F3 M6 Nonmonetary Transactions

Question 1

What is commercial substance?

Answer 1

Future cash flows change as a result of the transaction

Question 2

If a transaction has commercial substance are gains and losses recognized?

Answer 2

Yes

Question 3

Transactions that lack commercial substance are recorded at what value?

Answer 3

Carrying value

Question 4

When a nonmonetary transaction has commercial substance, gains and losses are recognized based on the difference between the ____ and the ____ of what asset?

Answer 4

Between the fair value and the book value of the asset given up.

Question 5

The ___ value of the assets given up is assumed to equal the ____ value of assets received including any cash given or received in the transaction.

Answer 5

Fair value

Arm’s length/not related parties

Question 6

When a nonmonetary transaction has commercial substance & cash is received gains and losses are recognized based on the in proportion to ____.

Answer 6

The cash received

Question 7

Under IFRS, exchanged of dissimilar assets are regarded as exchanges that generate revenue and all gains and losses are ____.

Answer 7

Recognized

Question 8

For nonmonetary exchanges that contain commercial substance gains & losses are recorded when?

Answer 8

Immediately

Question 9

If a nonmonetary exchange has commercial substance, the transaction is accounted for using the ___ value of the asset surrendered or received, whichever is more evident.

Answer 9

Fair value

Question 10

Gains and losses on fixed assets including involuntary conversions are always recognized during what period?
What value are the based on?

Answer 10

Period incurred

Based on recorded amount (Net book value) plus any costs associated with the transaction.

Question 11

In a nonmonetary transaction where commercial substance does not exist and no boot is received, if there is a gain is it recognized?

Answer 11

No

Question 12

In a nonmonetary transaction where commercial substance does not exist and boot is paid by us, if there is a gain is it recognized?

Answer 12

Yes, only if the boot is greater than 25% the total consideration

Question 13

In a nonmonetary transaction where commercial substance does not exist and boot is received, if there is a gain is it recognized?

Answer 13

Yes, in proportion to the total consideration if the boot received is less than 25%

Question 14

In a nonmonetary transaction where commercial substance does not exist and boot is received and the cash is 25% or more of the total consideration, if there is a gain is it recognized?

Answer 14

Yes, both parties account for the transaction as a monetary exchange and the gain or loss is recognized by both parties in the exchange

Question 15

In a nonmonetary transaction where commercial substance does not exist and boot is received, if there is a loss is it recognized?

Answer 15

Absolutely, rule of conservatism

Question 16

With nonmonetary exchanges pay attention to when cash is ____ and when cash is ____.

Answer 16

Paid and received