EXERCISE 15-3 - estimation techniques). However, it is an...

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EXERCISE 15-3 (10–15 minutes) (a) Land ($60 X 25,000). ................................................. 1,500,000 Treasury Stock ($48 X 25,000). ........................ 1,200,000 Paid-in Capital from Treasury Stock. .............. 300,000 (b) One might use the cost of treasury stock. However, this is not a relevant measure of this economic event. Rather, it is a measure of a prior, unrelated event. The appraised value of the land is a reasonable alternative (if based on appropriate fair value
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Unformatted text preview: estimation techniques). However, it is an appraisal as opposed to a market-determined price. The trading price of the stock is probably the best measure of fair value in this transaction. (b) One is not better than the other, but would depend on the relative reliability of the valuations for the stocks and bonds. This question is presented to stimulate some thought and class discussion....
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This note was uploaded on 04/22/2010 for the course ACCT ACC552 taught by Professor Hint during the Spring '09 term at Keller Graduate School of Management.

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