F2 - Accounting for Non-monetary exchanges

Question 1

If projected cash flows after the exchange are not expected to change significantly, then the exchange…

Answer 1

Lacks commercial substance.

Question 2

If the exchange lacks commercial substance and no boot is received, then

Answer 2

No gain is recognized

Question 3

If the exchange lacks commercial substance and no boot is paid, then

Answer 3

No gain is recognized

Question 4

If the exchange lacks commercial substance and boot received is less than 25% of the total consideration received then

Answer 4

A proportional amount of the gain is recognized.

Question 5

If a nonmonetary exchange has commercial substance, the transaction is accounted for using

Answer 5

The fair value of the asset surrendered or received, whichever is more evident.

Question 6

When a nonmonetary transaction has commercial substance, gains and losses are recognized

Answer 6

based on the difference between the fair value and the book value of the asset given up.