Question

Kansas Company acquired a building valued at $150,000 for property tax purposes in exchange for 10,000 shares of its $5 par common stock. The stock is widely traded and sold for $16 per share. At what amount should the building be recorded by Kansas Company

Answer 1

$160000

Step-by-step explanation:

Below is the calculation for the amount that should be recorded.

The actual value of building = $150000

Number of shares = 10000 shares

The stock is traded at the price = $16 per shares

The Kansas company should record the amount of building = total share x Sell price

The Kansas company should record the amount of building = 10000 x 16

The Kansas company should record the amount of building = $160000 (fair market value or price of shares)