CY Acquired Some Land in Exchange for 80 of Its

question 19

Essay

CY acquired some land in exchange for 80 of its own common shares. The shares were traded widely and sold at the time for $120 per share. The land is similar to other tracts, which recently sold for $10,000. Give the entry for the acquisition of the land. Below the entry, justify the basis for the amount you used in the entry.

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Definitions:

Price-Earnings Ratio

A valuation ratio of a company's current share price compared to its per-share earnings, used to evaluate the relative value of company shares.

Market Price

The current price at which an asset or service can be bought or sold.

Net Income

The sum a company retains as earnings after deducting taxes and expenses from its total revenue.

Profit Margin Ratio

A financial metric that measures the extent to which a company or business activity makes money, expressed as a percentage of revenue.