Mini Corp. acquires a patent from Maxi Co. in exchange for 2,500 shares of Mini Corp.'s $5 par value common stock and $95,000 cash. When the patent was initially issued to Maxi Co., Mini Corp.'s stock was selling at $7.50 per share. When Mini Corp. acquired the patent, its stock was selling for $9 a share. Mini Corp. should record the patent at what amount?
A) $107,500
B) $113,750
C) $117,500
D) $95,000

Question

Quizplus · Accepted Answer

The patent should be recorded at the fair value of the consideration given up. In this case, it's the fair value of the stock (2,500 shares at $9 per share = $22,500) plus the cash ($95,000), totaling $117,500.

Mini Corp Acquires a Patent from Maxi Co