When a corporation issues its capital stock in payment for services, the least appropriate basis for recording the transaction i

Question

3 years ago

11

When a corporation issues its capital stock in payment for services, the least appropriate basis for recording the transaction i

s the
a. market value of the services received.
b. par value of the shares issued.
c. market value of the shares issued.
d. Any of these provides an appropriate basis for recording the transaction.

Business

1 answer:

Jet001 [13] · Answer 1 · 2022-08-06T23:22:51+03:00

Answer:

B.) Par value of the share issued

Explanation:

This transaction just have to follow the rules of issuing stocks for non-cash assets. The rule is to record on the basis of MARKET VALUE of the services received or the MARKET VALUE of the shares issued whichever can be objectively determined.

The <u><em>least appropriate basis</em></u> would be the Par Value of the shares issued since the par value are usually significantly lower than its market value.

Par value are determined from the creation of the company and the company grows and increases its value.