On June 30, 2011, Cey, Inc.exchanged 2,000 shares of Seely Corp.$30 par value ordinary shares for a patent owned by Gore Co.The Seely stock was acquired in 2011 at a cost of $55,000.At the exchange date, Seely ordinary shares had a fair value of $46 per share, and the patent had a net carrying value of $110,000 on Gore's books.Cey should record the patent at

Question

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The fair value of the Seely stock is $46 per share, and Cey exchanged 2,000 shares. Therefore, the fair value of the Seely stock is $92,000 ($46 x 2,000).

The carrying value of the patent on Gore's books is $110,000, and Cey exchanged 2,000 shares valued at $92,000. Therefore, the remaining value of the exchange is $18,000 ($110,000 - $92,000).

Since Cey paid $55,000 for the Seely stock, the total value of the exchange is $55,000 + $18,000 = $73,000.

Therefore, Cey should record the patent at $92,000 (fair value of Seely stock) plus $18,000 (remaining value of the exchange) = $110,000.