ACCT 313 QA # 1 Week of August 24 2020 Saved to my Mac Mailings Review View 211 AaBbceDdle AaBbcode AaBBCCDC ABCcode AaBb Normal No Spacing Heading 1 Heading 2 Title 2. Company Y needs to purchase 20 acres on which to build its second corporate campus. The 20 acres in question are part of an old farm in St Helena Parish that has not been used in over 50 years. No one has lived on the farm in over 25 years. The owners, descendants of the original farming family, have no idea what the land is worth. Every expert Company Y consults on the valuation of the land is unwilling to give a certified appraisal. One issue that recurs is that Company Y wants a certified valuation to state the value of the land as unused farm land, and actively used commercial land. Company Y's CPAs have stated that valuing the land at its "highest best use," or the higher commercial value, is actually what GAAP will require for a "fair value." St Helena Parish currently values the land as farm land, and the Parish clerk, also a trained tax accountant, has stated that the tax assessed value approximates what the IRS terms "fair market value." To the surprise of Company Y's CEO, the company's CPAs point out that "fair value" for GAAP is not necessarily the same as "fair market value" for tax purposes. The commercial value, needless to say, is worth far more in part because the farm land value needs to consider the nearly abandoned nature of the land and the fact that far less farming is now occurring in the parish than historically. If the land becomes a commercial campus, the Parish will certainly increase the taxable value, or assessed value of the land so as to generate more property taxes. Regardless of the accounting, Company Y's CEO knows he has should pay the least value possible. Meanwhile the owners of the land start to hear about what the land might be worth once developed as a commercial site. They want to highest best value possible. Tensions are rising! As a compromise Company Y's CEO offers to give the land owners 20 shares of Company Y Common Stock. He states that this way, the owners will remain indirect owners of the land and if the development plan is successful, they will share in the upside. There will be no real need for a precise valuation of the land. They will no longer pay property taxes to St Helena parish and they may cam dividends on the Common Stock. Company Y is a publicly traded company. Its thinly traded shares trade on NASDAQ and are currently worth $5,000 per share. Company Y's CPAs reminds the CEO that the company is a "no para company - its shares do not carry a PAR VALUE. While wondering if the lack of PAR VALUE will disadvantage him in the negotiations, the CEO asks his CPAs to show how the acquisition and share issuance would be recorded in the General Ledger. In the space below, please show the journal entry for the land acquisition and the share issuance as envisioned by the CEO. ACCT 313 QA # 1 Week of August 24 2020 Saved to my Mac Mailings Review View 211 AaBbceDdle AaBbcode AaBBCCDC ABCcode AaBb Normal No Spacing Heading 1 Heading 2 Title 2. Company Y needs to purchase 20 acres on which to build its second corporate campus. The 20 acres in question are part of an old farm in St Helena Parish that has not been used in over 50 years. No one has lived on the farm in over 25 years. The owners, descendants of the original farming family, have no idea what the land is worth. Every expert Company Y consults on the valuation of the land is unwilling to give a certified appraisal. One issue that recurs is that Company Y wants a certified valuation to state the value of the land as unused farm land, and actively used commercial land. Company Y's CPAs have stated that valuing the land at its "highest best use," or the higher commercial value, is actually what GAAP will require for a "fair value." St Helena Parish currently values the land as farm land, and the Parish clerk, also a trained tax accountant, has stated that the tax assessed value approximates what the IRS terms "fair market value." To the surprise of Company Y's CEO, the company's CPAs point out that "fair value" for GAAP is not necessarily the same as "fair market value" for tax purposes. The commercial value, needless to say, is worth far more in part because the farm land value needs to consider the nearly abandoned nature of the land and the fact that far less farming is now occurring in the parish than historically. If the land becomes a commercial campus, the Parish will certainly increase the taxable value, or assessed value of the land so as to generate more property taxes. Regardless of the accounting, Company Y's CEO knows he has should pay the least value possible. Meanwhile the owners of the land start to hear about what the land might be worth once developed as a commercial site. They want to highest best value possible. Tensions are rising! As a compromise Company Y's CEO offers to give the land owners 20 shares of Company Y Common Stock. He states that this way, the owners will remain indirect owners of the land and if the development plan is successful, they will share in the upside. There will be no real need for a precise valuation of the land. They will no longer pay property taxes to St Helena parish and they may cam dividends on the Common Stock. Company Y is a publicly traded company. Its thinly traded shares trade on NASDAQ and are currently worth $5,000 per share. Company Y's CPAs reminds the CEO that the company is a "no para company - its shares do not carry a PAR VALUE. While wondering if the lack of PAR VALUE will disadvantage him in the negotiations, the CEO asks his CPAs to show how the acquisition and share issuance would be recorded in the General Ledger. In the space below, please show the journal entry for the land acquisition and the share issuance as envisioned by the CEO