FAR 3 - M6 NONMONETARY EXCHANGES

Question 1

Non monetary exchanges recognized gain or loss

Answer 1

IMMEDIATELY

Question 2

How do you record nonmonetary exchange with commercial substance?

Answer 2

@Fair value less: cash received

Question 3

How do your record nonmonetary exchange with NO commercial substance?

Answer 3

@Book value

Question 4

NO commercial substance - if boot is received, how do you recognize all realized gains?

Answer 4

If boot is received, all realized gains are at least partially recognized.

Question 5

NO commercial substance - if boot is RECEIVED, how do you recognize all realized gains?

Answer 5

If boot is RECEIVED, all realized gains are at least PARTIALLY recognized.

Question 6

NO commercial substance - if boot is PAID, how do you recognize all realized gains?

Answer 6

If boot is PAID, all realized gains are FULLY recognized

Question 7

If there is no mention of Fair Value of the asset received, you record the asset received at

Answer 7

Fair value of asset given up

Question 8

What is the % of cash paid/received to be considered non monetary exchange with commercial value

Answer 8

Boot/Cash paid/received should be 25% of the fair value of an exchange

Question 9

Exchange that lacks commercial substance

Answer 9

same asset

less than 25% of fair value

Question 10

If no commercial substance, no cash received, no gain or loss recognized

Answer 10

use the BV of the asset given up

Question 11

If no commercial substance, cash is received, recognize gain

Answer 11

FV less BV = deferred gain
x cash received/ fv

FV 80000
BV 60000
Def gain 20000

20000 * 15000 (cash recvd
——–
80000

Recognized gain partially = 3750