DC Purchases a Tract of Land with a Current Market

question 195

Multiple Choice

DC purchases a tract of land with a current market value of $130,000. Its book value in the accounts of the seller was $73,501. In exchange for the land, DC issued 10,000 of its common shares, with an estimated market value of $15 per share (these shares are not traded in an established market) . DC should record the cost of the land at:

• A) $73,500.
• B) $100,000.
• C) $130,000.
• D) $150,000.

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Definitions:

Unit Contribution Margin

The gap between the price per unit at which an item is sold and its per-unit variable expense.

Unit Variable Cost

The variable cost associated with producing one additional unit of a product.

Monthly Sales

Monthly sales are the total sales revenue a company generates within a specific month.

Sales Commissions

Remuneration given to sales staff based on the total amount of sales they generate, aimed at motivating higher sales output.