Final answer:
No, the par value of the stock is not the best indicator of the value of the asset when stock is issued for a non-cash asset
Step-by-step explanation:
No, the par value of the stock is not the best indicator of the value of the asset when stock is issued for a non-cash asset
When stock is issued for a non-cash asset, the value of the asset is determined by other factors such as market value or fair value. Par value is a legal concept that represents the minimum price at which shares can be issued and does not reflect the actual value of the asset
For example, if a company issues 100 shares of stock with a par value of $1 but the market value of the non-cash asset being exchanged is $10 per share, the true value of the asset is $10 per share, not $1