Art Makes a Gift of Stock in Drab Corporation,which Is

question 11

Essay

Art makes a gift of stock in Drab Corporation,which is not closely held but is traded in an over-the-counter market.The transactions involving this stock that occurred closest to the date of gift took place six trading days before (mean selling price of $120)and five days after (mean selling price of $100).Determine the fair market value of the Drab stock on the date of the gift.

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Definitions:

Fabricating Department

A division within a manufacturing company dedicated to the construction and assembly of the parts required to produce a finished product.

FIFO Method

An inventory valuation method that assumes that the first items placed in inventory are the first sold, standing for First-In, First-Out.

Equivalent Units

A concept in cost accounting used to convert partially completed goods into an equivalent number of fully completed units for inventory valuation.

Direct Materials

The raw materials used in the manufacturing process that are directly incorporated into the finished product.