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

[Matt Sisk]

Michael Gerdts wrote:
> This would also be an exception to the reverse stock split with a
> remainder problem.  (That is 100 shares become 33 with 1 old
> share's value of cash.) With mutual funds you can (and usually do)
> have fractions of shares.  With stocks only whole shares are
> allowed.  At least this seems to be the case on exchanges that
> my stocks are on.  Surely there is an exception to this rule
> somewhere.

Brokers allocate fractional shares to an individual client, especially
in situations where dividends are automatically reinvested. Ultimately,
of course, shares are integral; I'm not sure what the broker is really
up to here - perhaps they are allocating a single share across mutilple
client accounts, using buffer funds, who knows. But for purposes of a
client maintaining an account for a particular stock, the end result is
fractional shares.

-- 
Matt

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