If you have stck on your book $100,000 and you acquire an asset (building) 1,000,000.
Building 1,000,000 Investment 100,000
What happens to the other 900,000?
Handling a swap
Sep 20, 2007
2 Replies
Assuming you don't know the fair value of the stock but you know the fair value of the building, you would record a credit entry of $900K for paid-in capital. Also, you should reword the "investment" entry to "common stock."
"kuhrty" wrote
You're going to have a gain on the sale of the stock (receiving a building instead of cash).
There may be other items to be accounted for, like if there is a mortgage on the building, etc.
More facts are needed before you can get the full picture of how the booking entries are to be made.
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