- Amount of RE capitalized varies with the size of the dividend.
- “Small” dividend is < 20 -25 % of the outstanding shares of the class declared. Use MARKET VALUE to capitalize dividend. Market value is considered still reliable if the number of the new shares issued is small.
- “Large” dividend is > 20 - 25 % of the outstanding shares of the class declared. Use PAR VALUE to capitalize dividend. Since the number of newly issued shares is so large, the market value is no longer considered reliable.
- If between 20-25 % Board of Directors will decide.