Assume that a start-up manufacturing company raises capital through a series of equity issues.
Required:
a.Using the financial statement template below,summarize the financial statement effects of the following transactions.
(1)Issues 85,000 shares of $1 par value common stock for $15.00 per share.
(2)Receives land in exchange for 8,500 shares of $1 par common stock when the common stock is trading in the market at $25 per share.The land has no readily determinable market value.
(3)(a)Receives subscriptions for the issue of 28,000 shares of $1 par value common.The share issue price is $15 of which 30 percent is received as a down payment.
(3)(b)Subsequently,the remaining 70 percent is received from the transaction in 3(a). b.In each case,how does the company measure the transaction? What measurement
attribute is used?
Journal entry (optional):b.In each transaction,the company uses the attribute "fair value" as the measurement basis for the transaction.The net increase in shareholders' equity always equals the fair value of the asset received.Cash (the best measure of fair value in an arm's-length exchange)received in Transactions 1 and 3 determines the net increase in shareholders' equity.In Transaction 2,the fair value of the asset received (land)is approximated by the fair value of the common stock issued because the market price of the common stock is known and the fair value of the land is not readily determinable.

Question

Assume that a start-up manufacturing company raises capital through a series of equity issues.
Required:
a.Using the financial statement template below,summarize the financial statement effects of the following transactions.
(1)Issues 85,000 shares of $1 par value common stock for $15.00 per share.
(2)Receives land in exchange for 8,500 shares of $1 par common stock when the common stock is trading in the market at $25 per share.The land has no readily determinable market value.
(3)(a)Receives subscriptions for the issue of 28,000 shares of $1 par value common.The share issue price is $15 of which 30 percent is received as a down payment.
(3)(b)Subsequently,the remaining 70 percent is received from the transaction in 3(a).  b.In each case,how does the company measure the transaction? What measurement
attribute is used?
Journal entry (optional):b.In each transaction,the company uses the attribute "fair value" as the measurement basis for the transaction.The net increase in shareholders' equity always equals the fair value of the asset received.Cash (the best measure of fair value in an arm's-length exchange)received in Transactions 1 and 3 determines the net increase in shareholders' equity.In Transaction 2,the fair value of the asset received (land)is approximated by the fair value of the common stock issued because the market price of the common stock is known and the fair value of the land is not readily determinable.

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The Answer of Assume that a start-up manufacturing company raises capital through a series of equity issues.
Required:
a.Using the financial statement template below,summarize the financial statement effects of the following transactions.
(1)Issues 85,000 shares of $1 par value common stock for $15.00 per share.
(2)Receives land in exchange for 8,500 shares of $1 par common stock when the common stock is trading in the market at $25 per share.The land has no readily determinable market value.
(3)(a)Receives subscriptions for the issue of 28,000 shares of $1 par value common.The share issue price is $15 of which 30 percent is received as a down payment.
(3)(b)Subsequently,the remaining 70 percent is received from the transaction in 3(a).  b.In each case,how does the company measure the transaction? What measurement
attribute is used?
Journal entry (optional):b.In each transaction,the company uses the attribute "fair value" as the measurement basis for the transaction.The net increase in shareholders' equity always equals the fair value of the asset received.Cash (the best measure of fair value in an arm's-length exchange)received in Transactions 1 and 3 determines the net increase in shareholders' equity.In Transaction 2,the fair value of the asset received (land)is approximated by the fair value of the common stock issued because the market price of the common stock is known and the fair value of the land is not readily determinable.

Assume That a Start-Up Manufacturing Company Raises Capital Through a Series