London Limited issued 2,000 common shares in payment of its lawyer's bill of $ 8,000. London Limited assured the lawyer that the shares would be worth $ 10,000 within one year. The bill was for services performed in helping the company incorporate. Southern should record this transaction by debiting
A) Legal Fees Expense for $ 10,000.
B) Legal Fees Expense for $ 8,000.
C) Common Shares for $ 10,000.
D) Common Shares for $ 8,000.

Question

Quizplus · Accepted Answer

The transaction should be recorded at the fair value of the services received, which is $8,000, not the future estimated value of the shares.

London Limited Issued 2,000 Common Shares in Payment of Its