When Issuing Common Stock for Noncash Consideration, How Does a Company

question 117

Multiple Choice

When issuing common stock for noncash consideration, how does a company determine the value of the shares issued?

• A) management judgment
• B) the fair value of the stock issued
• C) the fair value of the consideration received
• D) all of the above

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Definitions:

Void

Describes a contract or legal agreement that has no legal force or effect, often because it lacks a necessary element or violates the law.

Illegality

The quality or state of being contrary to law; actions or conditions that are against the law.

Statute Of Frauds

A legal principle requiring certain types of contracts to be written and signed in order to be enforceable.

Bound By Contracts

A phrase indicating that parties are legally obligated to adhere to the terms outlined in a contract they have entered into.