Jazz Company purchased land with a current market value of $240,000. Its book value in the accounts of the seller was $130,500. In exchange for the land, Jazz issued 20,000 shares of its common stock, par $10, with an estimated market value of $14 per share. Jazz stock is not traded on an established stock exchange. What amount should Jazz record as the cost of the land?
A) $130,500
B) $200,000
C) $240,000
D) $280,000

Question

Quizplus · Accepted Answer

The cost of the land should be recorded at its fair market value, which is $240,000.

Jazz Company Purchased Land with a Current Market Value of $240,000