Blu Corporation issued 1,000 common shares in exchange for a new commercial band saw. At the time of this transaction the shares were trading at $10 and the fair value of the saw was at $12,000. This transaction would be recorded at $10,000.

Question

Quizplus · Accepted Answer

The transaction should be recorded at the fair value of the saw, which is $12,000, not the market value of the shares. Therefore, the correct recording would be an increase in equipment (or fixed assets) and an increase in common stock both for $12,000.

Blu Corporation Issued 1,000 Common Shares in Exchange for a New