would be the effect of the optional courses of action on total shareholders’ equity? Explain. What would be the effect of the optional courses of action on how stock would be presented in Alcoa’s balance sheet? If the shares are later resold for an amount greater than cost, how should Alcoa account for the sale? 2. What are the two primary courses of action Alcoa has in accounting for the stock split, and how would the choice affect Alcoa’s shareholders’ equity? Why? 3. How should Alcoa account for the cash dividend, and how would it affect Alcoa’s balance sheet? Why?
Dividend Policy
A dividend is a part of the profit paid to the shareholder in an organization. The management of the organization has the right to decide the policy for giving a dividend from the earnings to the shareholder. However, an organization is not in the obligation to declare a dividend for the investor. Dividend policy differs from organization to organization. As the management has the only authority to decide dividend rate, dividend amount, and time of dividend payout by considering all other elements that create an impact on the payment of a dividend.
Stocks And Dividends
Stock or equities are generally sold and bought in the Stock Exchange or which is popularly known as the stock market. Stocks are issued in the Stock Exchange for the sole purpose of raising funds for the Corporation or the company itself. Now since an individual has purchased a portion of the Corporation or company, he or she may claim to be a part of the earnings or profit of the company.
Alcoa is the world’s leading producer of primary aluminum, fabricated aluminum, and alumina. The following is a press release from the company: A lcoa A nnounces 33% I ncrease in B ase D ividend, 2- for -1 S tock S plit PITTSBURGH—Alcoa today announced that its Board of Directors approved a base quarterly dividend increase of 33.3%. Alcoa’s announcement indicated that the new quarterly dividend would be 25 cents per share. It also stated that the Board of Directors declared a two-for-one stock split and reaffirmed its commitment to a share repurchase program. Required: 1. What are the two primary reporting alternatives Alcoa has in accounting for the repurchase of its shares? What would be the effect of the optional courses of action on total shareholders’ equity? Explain. What would be the effect of the optional courses of action on how stock would be presented in Alcoa’s balance sheet? If the shares are later resold for an amount greater than cost, how should Alcoa account for the sale? 2. What are the two primary courses of action Alcoa has in accounting for the stock split, and how would the choice affect Alcoa’s shareholders’ equity? Why? 3. How should Alcoa account for the cash dividend, and how would it affect Alcoa’s balance sheet? Why?
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