Suppose Clair Company acquires some equipment from Marseilles Company in exchange for issuance of 10,000 shares of

Question:

Suppose Clair Company acquires some equipment from Marseilles Company in exchange for issuance of 10,000 shares of Clair’s common stock. The equipment was carried on Marseilles’s books at the €530,000 original cost less accumulated depreciation of €100,000. Clair’s stock actively trades and has a current market value is €55 per share. Its par value is €1 per share.

1. By using the balance sheet equation, show the effects of the transaction on the accounts of Clair Company and Marseilles Company.

2. Show the journal entries on the books of Clair Company and Marseilles Company.

Balance Sheet
Balance sheet is a statement of the financial position of a business that list all the assets, liabilities, and owner’s equity and shareholder’s equity at a particular point of time. A balance sheet is also called as a “statement of financial... Par Value
Par value is the face value of a bond. Par value is important for a bond or fixed-income instrument because it determines its maturity value as well as the dollar value of coupon payments. The market price of a bond may be above or below par,...