How would fcl record the transaction

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Reference no: EM132962017

FinCore Limited ("FCL") was recently incorporated and did not have excess cash on hand. When it purchased a piece of land in the year, the seller agreed to accept 13,000 preferred shares of FCL in full payment. At the time, FCL's preferred shares were trading at $125/share. A real estate appraiser estimated the value of the land at $1.5 million

Problem 1: How would FCL record this transaction?

Option 1: Debit Land $1.625 million, credit preferred shares $1.625 million since the appraiser value was only an estimate
Option 2: Debit Land $1.5 million; credit preferred shares $1.5 million
Option 3: Debit Land $1.625 million; credit preferred shares $1.625 million since the market value of the share is more reliable
Option 4: Debit Land $1.5 million; debit retained earnings $125,000; credit preferred shares $1.625 million
Option 5: Debit Land $1.5 million; debit contributed surplus $125,000; credit preferred shares $1.625

Reference no: EM132962017

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