Question

Kansas Company acquired a building valued at $165,000 for property tax purposes in exchange for 12,000 shares of its $5 par common stock. The stock is widely traded and selling for $18 per share. At what amount should the building be recorded by Kansas Company?

Answer 1

$216,000

Step-by-step explanation:

Given:

Value of the building = $165,000

Stocks exchanged = 12,000 shares

Selling price of the share = $18 per share

Now,

The amount that should be recorded by Kansas Company will be fair market price of the share

Therefore,

The amount building should be recorded

= Stocks exchanged × Selling price of the share

= 12,000 × $18

= $216,000