Gigantic Corp Acquired a Machine from Miko Company in Exchange

question 41

Multiple Choice

Gigantic Corp acquired a machine from Miko Company in exchange for 10,000 Gigantic common shares, for which the quoted market price on the stock exchange was $20 per share. The machine was estimated by Gigantic to have a fair market value of $225,000. (Assume that the market price of the shares and the fair value of the machine are equally reliable.) The book value of the machine in Miko's records was $190,000. At what amount should Gigantic record the machine?

• A)$190,000
• B)$200,000
• C)$212,500
• D)$225,000

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Definitions:

Silver Acetate

A chemical compound with the formula AgC2H3O2, used in plating and as a photographic agent.

NaCl

Sodium chloride, commonly known as table salt, an ionic compound consisting of sodium and chloride ions.

AgCl

Silver chloride, a white crystalline solid that is photosensitive and less soluble in water.

Spectator Ions

Ions that are present in a chemical reaction but do not participate in it, remaining unchanged throughout the reaction.