If stock is issued for a noncash asset, the asset should be recorded on the books of the corporation at
A) fair market value.
B) cost.
C) zero.
D) a nominal amount.

Question

Quizplus · Accepted Answer

When stock is issued for a noncash asset, the asset should be recorded on the books of the corporation at fair market value. This value represents the amount at which the asset could be sold in an arm's length transaction between willing parties. Recording the asset at fair market value ensures that the corporation accurately reflects the true value of the asset on its books.

If Stock Is Issued for a Noncash Asset, the Asset