Matt Shaw buys 100 shares of common stock for $8,000 in January. The value of the stock fluctuates in a narrow range (averaging $8,700) throughout the year. In November, when it has a value of $9,500, he donates it to a nonprofit entity. On December 31, the stock has a fair value of $8,200. At what amount should the nonprofit entity value the stock on its December 31 statement of financial position? Select one: a. $8,200

b. $8,000

c. $9,500

d. $8,700

Question

Business

Allyson Buck

1 August, 15:01

Matt Shaw buys 100 shares of common stock for $8,000 in January. The value of the stock fluctuates in a narrow range (averaging $8,700) throughout the year. In November, when it has a value of $9,500, he donates it to a nonprofit entity. On December 31, the stock has a fair value of $8,200. At what amount should the nonprofit entity value the stock on its December 31 statement of financial position? Select one: a. $8,200

b. $8,000

c. $9,500

d. $8,700

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Answers (1)

Know the Answer?

Rashad Ochoa · Answer 1

a. $8,200

Explanation:

The value of a stock is the price it can fetch from the market if it were to be sold immediately. Naturally, the price of a stock fluctuates as demand and supply level changes. If a company that issued the stock is performing well, its shares will be in demand leading to appreciation in price.

Mart Shaw will record the market price as the true value of the stock. Stock is a current asset. The market price is an accurate representation of the stock value. Any other price will be a misrepresentation which is against the accounting reporting principles.