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When stock traded on an active exchange is issued for a machine:

A. No entry is recorded until restrictions are lifted.
B. An asset is recorded for the fair value of the stock.
C. An asset is recorded for the appraised value of the machine.
D. Paid-in capital is increased by the appraised value of the machine.

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Answer: B. An asset is recorded for appraised value of the stock

Explanation: The stock traded on an active exchange is issued for a machine, an asset is recorded for the appraised value .

Stock traded can be issued in exchange for money, property, or services provided to a corporation. Example of these are;

1. an investor could give a utility vehicle in exchange for a company’s stock.

2. an investor could provide legal fees in exchange for stock.

The underlining rule here is to recognize the assets received in exchange for stock at the asset’s fair market value.

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