Patent 140,000 Share Capital-Ordinary 100,000 Share Premium-Ordinary 40,000 LO 3EQUITY 2. Marlowe cannot readily determine the fair value of the patent, but it knows the fair value of the shares is €140,000. LO 3EQUITY Illustration: The following series of transactions illustrates the procedure for recording the issuance of 10,000 shares of €10 par value ordinary shares for a patent for Marlowe Company, in various circumstances. If the fair value of the goods or services cannot be measured reliably, use the fair value of the shares issued. Journal entry (Incremental): Cash13,500 Share Capital-Preference (100 X $50) 5,000 Share Premium-Preference 2,500 Share Capital-Ordinary (300 X $10) 3,000 Share Premium-Ordinary 3,000 LO 3EQUITY Shares Issued in Noncash TransactionsThe general rule: Companies should record shares issued for services or property other than cash at the fair value of the goods or services received.
The ordinary shares have a market value of $20 per share, and the value of preference shares are unknown.
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