Tom Cruise and Katie Holmes are reportedly in dispute over how to celebrate daughter Suri's second birthday, National Enquirer reports.

Cruise is allegedly planning to spend $500,000 on a birthday party but Holmes believes it may be too extravagant.

"Tom is out to make Suri’s second birthday a spectacle like no other child has ever had," a source is quoted as saying.

"Katie believes wholeheartedly it would set a bad example. She doesn’t want her daughter to be a spoiled Beverly Hills rich kid who expects the biggest and the best for the rest of her life... She’s all for a nice party, but nothing ostentatious."