E15 3B (L0 1) (Stock Issued for Land) Twenty thousand shares reacquired by Sierra Land Inc. for $153 per share were exchanged for land that has an appraised value of $3,600,000. At the time of the exchange the common stock was trading at $176 per share on an organized exchange. Instructions (a) Prepare the journal entry to record the acquisition of land assuming that the purchase of the stock was originally recorded using the cost method. (b) Briefly identify the possible alternatives (including those that are totally unacceptable) for quantifying the cost of the land, and briefly support your choice

Answer and Explanation:

(a)

Dr Land ($176 X $20,000) $3,520,000

Cr Treasury Stock ($153 X $20,000) $3,060,000

Cr Paid-in Capital from Treasury Stock $460,000

b)

Cost of treasury stock might be used although , this is not a relevant measure of this economic event but it is a measure of a prior, unrelated event. Therefore the appraised value of the land is a reasonable alternative if based on appropriate fair value estimation techniques. However, it is an appraisal as opposed to a market-determined price. The trading price of the stock is probably the best measure of fair value in this type of transaction.

can your question and add a list so i can you out?

hi,

henry is an economist and wants to understand the relationship between inflation and consumer spending habits. for his research, he needs the consumer price index for 2014 and the inflation rate. based on the prices of goods given, what will he find to be the cpi and inflation rate for 2014? assume that a consumer’s basket for three consecutive years consists of the following:

you dont privide answer choices.

answer - 15% of a inflatation rate is 15% less in cpi