Reference no: EM13901684
COMMON EQUITY ISSUE. Assume that a start-up manufacturing company raises capital through a series of equity issues.
a. Using the financial statement template below, summarize the financial statement effects of the following transactions. Identify the account affected and use plus and minus signs to indicate the increases and decreases in the specific element of the balance sheet (assets, liabilities, components of shareholders' equity).
(1) Issues 100,000 shares of $1 par value common stock for $10 per share.
(2) Receives land in exchange for 10,000 shares of $1 par common stock when the common stock is trading in the market at $15 per share. The land has no read- ily determinable market value.
(3) Receives subscriptions for the issue of 40,000 shares of $1 par value common. The share issue price is $20, of which 30 percent is received as a down payment. Subsequently, the remaining 70 percent is received.
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Assets
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=
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Liabilities
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+
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Shareholders' Equity
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CC
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AOCI
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RE
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Journal entry:
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b. In each case, how does the company measure the transaction? What measurement attribute is used?
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