Carpenter Corporation purchased a mineral deposit, making payment as follows: Cash $10,000 and 6,000 Carpenter Corporation common shares. On the date of the purchase, the mineral deposit had an appraised value of $75,000; the common shares were quoted on the market at $11 per share. Other acquisition costs amounted to $3,000 cash. What was the cost recorded for the mineral deposit?
A) $79,000
B) $70,000
C) $75,000
D) $73,000

Question

Quizplus · Accepted Answer

The cost of the mineral deposit is the sum of the cash paid, the fair value of the shares issued, and the other acquisition costs. The fair value of the shares issued is 6,000 shares x $11 per share = $66,000. Therefore, the cost of the mineral deposit is $10,000 + $66,000 + $3,000 = $79,000.

Carpenter Corporation Purchased a Mineral Deposit, Making Payment as Follows