Mini Corp.acquires a patent from Maxi Co.in exchange for 2,500 shares of Mini Corp.'s $5 par value ordinary shares and $75,000 cash.When the patent was initially issued to Maxi Co., Mini Corp.'s shares were selling at $7.50 per share.When Mini Corp.acquired the patent, its shares were selling for $9 a share.Mini Corp.should record the patent at what amount?

Question

Quizplus · Accepted Answer

The cost of the patent is the fair market value of the shares and cash exchanged. The fair market value of the shares is 2,500 shares x $9 per share = $22,500. Therefore, the total cost is $22,500 + $75,000 = $97,500.

Mini CorpAcquires a Patent from Maxi Co