Question

On August 25, a privately owned company exchanged 10,000 shares of its private common stock for land. There is no readily available estimate of the stock’s fair value but the land has a current appraised value of $240,000. The seller originally bought the land for $200,000 two years ago. The journal entry the buyer records for acquisition of the land includes:______.A. A credit to common stock of $200,000.B. A credit to gain of $40,000.C. A debt to land for $240,000.D. All of these answer choices are correct.

Answer 1

Answer:

C. A debit to land for $240,000.

Explanation:

As it is mentioned that the value of the land has the appraised value of $240,000 also at the same time the common stock value could not be predicted

Therefore the land should be recorded at the current appraisal value i.e $240,000

Thus, the correct option is c. a debit to land for $240,000

The same is to be considered