When Stock Is Exchanged for Non-Cash Assets

question 19

Multiple Choice

When stock is exchanged for non-cash assets:

• A)debit the asset for prior book value; credit Common Stock for cash received.
• B)debit assets for market value; credit Common Stock for par value and,if needed,Paid-in Capital in Excess of Par.
• C)debit assets for market value; credit Common Stock for market value.
• D)debit assets for par value; credit Common Stock for par value.

---

Definitions:

Market Demand

The aggregate amount of a product or service that every consumer in a market is prepared and capable of buying at different price levels.

Market Equilibrium

The state in which the quantity supplied equals the quantity demanded, causing market forces to be in balance.

Competitive Industry

An industry characterized by numerous sellers and buyers, where no single entity has the market power to influence the price of goods or services.

Market Demand

The total quantity of a product or service that consumers are willing and able to purchase at various prices.