When a closely held corporation issues preferred stock for land, the land should be recorded at the

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When a corporation issues preferred stock for land, the land should be recorded at the fair market value of the land, which represents the amount for which the land could be exchanged between a willing buyer and a willing seller in an arm's length transaction. Recording the land at its fair market value provides more relevant and reliable information to users of the financial statements than recording it at the par value or book value of the preferred stock issued. The liquidating value of the stock is also not relevant for this transaction.

When a Closely Held Corporation Issues Preferred Stock for Land