Chad Darrow,CFO of Your Company,is Considering Constructing a Deal with Extreme

Essay

Chad Darrow,CFO of your company,is considering constructing a deal with Extreme Industries,whereby stock is issued in exchange for an asset (custom extrusion equipment valued at $400,000 by an outside appraiser).The stock to be exchanged is a new class of preferred stock that has not yet been traded in the open market.He has asked that you draft a memo to Marc Lyon,CEO,about the valuation of the asset to be used in the exchange.In your memo,address the reporting amount for the asset and how fair market value could be determined.