F3M5

Question 1

How to know when a transaction has commercial substance

Answer 1

• monetary transactions
• FCF changes
• economic positons change

Question 2

In monetary transaction, how do you determine fiar value

Answer 2

FV of asset received = FV of asset given up

Question 3

In a monetary transaction, how do you determine gain or loss

Answer 3

difference between BV and FV

Question 4

How to know when exchange lacks commercial substance

Answer 4

FCF Not Change
Boot rules
Gain or loss not always recognize

Question 5

Non-monetary transaction no boot is received

Answer 5

no gain recognized (unless more than 25%)

Question 6

Non-monetary transaction boot paid

Answer 6

no gain (unless more than 25%)

Question 7

Non-monetary transaction boot is received

Answer 7

proportional gain (if less than 25%)

full gain (if more than 25%)

This is the percentage of the original asset BV-FV

Question 8

Nonmonetary transactions with boot greater than 25%

Answer 8

both parties recognize gain/loss

in this case, it is actually considered a monetary exchange