F3 - M6 - Nonmonetary Transactions Flashcards
1
Q
What are Nonmonetary transactions?
A
An exchange of assets that is not cash related
I.e., Exchanging a building for a building, equipment, etc.
2
Q
How to categorize Nonmonetary transactions?
A
Either having or lacking commercial substance
3
Q
How to determine if a transaction contains commercial substance?
A
If the future cash flows change as a result of the transaction - either in risk, timing, or amount
If the economic position of the two parties changes because of the exchange, then the exchange has commercial substance
4
Q
What approach is used to value the transaction?
A
Fair Value
5
Q
Are gains / losses recognized?
A
Commerical Substance - Yes, both are.
Non-Commercial Substance:
Gains - Depends
Losses - Yes, always
