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A company acquires land by issuing 10,000 shares of its $10 par value common stock currently trading at $20 per share and the appraised value of the land is $250,000. We would record the land by:

a. Using its appraised value of $250,000 and recognize a gain of $50,000 since we are issuing stock only currently worth $200,000.

b. Record the land at the value of the consideration given up, $200,000.

c. Record the land at the average of its appraised value of $250,000 and the $200,000 value of the stock issued, thereby recognizing a $25,000 gain.

d. Record the land at the par value of the stock given up, $100,000.

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Accounting Basics, Accounting

Category:- Accounting Basics
Reference No.:- M9404052

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