How will a stock split impact Under Armour’s stockholders’ equity?

Photo source: http://blogs-images.forbes.com/greatspeculations/files/2012/01/250px-Under_Armour.svg_.png On March 17, 2014, Under Armour, a company selling sports clothing, shoes, and accessories, announced a two-for-one stock split (see Under Armour press release dated March 17, 2014).  Here is an excerpt from the Under Armour press release:

“Baltimore, MD (March 17, 2014) – Under Armour, Inc. (NYSE: UA) today announced that its Board of Directors has approved a two-for-one stock split of its outstanding common stock. The stock split will be effected in the form of a stock dividend of one share of Class A Common Stock for each share of Class A Common Stock outstanding and one share of Class B Common Stock for each share of Class B Common Stock outstanding. The additional shares issued as a result of the stock split will be distributed on or about April 14, 2014 to stockholders of record on March 28, 2014.”

Questions

  1.        What accounts will likely be debited and credited in the journal entry (if any) that Under Armour makes to record this stock split?
  2.        How does this stock split affect Under Armour’s stockholders’ equity?  What specific accounts (if any) are affected by this stock split?
  3.        What is meant by “stockholders of record”?

Instructor Resources

These resources are provided to give the instructor flexibility for use of Accounting in the Headlines articles in the classroom. The blog posting itself can be assigned via a link to this site OR by distributing the student handout below. Alternatively, the PowerPoint file below contains a bullet point overview of the article and the discussion questions. The YouTube video link below is a narration of the blog post article (no discussion questions are included in the YouTube video; those can be assigned separately.)

  • Student handout (pdf) (word) (contains entire blog posting + discussion questions)
  • PowerPoint file (brief article overview + discussion questions)
  • YouTube video (narrated article in shareable YouTube link)

Creative Commons License

This work is licensed under a Creative Commons Attribution-NonCommercial 3.0 Unported License.

About Dr. Wendy Tietz, CPA, CMA, CGMA

Dr. Wendy Tietz is a professor of accounting at Kent State University in Kent, Ohio, USA. She is also a textbook author with Pearson Prentice-Hall.

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