Non-Monetary exchange Commercial Substance

Question 1

Commercial Substance

Answer 1

1. cf from new asset will be significantly diff from those of an old asset in terms of amount timing and risk
2. use of new asset to the firm is significantly diff from old asset

Question 2

Nonmonetary Asset

Answer 2

asset that does NOT have a readily determinable cash value ex: investment security, a receivable, plant assets, inventory

Question 3

No Commercial Substance

Answer 3

entity is NOT significantly affected by the exchange and assets in use are NOT significantly different. Same position economically.

Question 4

IFRS and Noncash transactions

Answer 4

1. assets are valued on similar assets not necessarily assets in transaction
2. accounting guidance for gov’t grants (assets received by gov’t considered gov’t grant)
3. no accounting guidance on donated assets,