When a corporation issues its own stock in payment for goods or services,the least appropriate value to use in recording the transaction is
A)appraised value of the goods or services
B)market value of the goods or services
C)market value of the stock
D)par value of the stock

Question

Quizplus · Accepted Answer

Using the par value of the stock would not reflect the true economic value of the goods or services received in exchange for the stock. Par value is simply an arbitrary value assigned to the stock by the issuing corporation and does not necessarily reflect the fair market value of the stock at the time of the transaction. Therefore, using the par value would not accurately reflect the value of the transaction. Using the appraised or market value of the goods or services and the market value of the stock would be more appropriate in reflecting the economic value of the transaction.

When a Corporation Issues Its Own Stock in Payment for Goods