Kansas Company acquired a building valued at $210,000 for property tax purposes in exchange for 12,000 shares of its $5 par common stock. The stock is widely traded and selling for $15 per share. At what amount should the building be recorded by Kansas Company?
A) $60,000
B) $180,000
C) $210,000
D) $120,000

Question

Quizplus · Accepted Answer

The building should be recorded at its fair value, which is $15 per share x 12,000 shares = $180,000. The fact that the building was valued at $210,000 for property tax purposes is irrelevant to its fair value for accounting purposes.

Kansas Company Acquired a Building Valued at $210,000 for Property