Final answer:
The correct answer is option 2. The receipt of an asset from a contribution is recorded as additional paid-in capital on the equity side of the balance sheet, which represents capital from shareholders beyond the par value of shares and is consistent with GAAP.
Step-by-step explanation:
The question relates to accounting and the recording of transactions on a company's financial statements. Specifically, it concerns the treatment of assets received from contributions.
When a company receives an asset from a contribution, it is indeed recorded as additional paid-in capital. This is done on the equity side of the balance sheet and represents capital that is contributed to the company by shareholders beyond the par value of the shares issued. This contribution could be in the form of cash or other assets.
The amount recorded is based on the fair market value of the assets received. The entry increases both the asset account and the additional paid-in capital account, reflecting an increase in company resources without generating revenue or profit. This accounting treatment is valid for corporations and is consistent with generally accepted accounting principles (GAAP).
Recording these assets as additional paid-in capital is necessary to correctly reflect the financial position of the company.