Elaine, James, and Jeremy form Forest Corporation by transferring the following items to the corporation: Items transferred Basis Fair Market Value Number of Shares Issued From Elaine: Cash Equipment $60,000 30,000 $60,000 340,000 200 shares From James: Land 100 000 540.000 200 shares

Elaine, James, and Jeremy form Forest Corporation by transferring the following items to the corporation: Items transferred Basis Fair Market Value Number of Shares Issued From Elaine: Cash Equipment $60,000 30,000 $60,000 340,000 200 shares From James: Land 100 000 540.000 200 shares

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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Question

What is Jeremy’s basis in his Forest Corporation stock?

Elaine, James, and Jeremy form Forest Corporation by transferring the following items to the
corporation:
Items transferred
Basis
Fair Market Value
Number of Shares
Issued
From Elaine:
Cash
Equipment
$60,000
30,000
$60,000
340,000
200 shares
From James:
Land
Mortgage
100,000
140,000
200 shares
540,000
140,000
From Jeremy:
Office equipment
50,000
260,000*
100 shares
Besides the receiving 100 shares of stock, Jeremy also received $60,000 of cash. Forest
Corporation assumed the mortgage transferred by James.

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