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Intermediate Accounting: Reporting...
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Intermediate Accounting: Reporting...
On July 14, Peterman Corporation exchanged 1,000 shares of its $8 par value common stock for a plot of land. Peterman’s common stock is listed on the NYSE and traded at an average price of $21 per share on July 14. The land was appraised by independent real estate appraisers on July 14 at $23,000. As a result of this exchange, Peterman’s additional paid-in capital will increase by:
- a. $0
- b. $8,000
- c. $13,000
- d. $15,000
Identify the increase in the additional paid in capital.
Common stock: These are the ordinary shares that a corporation issues to the investors in order to raise funds. In return, the investors receive a share of profit from the profits earned by the corporation in the form of dividend.
Additional paid-in-capital: It is an amount of capital received from the shareholders in excess of par value.
Compute the increase in additional paid-in capital on common stock:
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