A an individual, is an architect and general contractor. B is a wealthy individual. Newco's Certificate of Incorporation states that it is authorized to issue 200 shares, no par value of common stock. B transfers S500,000 of cash to Newco in exchange for 50 shares of Newco's stock. A signs a contract with Newco in which A will perform services designing a housing project and then acting as general contractor on the construction of that housing project. In exchange, A will receive 50 shares of Newco's stock. 1a) How will A be treated in this transaction?

A an individual, is an architect and general contractor. B is a wealthy individual. Newco's Certificate of Incorporation states that it is authorized to issue 200 shares, no par value of common stock. B transfers S500,000 of cash to Newco in exchange for 50 shares of Newco's stock. A signs a contract with Newco in which A will perform services designing a housing project and then acting as general contractor on the construction of that housing project. In exchange, A will receive 50 shares of Newco's stock. 1a) How will A be treated in this transaction?

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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