Explain why a company would choose to issue a stock dividend rather than a cash dividend.

Flatfish Limited reported the following items in shareholders equity on December 31, 2010: Required: a. No dividends were declared in 2008 or 2009; however, in 2010 cash dividends of $5,000,000 were declared. Calculate how much would be paid to each class of shares. b. Assuming that the number of common shares remained constant throughout 2010, what was the cash dividend per share distributed to the common shareholders? c. Early in 2011 when its common shares were selling at $59 per share, the company declared a 10% stock dividend. Describe the impact that this declaration will have on the shareholders’ equity accounts. d. Explain why a company would choose to issue a stock dividend rather than a cash dividend.

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