Noncash assets given to a corporation in exchange for stock would be recorded at:
A)their book value when owned directly by the stockholder
B)cost less accumulated depreciation
C)fair market value
D)depreciable cost

Question

Quizplus · Accepted Answer

Noncash assets given to a corporation in exchange for stock should be recorded at their fair market value, which represents the value at which the asset could be sold. This is because stock represents ownership in the company, and the value of the asset being exchanged is used to determine the ownership percentage the investor will receive. Recording the transaction at any other value could misrepresent the value of the company and the ownership percentages of the investors.

Noncash Assets Given to a Corporation in Exchange for Stock