S Corporation Offered to Issue 5,000 Shares of Its No

question 108

Multiple Choice

S Corporation offered to issue 5,000 shares of its no par value common shares to another company in exchange for a building at a time when there were 1,000,000 shares already outstanding and were selling for $4.00 per share at the time. The owner of the building had the opportunity to sell it to a competing buyer for $26,000. However, because the seller wanted the S Corporation shares, S's offer was accepted. At what amount should the building be reported in S's financial statements?

• A) $26,000
• B) $10,000
• C) $20,000
• D) $16,000

Analyze the dynamics between social security fund collections and distributions.

Understand the basic structures and types of business firms.

Identify the conditions under which investment is more likely to occur.

Differentiate between investment in capital and consumer goods.

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Definitions:

Explicit Costs

These are the direct, clear expenses related to business operations, such as salaries, utilities, and rent, that are easily quantifiable.

Accounting Profit

The difference between the total revenue and explicit costs of a firm, not accounting for implicit costs.

Economic Profit

The variance between a company's overall incomes and its combined explicit and implicit expenses.

Implicit Costs

The opportunity costs of using resources owned by the firm for its operations instead of renting, selling, or utilizing them in other ways.