present value of those securities and all costs in connection with
their issue should constitute the cost of the building. Determination
of the present value of the securities is oftentimes a difficult
matter. When sales on the market take place concurrently, that
determines the price. When, as is usually the case, several existing
companies are bought up or merged to form a larger company, the old
stockholders are given shares in the new company for their equities in
the old. The book value of their old holdings may be the basis for the
issue of the new stock or the issue may be on the basis of a larger or
smaller value than this. This whole question of the value of the assets
taken over is equally a question of the value of the securities issued
therefor. This is considered in full in Chapters XX and XXI and will be
given only brief treatment here.
Manifestly all considerations relating to buildings purchased by
stocks and bonds have equal application to all other fixed assets so
purchased, and the treatment in later chapters will therefore be more
inclusive than could be any statement of the case applicable only to
buildings. It suffices to say here that usually the par value of the
securities issued constitutes the value placed on the assets bought.
The valuation as a rule is made by an appraisal committee from the
board of directors which inspects the various properties taken over and
places a value on them. In the absence of fraudulent intent, the courts
will usually sanction and uphold these values as having been made by
interested parties competent to act. This is the method generally used
for injecting water into properties.