Assets received in exchange for the issuance of stock should be recorded at:
A) book value prior to the issuance
B) fair value as determined by a good-faith estimate from independent appraisers
C) historical cost
D) historical cost less accumulated depreciation taken to date

Question

Quizplus · Accepted Answer

When assets are received in exchange for the issuance of stock, they should be recorded at fair value as determined by a good-faith estimate from independent appraisers. This is because the assets are being used as consideration for the issuance of the stock, and their fair value represents their true worth at the time of the transaction. Historical cost may not be relevant in this situation, and book value and accumulated depreciation are not appropriate measures for valuing newly acquired assets.

Assets Received in Exchange for the Issuance of Stock Should