Ch.14 Non-Monetary transactions

Question 1

Measurement of non-monetary transactions (ASPE)

Answer 1

reciprocal =there is an exchange of non-monetary assets

non-reciprocal=NMTs would include in-kind dividends, donations of goods or services, and liquidation of company assets to owners
An asset exchanged or transferred in an NMT is measured at the fair value.the fair value of the asset given up is used to measure the asset received

ASPE excludes measurement at fair value under any of the following circumstances:
• transaction lacks commercial substance.
• The transaction is an exchange of a product / property held for sale in the ordinary course of business for a product / property to be sold in the same line of business to customers who were not parties to the exchange.
• The fair value of neither the asset received, nor the asset given up, is reliably measurable.
• The transaction is a non-monetary, non-reciprocal transfer to owners.

Question 2

Commercial substance

Answer 2

excludes measurement at fair value when the transaction lacks commercial substance
following two ASPE criteria must be met:
• The configuration of the future cash flows of the asset received differs significantly from the configuration of the future cash flows of the asset given up.
• The entity-specific value of the asset received differs significantly from the entity-specific value of the asset given up.

Question 3

Entity-specific value

Answer 3

value of the asset based on how the entity plans to use it

not necessarily fair value, which is based on how the market would value the asset

Question 4

Exchange of similar items

Answer 4

excludes measurement at fair value when the transaction is an exchange of a product / property held for sale in the ordinary course of business for a product / property to be sold in the same line of business to customers who were not parties to the exchange.

Question 5

Reliably measurable fair values

Answer 5

excludes measurement at fair value where the fair value of neither the asset received nor the asset given up can be measured reliably.
comparable market transactions r used
if not estimate it when either of these r true:
• Variability in the range of reasonable fair value estimates for the asset is not significant.
• Probabilities of the various estimates within the range can be reasonably assessed and used to estimate fair value.
air value of the asset given up is used.

Question 6

Restructuring or liquidation

Answer 6

non-monetary, non-reciprocal transfer to owners that represents a spinoff or other form of restructuring or liquidation is measured at the carrying amount of the non-monetary assets or liabilities transferred

Question 7

Required disclosure

Answer 7

period which a NMT occurs, the entity should disclose the following:
• nature of the transaction
• basis of measurement
• amount
• if applicable, related gains and losses

Question 8

Partial monetary consideration(PMC)

Answer 8

exchange may occur where an entity completes a transaction that involves the exchange of a non-monetary item for a combination of another non-monetary item and monetary consideration

Question 9

Fair value measurement (PMC)

Answer 9

exchange meets the criteria for measurement at fair value, the cash is simply included as part of the fair value of the asset given up or the asset received

Question 10

Carrying value measurement (PMC)

Answer 10

exchange does not meet the criteria for measurement at fair value, the accounting treatment is dependent on whether the entity is giving or receiving the cash.
entity paying cash=measures the non-monetary asset received at the carrying amount of the asset given up+the fair value of the cash paid.
entity getting cash=non-monetary asset received at the carrying amount of the asset given up less the fair value of the cash received

Question 11

IFRS differences

Answer 11

NMTs do not have their own standard, but are covered in other standards such as IAS 16 Property, Plant and Equipment, IAS 38 Intangible Assets, and IFRS 15 Revenue from Contracts with Customers.
accounting treatment of NMTs is the same under both ASPE and IFRS
EXCEPT IFRS 15.66, when a revenue transaction occurs in which a customer promises consideration in a form other than cash, the vendor measures the transaction at the fair value of the non-cash consideration received. This accounting treatment differs from ASPE, where the fair value of the asset given up receives preference in all transactions.