The general rule to be applied when stock is issued for services or property other than cash is that the property or services be recorded at
A) the fair market value of the stock issued.
B) the fair market value of the noncash consideration received.
C) either the fair market value of the stock issued or the fair market value of the noncash consideration received, whichever is more clearly determinable.
D) a value that clearly reflects the intentions of the parties entering into the transaction and provides a relevant basis for recording.

Question

Quizplus · Accepted Answer

The correct approach is to record the transaction at either the fair market value of the stock issued or the fair market value of the noncash consideration received, depending on which value is more clearly determinable. This method ensures that the recorded value is both reliable and relevant for financial reporting purposes.

The General Rule to Be Applied When Stock Is Issued