On June 30, 2007, Cey, Inc.exchanged 2,000 shares of Seely Corp.$30 par value common stock for a patent owned by Gore Co.The Seely stock was acquired in 2007 at a cost of $55,000.At the exchange date, Seely common stock had a fair value of $45 per share, and the patent had a net carrying value of $110,000 on Gore's books.Cey should record the patent at
A)$55,000.
B)$60,000.
C)$90,000.
D)$110,000.

Question

Quizplus · Accepted Answer

The exchange took place at a fair value, so Cey should record the patent at its fair value of $90,000 ($45 per share x 2,000 shares). The cost of the Seely stock is not relevant in determining the value of the patent, and the carrying value on Gore's books is also not relevant to Cey's accounting.