Smith Company exchanges assets to acquire a building.The market price of the Smith stock on the exchange date was $35 per share and the building's book value on the books of the seller was $250,000. Which of the following is incorrect for Smith Company when Smith issues 10,000 shares of $10 par value common stock and pays $20,000 cash in exchange for the building?
A)The common stock account increases by $100,000.
B)The building account increases by $370,000.
C)Stockholders' equity increases $350,000.
D)The additional paid-in capital account increases by $100,000.

Question

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The Answer of Smith Company exchanges assets to acquire a building.The market price of the Smith stock on the exchange date was $35 per share and the building's book value on the books of the seller was $250,000. Which of the following is incorrect for Smith Company when Smith issues 10,000 shares of $10 par value common stock and pays $20,000 cash in exchange for the building?
A)The common stock account increases by $100,000.
B)The building account increases by $370,000.
C)Stockholders' equity increases $350,000.
D)The additional paid-in capital account increases by $100,000.

Smith Company Exchanges Assets to Acquire a Building