When a company acquires land by issuing 10,000 of its common shares currently trading for $20 per share, the company must get an appraisal of the land and recognize a gain if the appraised value is more than the $200,000 value of the shares issued.

Question

Quizplus · Accepted Answer

This statement is incorrect. When a company acquires land by issuing common shares, it records the land at the fair value of the shares issued, not the appraised value of the land. Any gain or loss related to the transaction is recognized based on the fair value of the shares issued, not the appraised value of the land.

When a Company Acquires Land by Issuing 10,000 of Its