When common stock is issued for services or non-cash assets cost should be

Question

Quizplus · Accepted Answer

When common stock is issued for services or non-cash assets, the cost of the common stock issued should be either the fair value of the consideration given up or the consideration received, whichever is more clearly evident. This is because the cost of the common stock reflects the value of what was given up or received in the transaction. If the fair value of the consideration given up is more clearly evident, that should be used as the cost. If the fair value of the consideration received is more clearly evident, then that should be used as the cost. Therefore, D is the best choice.

When Common Stock Is Issued for Services or Non-Cash Assets