Question

Exchange of Stock for Asset On July 14, Peterman Corporation exchanged 1,000 shares of its $8 par value common stock for a plot of land. Peterman's common stock is listed on the NYSE and traded at an average price of $21 per share on July 14. The land was appraised by independent real estate appraisers on July 14 at $23,000. As a result of this exchange, Peterman's additional paid-in capital will increase by: a.$0 b.$8,000

Answer 1

the increase in additional paid in capital is $13,000

Step-by-step explanation:

The computation of the increase in additional paid in capital is shown below:

= (Average price per share - par value of shares) × number of shares

= ($21 - $8) × 1,000

= $13 × 1,000

= $13,000

hence, the increase in additional paid in capital is $13,000