Issuance of Equity Securities

If equity securities are issued to pay for an asset, either the fair value of the asset or the fair value of equity issued can be used to record the value of the asset.

Example 10-8: Suppose a company issues 5,000 common shares (par value $1) on 1/1/05 to purchase some equipment whose value is not readily determinable. On 1/1/05 the companys shares were trading at $40. (Record all journal entries)