Osbourne Company issued 50 000 shares of ordinary shares in exchange for manufacturing equipment. The equipment was valued at $1 000 000. The shares have a market value of $15 per share. Osbourne should record a gain on the sale of shares for the difference between the equipment's market value and the share's current market value.

Question

Quizplus · Accepted Answer

Osbourne should not record a gain on the issuance of shares. Instead, the transaction should be recorded at the fair value of the equipment or the shares, whichever is more clearly evident, without recognizing a gain or loss.

Osbourne Company Issued 50 000 Shares of Ordinary Shares in Exchange