Shetland Ltd Declares and Pays a Share Dividend of 8

Multiple Choice

Shetland Ltd declares and pays a share dividend of 8 000 $2 shares. What is the effect on total equity in the company balance sheet?

A) Total Equity increases by $16 000.
B) Total Equity decreases by $16 000.
C) The number of issued shares increases and the book value of each share decreases.
D) Share Capital increases by $16 000 and Reserves decrease by $16 000, i.e. no change in total equity.