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Question 9Q

Intermediate Accounting (Kieso)
Found in: Page 810

Short Answer

What are the different bases for stock valuation when assets other than cash are received for issued shares of stock?

Stock valuation is an important factor to consider while making stock trading decisions. Using this strategy, the company can learn about the worth of stocks traded in the market.

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Step by Step Solution

Meaning of Stock Valuation

The process of determining a stock's current (or expected) worth at a specific point in time is known as stock valuation. Absolute and relative valuations are used for valuing equities.

Different bases for Stock Valuation

When stock is issued in exchange for services or property other than cash, the property or services should be recorded at their fair value or the fair value of the shares issued, whichever is more easily determinable.

If neither is easily determined, the board of directors usually decides on the value to be assigned.

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