NON MONETARY EXCHANGES Flashcards
1
Q
Which of the following statements correctly describes the proper accounting for nonmonetary exchanges that are deemed to have commercial substance?
01. Any gains or losses are deferred.
02. Losses are deferred to the extent of any gains.
03. Gains or losses are recognized immediately
04. Gains or losses are unrealized.
A
When there is commercial substance, gains and losses are recognized immediately.
This applies unless:
1. The fair value of neither asset can be determined 2. The exchange was made solely to facilitate sales to customers 3. If the exchange lacks commercial substance.
