Question

On December 1, Miser Corporation exchanged 6,000 shares of its $25 par value common stock held in treasury for a parcel of land to be held for a future plant site. The treasury shares were acquired by Miser at a cost of $40 per share, and on the exchange date the common shares of Miser had a fair value of $50 per share. Miser received $18,000 for selling scrap when an existing building on the property was removed from the site. Based on these facts, the land should be capitalized at at what amount?

Answer 1

$282,000

Step-by-step explanation:

The computation of the capitalized amount of the land is shown below:

= Number of shares exchanged × fair value of per share - scrap selling value

= 6,000 shares × $50 per share - $18,000

= $300,000 - $18,000

= $282,000

Simply we multiplied the exchanged shares with its fair value and then deduct the scrap selling value so that the correct value can come.

All other information which is given is not relevant. Hence, ignored it