On October 1, Takei, Inc. exchanged 8,000 shares of its $25 par value common stock for a parcel of land to be held for a future plant site. Takei's common stock had a fair market value of $80 per share on the exchange date. Takei received $36,000 from the sale of scrap when an existing building on the site was razed. The land should be carried at
A) $200,000.
B) $236,000.
C) $604,000.
D) $640,000.

Question

Quizplus · Accepted Answer

The land should be carried at the fair market value of the stock exchanged, which is 8,000 shares x $80 = $640,000. The $36,000 received from the sale of scrap should be deducted from this amount, resulting in a carrying value of $640,000 - $36,000 = $604,000.