When common stock is issued in exchange for a noncash asset and the market value of the stock is determinable, the acquired asset should usually be recorded at an amount equal to

Question

Quizplus · Accepted Answer

The acquired asset should be recorded at the market value of the stock because this is the fair value of what is given up in the exchange. The book value of the noncash asset is not relevant in this scenario, and the par value of the stock is an arbitrary value assigned by the company and not related to market value. The market value of the noncash asset may be considered if it is more reliable than the market value of the stock, but usually, the market value of the stock is used.

When Common Stock Is Issued in Exchange for a Noncash