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?
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
Get Answers For Free
Most questions answered within 1 hours.