Final answer:
Stock issued in noncash transactions should be recorded at the fair market value of the stock or the property received, whichever is more readily determinable. This reflects the economic value of the transaction and relates to the investor's expected rate of return through dividends or capital gains.
Step-by-step explanation:
The student asks about the accounting treatment for stock issued in noncash transactions. According to accounting principles, stock issued in noncash transactions should be recorded at the fair market value of the stock issued or the fair market value of the property received, whichever is more readily determinable. This concept is essential because it ensures that the transaction reflects the true economic value exchanged between the issuing corporation and the recipient of the stock. Stock represents firm ownership and has implications for both the company's financial structure and the investor's anticipation of a rate of return, which can come in the form of dividends or capital gains. A capital gain occurs when an investor sells stock for more than the purchase price, as in the scenario where a share bought for $45 is later sold for $60.