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26 May, 17:43

On December 1, Miser Corporation exchanged 2,000 shares of its $25 par value common stock held in treasury for a parcel of land to be held for a future plant site. The treasury shares were acquired by Miser at a cost of $40 per share, and on the exchange date the common shares of Miser had a fair market value of $50 per share. Miser received $6,000 for selling scrap when an existing building on the property was removed from the site. Based on these facts, the land should be capitalized at what amount?

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  1. 26 May, 19:12
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    Capitalized value = $188000

    Explanation:

    Land should be capitalized by fair market value of share exchanged less any recovery of scrap as land will be developed for future plant.

    Fair value of shares = $50*4000 = $200000

    Less: value of scrap = $12000

    Capitalized value = $188000
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