When a closely held corporation issues preferred shares for land, the land should be recorded at the
A)total no par value of the shares issued.
B)total book value of the shares issued.
C)total liquidating value of the shares issued.
D)fair market value of the land.

Question

Quizplus · Accepted Answer

When a closely held corporation issues preferred shares for land, the land should be recorded at the fair market value of the land. This is because the land was acquired in exchange for preferred shares, and the fair market value of the land represents the consideration given up by the corporation to acquire the asset. The other options (A, B, and C) do not accurately reflect the value of the land and would not provide a fair representation of the corporation's financial position.

When a Closely Held Corporation Issues Preferred Shares for Land