When stock is issued in exchange for property, the best evidence of fair value might be any of the following except:
A) The appraised value of the property received.
B) The selling price of the stock in a recent transaction.
C) The price of the stock quoted on the stock exchange.
D) The average book value of outstanding stock.

Question

Quizplus · Accepted Answer

The average book value of outstanding stock is not relevant in determining the fair value of the property received. The other three choices can provide evidence of fair value. A) The appraised value of the property received is a common way to determine its value. B) The selling price of the stock in a recent transaction can indicate the market value of the stock. C) The price of the stock quoted on the stock exchange can also indicate the market value of the stock.

When Stock Is Issued in Exchange for Property, the Best