When stock is issued for a noncash asset,the par value of the stock is the best indicator of the value of the asset.

Question

Quizplus · Accepted Answer

The par value of the stock is typically a nominal amount and may not reflect the true value of the non-cash asset being exchanged. Other measures such as fair market value or appraised value may be more appropriate in determining the value of the asset being contributed in exchange for the stock.

When Stock Is Issued for a Noncash Asset,the Par Value