Professor Adams' Lecture Materials

LO10-04: Determine the initial cost of individual property, plant, and equipment and intangible assets acquired in exchange for equity securities or through donation.

Equity securities

Sometimes property, plant, and equipment or intangible assets are purchased in exchange for company stock. The basic entry to record such a transaction is as follows.

Donated assets

Sometimes property, plant, and equipment or intangible assets are donated to the company. When this happens, the company records the donated asset at its fair value and credits revenue. The assumption being made is the company is receiving the donated asset in exchange for some service. An example is provided below.

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