**Journal Entry for Asset Acquisition Transaction**On June 15, NASDA Corporation acquired a building in exchange for 35,000 shares of its common stock. The stock had a par value of $75 per share but was valued at $110 per share at the time of the transaction. Below is the journal entry to record this transaction:| Date | Account Titles | Debit | Credit ||--------------|---------------------------|-------------|-------------|| June 15 | Building | $3,850,000 | || | Common Stock | | $2,625,000 || | Additional Paid-in Capital | | $1,225,000 |**Explanation:**- **Building:** The debit to the Building account reflects the acquisition of the building valued at $3,850,000 (35,000 shares x $110 per share).- **Common Stock:** The credit to the Common Stock account represents the par value of the shares issued, totaling $2,625,000 (35,000 shares x $75 par value).- **Additional Paid-in Capital:** The remaining credit of $1,225,000 represents the excess of the stock's market value over the par value, credited to the Additional Paid-in Capital account.

Date Account Titles and Explanation Debit Credit June'15 Building $3,850,000 Common…

Answered: 11. On June 15, NASDA Corporation,…

11. On June 15, NASDA Corporation, acquired a building in exchange for 35,000 shares with a $75 par common stock valued at $110 per share. Make the journal entries to record the transaction: Date

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Concept explainers

Stockholder's Equity

The stockholders’ equity (often referred to as the book value of the company) is the number of assets available to the stockholder after its entire liabilities is paid off. The stockholders’ equity is also sometimes referred to as owner's equity. The stockholders’ equity or book value generally includes common stock, treasury stock retained earnings. It is an indicator of a company's financial strength and is an important item on the company's balance sheet.

Question

**Journal Entry for Asset Acquisition Transaction**

On June 15, NASDA Corporation acquired a building in exchange for 35,000 shares of its common stock. The stock had a par value of $75 per share but was valued at $110 per share at the time of the transaction. Below is the journal entry to record this transaction:

| Date | Account Titles | Debit | Credit |
|--------------|---------------------------|-------------|-------------|
| June 15 | Building | $3,850,000 | |
| | Common Stock | | $2,625,000 |
| | Additional Paid-in Capital | | $1,225,000 |

**Explanation:**

- **Building:** The debit to the Building account reflects the acquisition of the building valued at $3,850,000 (35,000 shares x $110 per share).
- **Common Stock:** The credit to the Common Stock account represents the par value of the shares issued, totaling $2,625,000 (35,000 shares x $75 par value).
- **Additional Paid-in Capital:** The remaining credit of $1,225,000 represents the excess of the stock's market value over the par value, credited to the Additional Paid-in Capital account.

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