Chapter 6
Corporations: Contributed Capital and Dividends
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c) The lawyer that handled the issue of shares has sent a bill for $5,000. The lawyer has
agreed to accept 500 common shares instead of cash. Record the transaction
on May 10, 2016.
Date
Account Title and Explanation
Debit
Credit
Analysis
In the case of non-monetary exchanges of assets and services for issued shares, a corporation
can choose to evaluate the fair value of shares issued with two options.
Option 1: Fair value of assets or services received
Option 2: Fair value of the shares issued
Think of a scenario when option 1 is preferred over option 2 by accountants and explain why.
