Question

Kansas Company acquired a building valued at $151,000 for property tax purposes in exchange for 12,000 shares of its $3 par common stock. The stock is widely traded and selling for $18 per share. At what amount should the building be recorded by Kansas Company

Answer 1

The building would be recorded by Kansas Company for an amount of $216,000

Step-by-step explanation:

In order to calculate the amount should the building be recorded by Kansas Company we would have to calculate the value of the building with the following formula:

value of the building= shares exchanged*Market value per share

shares exchanged=12,000 shares

Market value per share=$18

Therefore, value of the building=12,000*$18

value of the building=$216,000

The building would be recorded by Kansas Company for an amount of $216,000