Re: What's the proper accounting way to handle a stock split?

[Richard Wackerbarth]

On Mon, 24 Apr 2000, Michael Gerdts wrote:
> On Mon, Apr 24, 2000 at 12:05:55AM -0500, Christopher Browne wrote:
> > So, if RHAT splits 2 ways on April 1, 1999, and then again splits 3 ways
> > on July 1, 2000, there would be two entries:
> >    ("RHAT" "1999-04-01" 2)
> >    ("RHAT" "2000-07-01" 3)
>
> I think that you need to be able to handle fractions.  This will allow for
> reverse splits, and odd ones like 3 for 2.  A float could get messy for
> things like 1 for 3.

I think it is best to store exact numbers (for example {3 to 5} as a ratio or 
{99 to 165}  for the actual number of shares)

> Also, with reverse splits you can end up being forced to sell a share or
> two.  For example, in a 1 for 3 split, if you have 100 shares, you will end
> up with 33 shares and the value of one old share in cash.

I see no problem there. You SELL the one share and then split 99 shares.
I think that is the way the tax authorities would treat it anyway.

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