When common stock is issued for services, the corporation usually recognizes an expense for the fair market value of the services provided.

Question

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When common stock is issued for services, the corporation is essentially paying for those services with equity. As a result, the corporation typically recognizes an expense on its income statement for the fair market value of the services received in exchange for the stock. This is known as a stock-based compensation expense.

When Common Stock Is Issued for Services, the Corporation Usually