When stock traded on an active exchange is issued for a machine:
A) No entry is recorded until restrictions are lifted.
B) An asset is recorded for the fair value of the stock.
C) An asset is recorded for the appraised value of the machine.
D) Paid-in capital is increased by the appraised value of the machine.

Question

Quizplus · Accepted Answer

In this scenario, an asset should be recorded for the fair value of the stock traded on an active exchange. The fact that the stock is issued for a machine is irrelevant. The machine's appraised value may be necessary to determine the fair value of the stock, but the asset recorded should be for the value of the stock itself. No entry is made to paid-in capital in this scenario.

When Stock Traded on an Active Exchange Is Issued for a Machine