Question

A company has 60,000 shares of $10 par common stock authorized. On June 1, the company...

A company has 60,000 shares of $10 par common stock authorized. On June 1, the company issued 12,000 shares of common stock in exchange for a patent with a fair value of $600,000. How much should the company record for Paid-in Capital in Excess of Par – c/s on June 1?

Homework Answers

Answer #1

Number of common shares issued = 12,000

Par value per share = $10

Fair value of patent acquired = $600,000

Patent will be recorded at its fair value of $600,000.

Common stock will be credited = Number of common shares issued x Par value per share

= 12,000 x 10

= $120,000

Paid in capital in excess of par common stock will be credited by = Fair value of patent acquired - Credit to common stock

= 600,000-120,000

= $480,000

the company record for Paid-in Capital in Excess of Par – c/s on June 1= $480,000

Kindly comment if you need further assistance. Thanks

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