The land acquired by Miser Corporation in exchange for treasury shares should be capitalized at $300,000, which is the fair value of the 6,000 shares at the time of the exchange.
The land should be capitalized at a value of $300,000, which is the fair value of the common shares of Miser on the exchange date. The calculation is as follows: 6,000 shares exchanged at $50 fair value per share equals $300,000. The cost at which Miser acquired the treasury shares and the subsequent gain from selling scrap ($18,000) aren't relevant for the initial measurement of the land's value on acquisition.
The capitalization of the land is based on the fair value of the equity issued, rather than its historical cost or the proceeds from selling the scrap. This is an accounting treatment guided by the principle that assets acquired in a non-monetary exchange should be recorded at the fair value of the assets given up. In this case, the common stock is considered the asset given up to acquire the land.